Lerach Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit Against Abercrombie & Fitch Co

Business Wire, Oct 4, 2005

SAN DIEGO -- Lerach Coughlin Stoia Geller Rudman & Robbins LLP ("Lerach Coughlin") (http://www.lerachlaw.com/cases/abercrombie/) today announced that a class action has been commenced in the United States District Court for the Southern District of Ohio on behalf of purchasers of Abercrombie & Fitch Co. ("Abercrombie") (NYSE:ANF) publicly traded securities during the period between June 2, 2005 and August 16, 2005 (the "Class Period").

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from September 2, 2005. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach or Darren Robbins of Lerach Coughlin at 800/449-4900 or 619/231-1058, or via e-mail at wsl@lerachlaw.com. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.lerachlaw.com/cases/abercrombie/. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

The complaint charges Abercrombie and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Abercrombie is a retailer operating four "brand concepts" of "casual luxury" goods and apparel.

The complaint alleges that during February and March 2005, defendants made a series of express promises that Abercrombie was continuing to report the high margins and earnings achieved during the 2004 holiday season because it had purportedly "eliminated" its reliance on profit-dimishing promotional sales. Instead of focusing on transaction volume, Abercrombie differentiated itself amongst other apparel distributors by promising it was rigorously maintaining a high price/high margin sales model. Purportedly based on this sales model, coupled with internal sales forecasts, during March 2005 defendants made fiscal 2005 earnings projections of $2.80-$3.00 per share, or approximately $0.70-$0.75 per share on a quarterly basis.

According to the complaint, between June 2, 2005 and August 16, 2005, defendants caused Abercrombie's shares to trade at artificially inflated levels by concealing that its business had deteriorated and as a result, its previously issued earnings projections were grossly overstated. Despite defendants' earlier promises, during May and June 2005 the Company held an extended promotional sale under the guise of moving out older product lines to make room for newer lines, which permitted defendants to make the net sales and comparable store sales figures the market expected for May and June 2005. Defendants' positive statements had their intended effect and the Company's stock price spiraled to a Class Period high of $73.14 on July 7, 2005. Between June 2, 2005 and July 15, 2005 Abercrombie's senior executives sold approximately 1.9 million shares of the Company's stock at inflated prices, pocketing approximately $137 million in proceeds.

Following a moderate stock price decline on August 4, 2005 when Abercrombie's actual July 2005 sales results, depressed by the huge May-June promotional activities, were reported, the Company's stock price plummeted on August 16, 2005, when Abercrombie released its Q2 05 financial results. Instead of reporting $0.70-$0.75 per share in earnings, the Company reported $0.63 per share in earnings on lower than expected margins. The Company's stock price plunged to a price approximately 20% lower than its Class Period high, erasing over $1.2 billion in market capitalization.

Plaintiff seeks to recover damages on behalf of all purchasers of Abercrombie publicly traded securities during the Class Period (the "Class"). The plaintiff is represented by Lerach Coughlin, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Lerach Coughlin, a 150-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Washington, D.C., Houston, Philadelphia and Seattle, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. Lerach Coughlin lawyers have been responsible for more than $20 billion in aggregate recoveries. The Lerach Coughlin Web site (http://www.lerachlaw.com) has more information about the firm.