Abercrombie & Fitch Co. ( ANF ) is a specialty retailer that operates stores and direct-to-customer operations. The company sells a broad range of products such as casual sportswear, shirts, t-shirts, pants, jeans, polo shirts, and accessories for men, women, and kids. ANF has a few brands, including Abercrombie & Fitch, Abercrombie & Fitch Kids, Hollister, Gilly Hicks.
The company operates nationally and internationally, and as of February 1, 2014, the company operates and manages 843 stores in the US, and 163 stores abroad, and generally targets teenagers and college students. ANF is set to announce its earnings through a conference call on 28 th August 2014, before the market opens.
Lately, the fashion retailer company has not been doing too well, as with the entire retail sector this quarter. Many luxury brands such as Michael Kors ( KORS ), and Kate Spade ( KATE ) outlined downsides during their conference calls, despite how some of them were actually crushing estimates, and growing rapidly both nationally and internationally.
When one examines Abercrombie and Fitch ( ANF ), and other cheaper brands that cater to teenagers like Aeropostale Inc. ( ARO ), and American Eagle ( AEO ), it is noticeable how these once popular retailers who catered mainly towards teens and young clientele have lost the tough competition to cheaper retail brands that are quick to adapt to the changing styles of young crowds. One of these companies is Swedish brand H&M Hennes & Mauritz AB, though it does not trade on an American exchange.
Still, while there are definitely question marks surrounding the company, it should also be mentioned that what makes ANF unique in a sense, is how it has a diverse price range. Some apparel can sell for upwards of $250-$300, whilst the cheapest you can get can be a $20 t-shirt from its Hollister brand. This means that ANF has the ability to cater to lots of pocketbook sizes and different budgets, something ARO and AEO cannot really do, as they are considerably cheaper.
Should Abercrombie & Fitch Co. (ANF) Be in Your Portfolio?
Examining, ANF's financial statements, it is safe to say that the retailer's previous quarter did not fare too well. The company had only managed to make sales worth $822.43 million, down from the previous quarter by almost $500 million. The company also sustained $23.67 million net loss, or roughly -$0.32/share.
As of now, the retailer maintains a Zacks Rank #2 (Buy), and the Zacks Consensus Estimate Trend underscores how EPS estimates have been lowered from $0.11/share to $0.10/share, which is not really a positive factor, but the stock has seen a 5.56% surprise for the last quarter's EPS estimate, despite the fact that it is still in the negatives.
Considering how the stock has a "Buy" rating, it may be good to buy some while there is still some time, as it seems likely that the company will beat the estimates. However, one should bear in mind that the retail sector is still recovering from the damage, and investors would be wise to hedge or have some sort of safety net in case the company does beat the estimates, but the stock does not jump, as we saw with KORS earlier in the earnings season.