We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Abercrombie & Fitch(ANF) Down 12.5% Since Earnings Report: Can It Rebound?
Read MoreHide Full Article
It has been about a month since the last earnings report for Abercrombie & Fitch Company (ANF - Free Report) . Shares have lost about 12.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Abercrombie Q1 Loss Widens Y-o-Y, Sales Beat Estimate
Abercrombie & Fitch reported first quarter fiscal 2017 results, wherein top and bottom lines declined from the year-ago quarter. The soft revenue performance can be attributed to the tough retail environment characterized by heightened promotional activity.
The company posted first-quarter adjusted loss of $0.72 per share that came in line with the Zacks Consensus Estimate but widened from loss of $0.59 reported in the year-ago quarter.
Net sales of $661.1 million came ahead of the Zacks Consensus Estimate of $653.3 million but went down nearly 4% year over year. Decline reflects 3% drop in comparable sales (comps). Comps for Abercrombie declined 10%, partially offset by increase of 3% for Hollister. From a geographical view point, net sales had declined 4% in the U.S market and 3% internationally. Direct-to-consumer sales performed well and accounted for 27% of the net sales, advancing 300 bps.
For the first quarter, gross profit margin contracted 130 bps to 60.3% due to reduced unit retail, compensated by lower unit cost. Further assortment issues and more than planned promotional expenses hurt gross profit.
Abercrombie reported operating loss amounting to $69.9 million for the quarter, compared to $54.9 million recorded in the year-ago period.
Financials
Abercrombie ended the quarter with cash and cash equivalents of $421.4 million, long-term borrowings of $263.4 million, and shareholders’ equity of $1,180.8 million. As of Apr 29, 2017, inventories were $398.8 million, down nearly 8.5% from the prior-year period. The company continues to focus on tight inventory management policies in order to deliver better sales performance.
Store Update
During the first quarter, the company introduced three new stores in the U.S. including one Hollister and two Abercrombie stores. The company also closed a total of eight stores in the quarter, including seven U.S. and one international store. Store closures comprised of six Abercrombie and two Hollister stores. With this, the company operated 705 stores in the U.S. and 188 stores internationally as at the end of the reported quarter.
During fiscal 2017, the company plans to open two new outlets in the U.S. alongside of seven full-price stores. Additionally, the company plans to shut down 60 stores in the U.S on the basis of lease expirations. Store closure is expected to give Abercrombie more flexibility in terms of cost savings, amid a tough environment, where retailers are facing intense competition from continued shift to online shopping.
Outlook for Fiscal 2017
The company has made no major changes in their guidance for fiscal 2017 as slated in the previous quarter. Comps are expected to remain challenging during the second quarter while improvements are expected in the second half of the year. Further, it expects foreign currency headwinds to hurt sales and operating income in fiscal 2017.
Gross margin is expected to remain pressurized during the second quarter and fall slightly from last year’s rate of 61% for fiscal 2017. For fiscal 2017, the company expects capital expenditure of $100 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to seven lower. In the past month, the consensus estimate has shifted downward by 29.2% due to these changes.
At this time, Abercrombie & Fitch's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Abercrombie & Fitch(ANF) Down 12.5% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Abercrombie & Fitch Company (ANF - Free Report) . Shares have lost about 12.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Abercrombie Q1 Loss Widens Y-o-Y, Sales Beat Estimate
Abercrombie & Fitch reported first quarter fiscal 2017 results, wherein top and bottom lines declined from the year-ago quarter. The soft revenue performance can be attributed to the tough retail environment characterized by heightened promotional activity.
The company posted first-quarter adjusted loss of $0.72 per share that came in line with the Zacks Consensus Estimate but widened from loss of $0.59 reported in the year-ago quarter.
Net sales of $661.1 million came ahead of the Zacks Consensus Estimate of $653.3 million but went down nearly 4% year over year. Decline reflects 3% drop in comparable sales (comps). Comps for Abercrombie declined 10%, partially offset by increase of 3% for Hollister. From a geographical view point, net sales had declined 4% in the U.S market and 3% internationally. Direct-to-consumer sales performed well and accounted for 27% of the net sales, advancing 300 bps.
For the first quarter, gross profit margin contracted 130 bps to 60.3% due to reduced unit retail, compensated by lower unit cost. Further assortment issues and more than planned promotional expenses hurt gross profit.
Abercrombie reported operating loss amounting to $69.9 million for the quarter, compared to $54.9 million recorded in the year-ago period.
Financials
Abercrombie ended the quarter with cash and cash equivalents of $421.4 million, long-term borrowings of $263.4 million, and shareholders’ equity of $1,180.8 million. As of Apr 29, 2017, inventories were $398.8 million, down nearly 8.5% from the prior-year period. The company continues to focus on tight inventory management policies in order to deliver better sales performance.
Store Update
During the first quarter, the company introduced three new stores in the U.S. including one Hollister and two Abercrombie stores. The company also closed a total of eight stores in the quarter, including seven U.S. and one international store. Store closures comprised of six Abercrombie and two Hollister stores. With this, the company operated 705 stores in the U.S. and 188 stores internationally as at the end of the reported quarter.
During fiscal 2017, the company plans to open two new outlets in the U.S. alongside of seven full-price stores. Additionally, the company plans to shut down 60 stores in the U.S on the basis of lease expirations. Store closure is expected to give Abercrombie more flexibility in terms of cost savings, amid a tough environment, where retailers are facing intense competition from continued shift to online shopping.
Outlook for Fiscal 2017
The company has made no major changes in their guidance for fiscal 2017 as slated in the previous quarter. Comps are expected to remain challenging during the second quarter while improvements are expected in the second half of the year. Further, it expects foreign currency headwinds to hurt sales and operating income in fiscal 2017.
Gross margin is expected to remain pressurized during the second quarter and fall slightly from last year’s rate of 61% for fiscal 2017. For fiscal 2017, the company expects capital expenditure of $100 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to seven lower. In the past month, the consensus estimate has shifted downward by 29.2% due to these changes.
Abercrombie & Fitch Company Price and Consensus
Abercrombie & Fitch Company Price and Consensus | Abercrombie & Fitch Company Quote
VGM Scores
At this time, Abercrombie & Fitch's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.