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Abercrombie (ANF) Loses Sheen: What's Troubling the Stock?
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Popular apparel retailer Abercrombie & Fitch Co. (ANF - Free Report) has been losing popularity among investors. This Zacks Rank #5 (Strong Sell) stock crashed 61.1% in the last one year, underperforming the Retail – Apparel/Shoes industry, which fell 22.9%. The company has been facing difficult times owing to a challenging retail environment and foreign currency headwinds, which have been leading to dismal results for the company.
Abercrombie has significant presence in the international market which exposes the company to political, social and economic risks associated with foreign operations, particularly the prevalent adverse currency exchange rates. Of late, the currency headwinds have dramatically hurt Abercrombie’s results.
In fact, in the last reported quarter, adverse currency exchange rates hurt Abercrombie’s sales by nearly $16 million and earnings by 5 cents per share. Looking ahead too, management expects currency woes to linger and impact fiscal 2017 sales and operating income to the tune of $55 million and $25 million, respectively.
Further, the company’s fourth-quarter fiscal 2016 marked its fourth straight quarter of earnings and sales miss, highlighting its dismal history. Also, results declined year over year in the fourth quarter, owing to a tough retail backdrop due to increased promotions in the holiday season and persistence of currency headwinds. Apart from the currency hurdles, the company also anticipates the tough retail environment to persist and hurt results in fiscal 2017.
This in turn has caused a downtrend in earnings estimates. Evidently, the Zacks Consensus Estimate for the first quarter moved from a loss of 61 cents a share to a loss of 71 cents in the past 60 days. Over the same time frame, estimates for fiscal 2017 have slumped to a loss of 10 cents from an earnings estimate of 19 cents. Clearly, this hints at a murky future for the company.
Apart from this, Abercrombie faces intense competition from other major players in the apparel-shoes space, on grounds of fashion, quality and service. We believe that failure to offer high-quality, differentiated products at a competitive price may hamper Abercrombie’s market share, resulting in reduced top and bottom lines.
Nonetheless, strength at Abercrombie’s Hollister brand provides some respite. Incidentally, fourth quarter results gained from the solid performance of Hollister brand, renewed strength in the Abercrombie brand and robust direct-to-customer sales. Backed by these positives, the company also provided upbeat comps growth guidance for fiscal 2017.
However, it anticipates comps to remain challenging in first-half fiscal 2017, thus getting us back to the pavilion.
Stocks to Consider
Some better-ranked stocks in the same industry include The Children's Place, Inc. (PLCE - Free Report) , Kate Spade & Company and Foot Locker, Inc. (FL - Free Report) . While Children's Place sports a Zacks Rank #1 (Strong Buy), Kate Spade and Foot Locker currently carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Children's Place has an average positive earnings surprise of 39% in the trailing four quarters. The stock has a long-term growth rate of 8%.
Kate Spade, with long-term earnings per share growth rate of 28.3%, has delivered positive earnings surprise in the last two quarters.
Foot Locker has delivered positive earnings surprise in the last three quarters. The stock has a long-term growth rate of 9.7%.
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Abercrombie (ANF) Loses Sheen: What's Troubling the Stock?
Popular apparel retailer Abercrombie & Fitch Co. (ANF - Free Report) has been losing popularity among investors. This Zacks Rank #5 (Strong Sell) stock crashed 61.1% in the last one year, underperforming the Retail – Apparel/Shoes industry, which fell 22.9%. The company has been facing difficult times owing to a challenging retail environment and foreign currency headwinds, which have been leading to dismal results for the company.
Abercrombie has significant presence in the international market which exposes the company to political, social and economic risks associated with foreign operations, particularly the prevalent adverse currency exchange rates. Of late, the currency headwinds have dramatically hurt Abercrombie’s results.
In fact, in the last reported quarter, adverse currency exchange rates hurt Abercrombie’s sales by nearly $16 million and earnings by 5 cents per share. Looking ahead too, management expects currency woes to linger and impact fiscal 2017 sales and operating income to the tune of $55 million and $25 million, respectively.
Further, the company’s fourth-quarter fiscal 2016 marked its fourth straight quarter of earnings and sales miss, highlighting its dismal history. Also, results declined year over year in the fourth quarter, owing to a tough retail backdrop due to increased promotions in the holiday season and persistence of currency headwinds. Apart from the currency hurdles, the company also anticipates the tough retail environment to persist and hurt results in fiscal 2017.
This in turn has caused a downtrend in earnings estimates. Evidently, the Zacks Consensus Estimate for the first quarter moved from a loss of 61 cents a share to a loss of 71 cents in the past 60 days. Over the same time frame, estimates for fiscal 2017 have slumped to a loss of 10 cents from an earnings estimate of 19 cents. Clearly, this hints at a murky future for the company.
Apart from this, Abercrombie faces intense competition from other major players in the apparel-shoes space, on grounds of fashion, quality and service. We believe that failure to offer high-quality, differentiated products at a competitive price may hamper Abercrombie’s market share, resulting in reduced top and bottom lines.
Nonetheless, strength at Abercrombie’s Hollister brand provides some respite. Incidentally, fourth quarter results gained from the solid performance of Hollister brand, renewed strength in the Abercrombie brand and robust direct-to-customer sales. Backed by these positives, the company also provided upbeat comps growth guidance for fiscal 2017.
However, it anticipates comps to remain challenging in first-half fiscal 2017, thus getting us back to the pavilion.
Stocks to Consider
Some better-ranked stocks in the same industry include The Children's Place, Inc. (PLCE - Free Report) , Kate Spade & Company and Foot Locker, Inc. (FL - Free Report) . While Children's Place sports a Zacks Rank #1 (Strong Buy), Kate Spade and Foot Locker currently carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Children's Place has an average positive earnings surprise of 39% in the trailing four quarters. The stock has a long-term growth rate of 8%.
Kate Spade, with long-term earnings per share growth rate of 28.3%, has delivered positive earnings surprise in the last two quarters.
Foot Locker has delivered positive earnings surprise in the last three quarters. The stock has a long-term growth rate of 9.7%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>