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Reasons Why Abercrombie (ANF) Should be in Your Portfolio
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Abercrombie & Fitch Co. (ANF - Free Report) currently boasts robust prospects based on the strength across its businesses, driven by the popularity of its brands, strategic investments and strengthening digital capabilities. Its focus on effective marketing strategies and store optimization plans also bodes well.
This Zacks Rank #1 (Strong Buy) company has a market capitalization of $1.8 billion. In the past three months, it has surged 43.2% against the industry’s decline of 2.1%.
Image Source: Zacks Investment Research
Let’s delve into the factors that have been benefiting this apparel and personal care products retailer for a while now.
Business Strength: Abercrombie has been benefiting from the strong momentum in the Abercrombie brand and the sequential improvement in the Hollister brand. The company’s efforts to diversify and boost its inventory across all labels have been faring well, attracting customers to shop for a wide range of products like casual apparel, cargo and sportswear. Also, its focus on strategic investments across stores and its digital capabilities and technology via its Always Forward Plan bodes well.
In first-quarter fiscal 2023, ANF’s net sales rose 3% (up 4% on a constant-currency basis) to $836 million on a year-over-year basis. Driven by the strong top-line performance, its adjusted earnings of 39 cents per share increased 44.4% from the year-ago period’s 27 cents.
Upbeat Financial View: For fiscal 2023, Abercrombie anticipates witnessing net sales growth of 2-4% year over year, up from the prior guidance of 1-3% growth. It expects the Abercrombie brand to outperform Hollister. The company’s business in the United States is expected to perform better than its overseas business in fiscal 2023. Also, the company expects to benefit from the 53rd week of fiscal 2023, with sales of $45 million. For the second quarter of fiscal 2023, ANF expects to generate sales growth of 4-6%.
Store Optimization Plans: The company remains focused on rationalizing its store base by reducing its dependence on underperforming tourist-driven locations. As part of its store optimization plans, Abercrombie opened six stores, including three Hollister and three Abercrombie stores, in the fiscal first quarter. Also, it closed seven Hollister and three Abercrombie stores. Exiting the fiscal first quarter, its total store base was 758, including 556 stores in the United States and 202 stores internationally.
Long-Term Initiatives: Abercrombie has been progressing well with its 2025 Always Forward plan. Notably, the plan focuses on brand growth, leveraging omnichannel capabilities and expanding digital penetration. With regard to the plan, ANF earlier provided a financial outlook for fiscal 2025 and a long-term view. It anticipates annual revenues of $4.1-$4.3 billion and an annual operating margin rate of at least 8% by the end of fiscal 2025.
It also remains optimistic about generating at least $600 million in free cash flow in the next three years. This will likely enable the company to deliver healthy shareholder returns and drive omnichannel growth across digital and physical stores.
Urban Outfitters specializes in the retail and wholesale of general consumer products. The Zacks Consensus Estimate for URBN’s current financial-year sales suggests 5.1% growth, while earnings per share are expected to rise by 57.1% from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 12.2%.
MINISO Group operates as a retailer and wholesaler of lifestyle products. The Zacks Consensus Estimate for MNSO’s current financial-year sales and earnings per share suggests growth of 5.3% and 128.6%, respectively, from the corresponding year-ago reported figures.
BARK is engaged in providing products, services and content for dogs. The Zacks Consensus Estimate for BARK’s current financial year sales suggests a decline of 2.4%, while earnings are likely to grow 80.7% from the prior-year reported numbers. It has a trailing four-quarter earnings surprise of 10.4%, on average.
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Reasons Why Abercrombie (ANF) Should be in Your Portfolio
Abercrombie & Fitch Co. (ANF - Free Report) currently boasts robust prospects based on the strength across its businesses, driven by the popularity of its brands, strategic investments and strengthening digital capabilities. Its focus on effective marketing strategies and store optimization plans also bodes well.
This Zacks Rank #1 (Strong Buy) company has a market capitalization of $1.8 billion. In the past three months, it has surged 43.2% against the industry’s decline of 2.1%.
Image Source: Zacks Investment Research
Let’s delve into the factors that have been benefiting this apparel and personal care products retailer for a while now.
Business Strength: Abercrombie has been benefiting from the strong momentum in the Abercrombie brand and the sequential improvement in the Hollister brand. The company’s efforts to diversify and boost its inventory across all labels have been faring well, attracting customers to shop for a wide range of products like casual apparel, cargo and sportswear. Also, its focus on strategic investments across stores and its digital capabilities and technology via its Always Forward Plan bodes well.
In first-quarter fiscal 2023, ANF’s net sales rose 3% (up 4% on a constant-currency basis) to $836 million on a year-over-year basis. Driven by the strong top-line performance, its adjusted earnings of 39 cents per share increased 44.4% from the year-ago period’s 27 cents.
Upbeat Financial View: For fiscal 2023, Abercrombie anticipates witnessing net sales growth of 2-4% year over year, up from the prior guidance of 1-3% growth. It expects the Abercrombie brand to outperform Hollister. The company’s business in the United States is expected to perform better than its overseas business in fiscal 2023. Also, the company expects to benefit from the 53rd week of fiscal 2023, with sales of $45 million. For the second quarter of fiscal 2023, ANF expects to generate sales growth of 4-6%.
Store Optimization Plans: The company remains focused on rationalizing its store base by reducing its dependence on underperforming tourist-driven locations. As part of its store optimization plans, Abercrombie opened six stores, including three Hollister and three Abercrombie stores, in the fiscal first quarter. Also, it closed seven Hollister and three Abercrombie stores. Exiting the fiscal first quarter, its total store base was 758, including 556 stores in the United States and 202 stores internationally.
Long-Term Initiatives: Abercrombie has been progressing well with its 2025 Always Forward plan. Notably, the plan focuses on brand growth, leveraging omnichannel capabilities and expanding digital penetration. With regard to the plan, ANF earlier provided a financial outlook for fiscal 2025 and a long-term view. It anticipates annual revenues of $4.1-$4.3 billion and an annual operating margin rate of at least 8% by the end of fiscal 2025.
It also remains optimistic about generating at least $600 million in free cash flow in the next three years. This will likely enable the company to deliver healthy shareholder returns and drive omnichannel growth across digital and physical stores.
Other Key Picks
Some other top-ranked stocks are Urban Outfitters, Inc. (URBN - Free Report) , MINISO Group Holding Limited (MNSO - Free Report) and BARK, Inc. (BARK - Free Report) . While URBN sports a Zacks Rank #1, MNSO and BARK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Urban Outfitters specializes in the retail and wholesale of general consumer products. The Zacks Consensus Estimate for URBN’s current financial-year sales suggests 5.1% growth, while earnings per share are expected to rise by 57.1% from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 12.2%.
MINISO Group operates as a retailer and wholesaler of lifestyle products. The Zacks Consensus Estimate for MNSO’s current financial-year sales and earnings per share suggests growth of 5.3% and 128.6%, respectively, from the corresponding year-ago reported figures.
BARK is engaged in providing products, services and content for dogs. The Zacks Consensus Estimate for BARK’s current financial year sales suggests a decline of 2.4%, while earnings are likely to grow 80.7% from the prior-year reported numbers. It has a trailing four-quarter earnings surprise of 10.4%, on average.