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The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $841 million, suggesting 4.5% growth from that reported in the year-ago quarter. For fiscal second-quarter earnings, the consensus mark is pegged at 12 per share, implying a significant increase of a loss of 30 cents reported in the year-ago quarter. The consensus estimate for earnings has been unchanged in the past 30 days.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by a significant margin. Moreover, ANF has delivered an earnings surprise of 480.6%, on average, in the trailing four quarters.
Abercrombie & Fitch Company Price and EPS Surprise
Abercrombie has been gaining from a continued momentum in the Abercrombie brand and sequential improvement in the Hollister brand. The company has been witnessing a surge in demand on the back of its effective rebranding efforts, which have brought it back in line with the leading fashion trends. The company’s efforts to improve its inventory across all labels have been attracting customers to shop for a diverse range of products like dresses and cargo. This is likely to have boosted the top line in the to-be-reported quarter.
On the last reported quarter’s earnings call, management anticipated sales growth of 4-6% for second-quarter fiscal 2023.
Our model predicts second-quarter fiscal 2023 sales for the Abercrombie brand to increase 15% year over year. Sales for Hollister are expected to decline 5.4% year over year, while the same indicates an improvement from the 6.7% decline reported in the last quarter.
Lower freight costs and robust average unit retail (AUR) growth are likely to have aided margins in the fiscal second quarter.
Management predicted the operating margin to be 2-3% in second-quarter fiscal 2023, whereas it reported breakeven results in the prior-year quarter. The operating margin is likely to benefit from lower freight and raw material costs.
We expect the gross margin to expand 170 basis points (bps) year over year to 59.6% in the fiscal second quarter, reflecting a decline in the cost of goods sold due to lower raw material prices and freight costs. Our model predicts an adjusted operating margin of 2.5%, suggesting a 250-bps expansion from the breakeven operating margin in the year-ago quarter.
Additionally, the company’s strategic investments across stores, digital and technology via its Always Forward Plan bode well. The company has been on track with its 2025 Always Forward plan that focuses on brand growth, leveraging its omnichannel capabilities, and expanding digital penetration and financial discipline. Growth in these avenues is likely to have contributed to the strong top-line performance in the to-be-reported quarter.
Abercrombie has been trying to accelerate its digital revolution via the Knowing Their Customer Better and Wowing Them Everywhere initiatives. Increased investment in customer analytics to meet and outpace customer demand bodes well. Additionally, it has been working toward rationalizing its store base by reducing its dependence on underperforming tourist-driven locations. Digital and store growth is likely to have boosted sales in the fiscal second quarter.
However, elevated technology expenses and incentive-based compensation are expected to have marred operating margin growth in the to-be-reported quarter. Additionally, inflation and increased operating expense investment for the 2025 Always Forward Plan initiatives are expected to have weighed on the operating margin performance in the to-be-reported quarter.
We expect adjusted total operating expenses to increase 2.5% year over year to $476.8 million in the fiscal second quarter, driven by a 14.3% rise in marketing, general and administrative expenses.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Abercrombie this season. 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. But that’s not the case here. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Abercrombie currently sports a Zacks Rank #1 and has an Earnings ESP of 0.00%.
Stocks Poised to Beat Earnings Estimates
Here are some companies that have the right combination of elements to post an earnings beat:
Five Below (FIVE - Free Report) currently has an Earnings ESP of +1.33% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for FIVE’s quarterly revenues is pegged at $760.5 million, which suggests growth of 13.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for FIVE’s earnings has been unchanged at 83 cents per share in the past 30 days. The consensus estimate indicates 12.2% growth from the year-ago quarter’s reported figure.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +11.07% and a Zacks Rank #2. The company is likely to register growth in the bottom line when it reports second-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up 25% to 15 cents per share in the past 30 days. The consensus estimate suggests a significant surge of 275% from the year-ago quarter’s reported EPS of 4 cents.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.2 billion, which suggests a decline of 1.3% from the figure reported in the prior-year quarter.
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +0.20% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports second-quarter fiscal 2023 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.5 billion, which suggests 9% growth from the figure reported in the prior-year quarter.
The consensus mark for ULTA’s quarterly earnings has moved up 0.5% in the past seven days to $5.84 per share. The consensus estimate suggests growth of 2.5% from the year-ago quarter.
Image: Bigstock
Will Abercrombie's (ANF) Q2 Earnings Beat on Strong Margins?
