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Why Shares of Abercrombie & Fitch Co. Surged on Wednesday

Shares of apparel retailer soared on Wednesday after the company reported its second-quarter results, beating analyst estimates for both revenue and earnings. After jumping more than 15% in early trading, the stock was up about 11% at 11:20 a.m.

What: Shares of apparel retailer Abercrombie & Fitch soared on Wednesday after the company reported its second-quarter results, beating analyst estimates for both revenue and earnings. After jumping more than 15% in early trading, the stock was up about 11% at 11:20 a.m.

So what: Abercrombie reported quarterly revenue of $817.8 million, down 8% year-over-year, but about $6 million higher than analysts were expecting. This decline was driven by a comparable-store sales decline of 4%, as well as a roughly 5% negative impact from changes in foreign currency exchange rates. Comparable-store sales improved compared to the first quarter, when the company posted an 8% year-over-year decline.

The company reported non-GAAP net income of $0.12 per share, far better than the $0.04-per-share loss that analysts were expecting. On a GAAP basis, Abercrombie reported a loss of $0.01 per share, compared to a $0.17-per-share gain during the same quarter last year. Going forward, Abercrombie expects further improvement in its comparable sales trend, although foreign exchange rates will continue to negatively affect the company's results.

Now what: Abercrombie managed to improve the performance of its Hollister brand during the second quarter, with comparable-store sales falling just 1%, down from a 6% decline during the first quarter. The namesake Abercrombie brand continued to struggle, though, with a 7% comparable-store sales decline a small improvement compared to the first quarter.

Shares of Abercrombie have declined by about 60% over the past year, even after the surge in the stock price today, and with shares trading near the levels they reached during the financial crisis, it's no wonder that a bit of positive news has sent the stock soaring. Abercrombie still has a lot of work to do, and its profitability is still well below typical levels over the past decade, but investors saw a glimpse of progress in the company's second-quarter results.

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The article Why Shares of Abercrombie & Fitch Co. Surged on Wednesday originally appeared on Fool.com.

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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