Abercrombie & Fitch Co predicts a decline in sales and margins after posting a surprise quarterly loss amid a surge in freight and raw material costs.

Decades-high inflation has pushed consumers to cut spending on discretionary goods such as apparel, while persistent supply chain issues, worsened by the war in Ukraine, have dented profits.

Known for brands such as Hollister and Gilly Hicks, the Ohio-based retailer reported an 810-basis-point fall in first-quarter margins, as it spent $80 million more on transportation.

The company also cut its full-year operating margin to between 5 per cent and 6 per cent from 7 per cent to 8 per cent forecast earlier.

The millennial-focused retailer expects net sales to be flat to up 2 per cent in fiscal 2022, compared with its earlier forecast of a 2 per cent to 4 per cent growth. Analysts on average expect sales to increase 3.5 per cent to $3.84 billion, according to Refinitiv IBES data.

For the three months ending April 30, Abercrombie reported an adjusted per-share loss of 27 cents, while analysts expected a profit of 2 cents.