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Can Abercrombie (ANF) Q2 Earnings Beat Despite Cost Headwinds?
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Abercrombie & Fitch Co. (ANF - Free Report) is scheduled to report second-quarter fiscal 2022 results on Aug 25, before the opening bell. The leading apparel retailer is expected to register declines in the top and bottom lines when it reports second-quarter fiscal 2022 numbers.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $847.8 million, suggesting a 2% decline from that reported in the year-ago quarter. For fiscal second-quarter earnings, the consensus mark is pegged at 23 cents per share, implying a decline of 86.5% from the year-ago quarter's reported figure. The consensus estimate has moved down 11.5% in the past seven days.
In the last reported quarter, the company recorded a negative earnings surprise of 437.5%. ANF’s earnings have missed the Zacks Consensus Estimate by 73.8%, on average, in the trailing four quarters.
Abercrombie & Fitch Company Price and EPS Surprise
Abercrombie has been gaining from continued strength in the Abercrombie & Fitch brand, which is likely to have boosted sales in the to-be-reported quarter. Moreover, the company is expected to have benefited from an improvement in the Hollister brand and continued average unit retail (AUR) growth. The company’s AUR has been benefiting from favorable responses to its products and experience. AUR gains can also be attributed to reduced promotional activity and higher tickets. The company had implemented a targeted ticket increase in the fiscal first quarter based on competitive pricing analysis.
Abercrombie has been gaining from a solid online show, lower promotions and tight expense management. Its expanded digital and omni-channel capabilities, customer additions, and robust digital-marketing efforts bode well. ANF’s store optimization is also expected to have boosted its performance in the fiscal second quarter. The company has been on track with investments in brand marketing, digital experience, and growing Gilly Hicks and Social Tourist brands.
However, the higher-than-expected freight costs due to the ongoing volatility in the global supply-chain environment have been resulting in higher AUC, which has been hurting margins. On the last reported quarter’s earnings call, Abercrombie expected higher costs to create headwinds, at least through the end of fiscal 2022.
Expectations of the volatility in the supply environment, higher freight costs and increased operating expenses related to higher marketing expenses are likely to have dented the company’s bottom line and margins in the to-be-reported quarter. Consequently, Abercrombie provided a conservative view for the fiscal second quarter.
For second-quarter fiscal 2022, management envisions a net sales decline in the low-single digits from the second-quarter fiscal 2021 reported level of $865 million. Its sales view for second-quarter fiscal 2022 includes a 300-bps impact from adverse currency rates and COVID-related lockdowns in China, and a 300-bps negative impact from inflationary pressure on consumer demand. It anticipates a 3-4% year-over-year decline in the operating margin mainly due to higher freight and raw material costs. It expects the effective tax rate in the mid-30s for the fiscal second quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Abercrombie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Abercrombie has a Zacks Rank #3 and an Earnings ESP of +3.70%.
Other Stocks With Favorable Combination
Here are some more companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +4.07% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2022 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.2 billion, which suggests a rise of 11.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Ulta Beauty’s earnings has moved up 1.2% to $4.90 per share in the past seven days. The consensus estimate indicates 7.5% growth from $4.56 reported in the year-ago quarter. ULTA delivered an earnings beat of 49.8%, on average, in the trailing four quarters.
Dollar General (DG - Free Report) currently has an Earnings ESP of +1.04% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports second-quarter fiscal 2022 numbers. The consensus mark for DG’s quarterly earnings has moved down by a penny in the past 30 days to $2.93 per share. The consensus estimate suggests 8.9% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Dollar General’s quarterly revenues is pegged at $9.4 billion, which suggests growth of 8.6% from the figure reported in the prior-year quarter. DG delivered an earnings beat of 2.8%, on average, in the trailing four quarters.
Dollar Tree (DLTR - Free Report) currently has an Earnings ESP of +1.75% and a Zacks Rank of 2. The Zacks Consensus Estimate for its second-quarter fiscal 2022 earnings has been unchanged at $1.57 per share in the past 30 days. The consensus mark suggests 27.6% growth from the year-ago quarter’s reported number.
Dollar Tree’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.79 billion, which suggests a rise of 7% from the figure reported in the prior-year quarter. DLTR delivered an earnings beat of 13.1%, on average, in the trailing four quarters.
