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Bull of the Day: Abercrombie & Fitch (ANF)

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Abercrombie & Fitch Co. (ANF - Free Report) is a specialty retailer of premium, high-quality casual apparel for men, women, and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East. Its product portfolio includes knit and woven shirts, jeans, sweaters, outerwear, and accessories for men, women and kids, under the Abercrombie & Fitch, abercrombie kids and Hollister brands.

Q4 Earnings Recap

Overall, Abercrombie’s fourth quarter earnings results came in better than expected.

Non-GAAP earnings per share of $1.50 easily beat our consensus, while revenue of $1.12 billion fell in-line with projections.

Digital net sales spiked 34% to $639 million, reflecting robust growth for every month last quarter.

ANF’s gross profit rate improved 230 basis points to 60.5% thanks to higher average unit retail and slightly lower average unit cost.

CEO Fran Horowitz said that “I am proud of our execution in the fourth quarter, where we exceeded initial internal expectations. We listened and remained close to our customer, adjusting our product and messaging to align with their new reality.”

And for the fiscal year, “we continued to make strategic investments to support future growth including: opening smaller, more omni-enabled experiences; adding senior level talent in key areas including marketing, data and analytics and digital; and further building-out regional teams in EMEA and APAC,” Horowitz continued.

ANF Breaks Out

Abercrombie & Fitch Company Price and Consensus

In the past six months, shares of ANF have jumped almost 136% compared to the S&P 500’s 17.7% increase. Earnings estimates have been rising too, and ANF is a Zacks Rank #1 (Strong Buy) right now.

For fiscal 2021, nine analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 33 cents to $1.36 per share. Earnings are expected to grow over 286% compared to the prior year period. Fiscal 2022 looks strong too, and earnings should see positive year-over-year growth as well.

Post earnings, ANF received a slew of price target raises from analysts, ranging from $30 to $33. At B. Riley Securities, analyst Susan Anderson believes the retailer will exit the Covid-19 crisis with lower costs and a higher merchandise margin rate, while Citi analyst Paul Lejuez said the stock’s risk/reward is “very favorable” at current levels.

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep ANF on your shortlist.

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