Abercrombie & Fitch Co. (ANF - Free Report) is scheduled to report second-quarter fiscal 2023 results on Aug 23, before the opening bell.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $841 million, suggesting 4.5% growth from that reported in the year-ago quarter. For fiscal second-quarter earnings, the consensus mark is pegged at 12 per share, implying a significant increase of a loss of 30 cents reported in the year-ago quarter. The consensus estimate for earnings has been unchanged in the past 30 days.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by a significant margin. Moreover, ANF has delivered an earnings surprise of 480.6%, 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 a continued momentum in the Abercrombie brand and sequential improvement in the Hollister brand. The company has been witnessing a surge in demand on the back of its effective rebranding efforts, which have brought it back in line with the leading fashion trends. The company’s efforts to improve its inventory across all labels have been attracting customers to shop for a diverse range of products like dresses and cargo. This is likely to have boosted the top line in the to-be-reported quarter.
On the last reported quarter’s earnings call, management anticipated sales growth of 4-6% for second-quarter fiscal 2023.
Our model predicts second-quarter fiscal 2023 sales for the Abercrombie brand to increase 15% year over year. Sales for Hollister are expected to decline 5.4% year over year, while the same indicates an improvement from the 6.7% decline reported in the last quarter.
Lower freight costs and robust average unit retail (AUR) growth are likely to have aided margins in the fiscal second quarter.
Management predicted the operating margin to be 2-3% in second-quarter fiscal 2023, whereas it reported breakeven results in the prior-year quarter. The operating margin is likely to benefit from lower freight and raw material costs.
We expect the gross margin to expand 170 basis points (bps) year over year to 59.6% in the fiscal second quarter, reflecting a decline in the cost of goods sold due to lower raw material prices and freight costs. Our model predicts an adjusted operating margin of 2.5%, suggesting a 250-bps expansion from the breakeven operating margin in the year-ago quarter.
Additionally, the company’s strategic investments across stores, digital and technology via its Always Forward Plan bode well. The company has been on track with its 2025 Always Forward plan that focuses on brand growth, leveraging its omnichannel capabilities, and expanding digital penetration and financial discipline. Growth in these avenues is likely to have contributed to the strong top-line performance in the to-be-reported quarter.
Abercrombie has been trying to accelerate its digital revolution via the Knowing Their Customer Better and Wowing Them Everywhere initiatives. Increased investment in customer analytics to meet and outpace customer demand bodes well. Additionally, it has been working toward rationalizing its store base by reducing its dependence on underperforming tourist-driven locations. Digital and store growth is likely to have boosted sales in the fiscal second quarter.
However, elevated technology expenses and incentive-based compensation are expected to have marred operating margin growth in the to-be-reported quarter. Additionally, inflation and increased operating expense investment for the 2025 Always Forward Plan initiatives are expected to have weighed on the operating margin performance in the to-be-reported quarter.
We expect adjusted total operating expenses to increase 2.5% year over year to $476.8 million in the fiscal second quarter, driven by a 14.3% rise in marketing, general and administrative expenses.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Abercrombie this season. 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. But that’s not the case here. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Abercrombie currently sports a Zacks Rank #1 and has an Earnings ESP of 0.00%.
Stocks Poised to Beat Earnings Estimates
Here are some companies that have the right combination of elements to post an earnings beat:
Five Below (FIVE - Free Report) currently has an Earnings ESP of +1.33% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2023 results. The consensus mark for FIVE’s quarterly revenues is pegged at $760.5 million, which suggests growth of 13.7% 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 FIVE’s earnings has been unchanged at 83 cents per share in the past 30 days. The consensus estimate indicates 12.2% growth from the year-ago quarter’s reported figure.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +11.07% and a Zacks Rank #2. The company is likely to register growth in the bottom line when it reports second-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up 25% to 15 cents per share in the past 30 days. The consensus estimate suggests a significant surge of 275% from the year-ago quarter’s reported EPS of 4 cents.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.2 billion, which suggests a decline of 1.3% from the figure reported in the prior-year quarter.
Ulta Beauty (ULTA - Free Report) currently has an Earnings ESP of +0.20% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports second-quarter fiscal 2023 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.5 billion, which suggests 9% growth from the figure reported in the prior-year quarter.
The consensus mark for ULTA’s quarterly earnings has moved up 0.5% in the past seven days to $5.84 per share. The consensus estimate suggests growth of 2.5% from the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.