Deborah Mary Sophia

(Reuters) -Clothes retailer Abercrombie & Fitch Co warned of weaker margins in 2022 after missing holiday-quarter sales and profit estimates due to product shortages and COVID-19 curbs, sending shares down more than 17% in early trading on Wednesday.

This Ohio-based retailer suffered from shipping delays and factory closings in Vietnam, which led to shortages at peak shopping times of Christmas and New Year. Hollister’s brand for teens was hardest hit.

On an earnings call, Chief Executive Fran Horowitz stated that there were significant inventory delays between late November and December which made it impossible to meet peak holiday demand.

As a result of increased Omicron coronavirus strains in various parts, sales in Asia Pacific fell 21%. The company had to decrease operating hours in its outlets.

Horowitz claimed that sales started to rise as more products were introduced and COVID-19 was reduced, which gave Horowitz’s firm some momentum during the current quarter.

Abercrombie forecasts that net sales will rise by 2%-4% in fiscal 2022, exceeding estimates for a 2.7% increase at the midpoint.

Although the retailer was able to offer smaller and less generous discounts in order to preserve its margins, they were overshadowed by higher than expected freight costs during the fourth quarter. Profit per share fell short of expectations at $1.27 with $1.14 being lower than estimates.

According to the company’s estimates, gross margins would fall by 200 basis points next year.

According to IBES data from Refinitiv, Abercrombie’s fourth-quarter net sales increased to $1.16billion from $1.12billion a year ago, but fell short of analysts’ expectations of $1.18billion.

Urban Outfitters Inc. (NASDAQ:) saw another drop in sales of teen apparel before Christmas. American Eagle Outfitters (NYSE:) Inc has reported a drop in holiday sales because of the same factors as Omicron, supply chain snarls, and Omicron.