ANF Shares Gain on Improved Holiday Sales - Analyst Blog


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After prolonged downside in the shares of Abercrombie & Fitch Co. ( ANF ), the stock witnessed a massive 13.9% rise in the afterhours trading session, yesterday, on reports of better-than-expected holiday sales and the resulting boom in full-year earnings expectation.

This holiday season (nine-weeks ended Jan 4, 2014), overall company comparable sales (comps) for this casual apparel retailer declined 6%, including direct-to-consumer sales. While the plunge mainly resulted from a 4% downside in U.S. comps and a 10% decline in International comps, a 25% rise in direct-to-consumer comps was an offset.

The fourth quarter-to-date comps performance surprised the investor clan as the company's comps have been depicting a downward trend, with negative comps results for the trailing 7 quarters. Moreover, the company had guided comps to fall in the low double-digit range for the fourth quarter.

That said, Abercrombie & Fitch remains impressed by its fourth quarter-to-date performance despite the challenging and promotional retail environment. Notably, the company remains encouraged by the strong performance of its direct-to-consumer business that contributed about 25% to sales in December as well as the sequential improvement in comps.

Overwhelmed by the strong quarter-to-date performance and smooth progress on its cost reduction initiatives, the company raised its adjusted earnings per share forecast to $1.55 - $1.65, compared to $1.40 - $1.50 projected earlier. However, Abercrombie & Fitch expects its comps performance for January to remain below the quarter-to-date trend, resulting in stronger prior-year comps comparisons.

Going forward, this Zacks Rank #3 (Hold) company expects significant improvement in its business in 2014 and ahead, driven by its stringent focus on successful execution of its long-term strategic plans.

On the other hand, most retailers reported lackluster results for the holiday shopping period this year, followed by lowered forecasts, as retailers suffered from lower traffic, an intensified promotional environment, lesser shopping days between Thanksgiving and Christmas, numerous icy storms and sluggish consumer spending. Retailers that lowered their guidance battered by the holiday results include Family Dollar Stores Inc. ( FDO ), American Eagle Outfitters Inc. ( AEO ) and L Brands Inc. ( LB ).

AMER EAGLE OUTF (AEO): Free Stock Analysis Report

ABERCROMBIE (ANF): Free Stock Analysis Report

FAMILY DOLLAR (FDO): Free Stock Analysis Report

L BRANDS INC (LB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: AEO , ANF , FDO , LB

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