Abercrombie & Fitch Company
) - one of the world's leading specialty retailers of premium,
high-quality casual apparel for men and women - remains on our
Neutral list with a target price of $48.00. Moreover, the company
has a Zacks Rank #3 (Hold).
We remain impressed by the company's robust quarterly results
and impressive fiscal 2013 outlook; however, its continued weak
comparable-store sales performances make us cautious.
The fourth quarter fiscal 2012 earnings of $2.21 per share at
Abercrombie exhibited a stark improvement of over 97% from the
comparable year-ago quarter as well as the Zacks Consensus
Estimate of $1.93. The year-over-year increase was primarily
driven a strong top-line growth along with improved margins.
Looking at the earnings surprise history, the company has
beaten the Zacks Consensus Estimates 11 times in the past 14
quarters. The average positive surprise in the trailing 14
quarters comes to 28.4%.
Looking ahead, the company expects its fiscal 2013 earnings to
increase in the range of 4%-7% to $3.35-$3.45 per share compared
with the fiscal 2012 earnings of $3.22. Currently, the Zacks
Consensus Estimate stands at $3.49 per share, which is above the
company's guidance range.
Apart from strong fourth-quarter results, Abercrombie's growth
story looks compelling. We believe that management's focus on
expanding global operations and improving cash flows, while
maintaining a healthy balance sheet, bode well for future
On the flip side, the company's comps performance is showing
declining trend and now for the past 4 consecutive quarters these
remained negative. Moreover, the company is projecting a decline
in comps in the range of high-single-digit during the first
quarter of fiscal 2013. Therefore, considering this downward
trend, we remain apprehensive about the company's future
comparable store sales performances.
Further, Abercrombie operates in a competitive environment and
strives to maintain its market share, actively competing with
numerous manufacturers and distributors of apparel and related
products. The company primarily competes on the basis of brand
recognition, fashion, price, service, store location and quality.
Failure to offer high-quality differentiated products at a
competitive price may hamper Abercrombie's market share, and
thereby it's top and bottom-line performances.
Other Stocks Worth Considering
Other stocks worth considering in the apparel retail industry
New York & Company Inc.
Stein Mart Inc
Urban Outfitters Inc
). All these companies hold Rank #2 (Buy).
ABERCROMBIE (ANF): Free Stock Analysis Report
NEW YORK & CO (NWY): Free Stock Analysis
STEIN MART INC (SMRT): Free Stock Analysis
URBAN OUTFITTER (URBN): Free Stock Analysis
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