Back to top

Analyst Blog

On Jun 27, 2014, we issued an updated research report on Abercrombie & Fitch Company (ANF - Analyst Report) following the company's impressive first-quarter fiscal 2014 results.

In a surprising turnaround driven by its focus on executing long-term strategic plans, the company posted narrower-than-expected first-quarter fiscal 2014 loss and reaffirmed its outlook for the fiscal year, giving some respite to investors.

Despite unfavorable weather conditions along with a challenging teen retail environment, Abercrombie posted an adjusted loss per share of 17 cents, which was in line with the company’s expectations and fared better than the Zacks Consensus Estimate of a loss of 18 cents. With this beat, the company has now surpassed expectations for the third consecutive quarter.

Buoyed by upbeat quarterly performance and its stringent focus on successful execution of long-term strategic plans, the company continues expecting significant improvement in its business in 2014 and beyond.

Apart from better-than-expected first-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 growth.

On the flip side, the company’s comps performance is showing a declining trend and has remained negative for the past nine consecutive quarters. Moreover, Abercrombie is expecting comps to fall in the range 3% to 4% in fiscal 2014. 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.

Therefore, Abercrombie currently carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked stocks in the shoe/apparel retail industry include Citi Trends, Inc. (CTRN - Analyst Report), The Men’s Wearhouse, Inc. (MW - Snapshot Report) and Foot Locker, Inc. (FL - Snapshot Report). While Citi Trends holds a Zacks Rank #1 (Strong Buy), Men’s Wearhouse and Foot Locker carry a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%