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Can Abercrombie (ANF) Q2 Earnings Beat Despite Cost Headwinds?
Abercrombie & Fitch Co. (ANF - Free Report) is scheduled to report second-quarter fiscal 2022 results on Aug 25, before the opening bell. The leading apparel retailer is expected to register declines in the top and bottom lines when it reports second-quarter fiscal 2022 numbers.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $847.8 million, suggesting a 2% decline from that reported in the year-ago quarter. For fiscal second-quarter earnings, the consensus mark is pegged at 23 cents per share, implying a decline of 86.5% from the year-ago quarter's reported figure. The consensus estimate has moved down 11.5% in the past seven days.
In the last reported quarter, the company recorded a negative earnings surprise of 437.5%. ANF’s earnings have missed the Zacks Consensus Estimate by 73.8%, on average, in the trailing four quarters.
Abercrombie & Fitch Company Price and EPS Surprise
Abercrombie & Fitch Company price-eps-surprise | Abercrombie & Fitch Company Quote
Factors to Note
Abercrombie has been gaining from continued strength in the Abercrombie & Fitch brand, which is likely to have boosted sales in the to-be-reported quarter. Moreover, the company is expected to have benefited from an improvement in the Hollister brand and continued average unit retail (AUR) growth. The company’s AUR has been benefiting from favorable responses to its products and experience. AUR gains can also be attributed to reduced promotional activity and higher tickets. The company had implemented a targeted ticket increase in the fiscal first quarter based on competitive pricing analysis.
Abercrombie has been gaining from a solid online show, lower promotions and tight expense management. Its expanded digital and omni-channel capabilities, customer additions, and robust digital-marketing efforts bode well. ANF’s store optimization is also expected to have boosted its performance in the fiscal second quarter. The company has been on track with investments in brand marketing, digital experience, and growing Gilly Hicks and Social Tourist brands.
However, the higher-than-expected freight costs due to the ongoing volatility in the global supply-chain environment have been resulting in higher AUC, which has been hurting margins. On the last reported quarter’s earnings call, Abercrombie expected higher costs to create headwinds, at least through the end of fiscal 2022.
Expectations of the volatility in the supply environment, higher freight costs and increased operating expenses related to higher marketing expenses are likely to have dented the company’s bottom line and margins in the to-be-reported quarter. Consequently, Abercrombie provided a conservative view for the fiscal second quarter.
For second-quarter fiscal 2022, management envisions a net sales decline in the low-single digits from the second-quarter fiscal 2021 reported level of $865 million. Its sales view for second-quarter fiscal 2022 includes a 300-bps impact from adverse currency rates and COVID-related lockdowns in China, and a 300-bps negative impact from inflationary pressure on consumer demand. It anticipates a 3-4% year-over-year decline in the operating margin mainly due to higher freight and raw material costs. It expects the effective tax rate in the mid-30s for the fiscal second quarter.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Abercrombie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Abercrombie has a Zacks Rank #3 and an Earnings ESP of +3.70%.
Other Stocks With Favorable Combination
Here are some more companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +4.07% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2022 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.2 billion, which suggests a rise of 11.7% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s earnings has moved up 1.2% to $4.90 per share in the past seven days. The consensus estimate indicates 7.5% growth from $4.56 reported in the year-ago quarter. ULTA delivered an earnings beat of 49.8%, on average, in the trailing four quarters.
Dollar General (DG - Free Report) currently has an Earnings ESP of +1.04% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports second-quarter fiscal 2022 numbers. The consensus mark for DG’s quarterly earnings has moved down by a penny in the past 30 days to $2.93 per share. The consensus estimate suggests 8.9% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Dollar General’s quarterly revenues is pegged at $9.4 billion, which suggests growth of 8.6% from the figure reported in the prior-year quarter. DG delivered an earnings beat of 2.8%, on average, in the trailing four quarters.
Dollar Tree (DLTR - Free Report) currently has an Earnings ESP of +1.75% and a Zacks Rank of 2. The Zacks Consensus Estimate for its second-quarter fiscal 2022 earnings has been unchanged at $1.57 per share in the past 30 days. The consensus mark suggests 27.6% growth from the year-ago quarter’s reported number.
Dollar Tree’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.79 billion, which suggests a rise of 7% from the figure reported in the prior-year quarter. DLTR delivered an earnings beat of 13.1%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.