Abercrombie & Fitch Co.
) touched a new 52-week low of $31.69 yesterday before closing at
$31.89. Notably, this teen apparel retailer has lost
approximately 31.6% year-to-date primarily due to four
consecutive quarters of waning top line.
The average volume of shares traded over the last 3 months was
over 3,340K. Moreover, the company currently trades at a forward
P/E of 21.72x, a 14.9% premium to the peer group average of
18.91x. The last traded price is 20.8% lower the Zacks Consensus
average analyst price target of $40.29.
Abercrombie posted disappointing sales results in
third-quarter fiscal 2013, marking lower-than-expected top-line
results for the fourth consecutive quarter. The company's sales
for the quarter declined 11.3% year over year to $1,033.3 million
while it missed the Zacks Consensus Estimate of $1,035.0 million.
Weak third-quarter sales resulted mainly from poor performance in
the domestic market as well as a lingering sluggishness in the
overall spending among youngsters.
Moreover, Abercrombie's comps performance depicts a downward
trend, with negative comps results for the trailing 7 quarters.
Further, the company is expecting comps to fall in the low
double-digit range for the upcoming quarter.
Though the company is aggressively implementing strategies to
counter the downward sales trend, we do not see any meaningful
improvement in the near term, given the company's negative comps
guidance for the fourth quarter.
A significant portion of the company's merchandise is
manufactured overseas, in countries like Asia, and Central and
South America. Further, international operations account for over
one-fourth of the Abercrombie's revenues, which shows the
company's considerable exposure to the political, social and
economic risks of operating beyond national borders. This, along
with foreign currency fluctuations, may adversely affect its
Alongside, we believe that Abercrombie's high dependence on
outside suppliers, intense competition from discount retailers as
well as the seasonality of its business may undermine growth
Other Stocks to Consider
Currently, Abercrombie carries a Zacks Rank #5 (Strong Sell).
However, other better-ranked stocks in the apparel retail
G-III Apparel Group, Ltd.
Michael Kors Holdings
). G-III Apparel and Hanesbrands hold a Zacks Rank #1 (Strong
Buy) while Michael Kors has a Zacks Rank #2 (Buy).
ABERCROMBIE (ANF): Free Stock Analysis Report
G-III APPAREL (GIII): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
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