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Why is Abercrombie (ANF) Marching Ahead of Its Industry?
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Abercrombie & Fitch Co. (ANF - Free Report) has exhibited a decent run on the bourses in the past year, thanks to the continued momentum in the Abercrombie brand and Hollister brands. Lower freight costs and robust AUR growth have been aiding its margins. The company’s store optimization and the Always Forward plan also bode well.
The Zacks Rank #1 (Strong Buy) stock has rallied 251.2% compared with the industry’s growth of 4.9%.
An uptrend in the Zacks Consensus Estimate echoes the same sentiment. The consensus estimate for the current and next fiscal years has increased 93.8% and 69.2% to $4.03 and $4.18, respectively, in the past 30 days.
Image Source: Zacks Investment Research
Let’s Delve Deeper
Abercrombie & Fitch is experiencing positive results due to the sustained momentum of the Abercrombie brand and consecutive enhancements in the Hollister brand. The company has highlighted the success of its initiatives aimed at enhancing the brand positioning of Hollister. Brand-wise, net sales improved 8% year over year to $472.6 million at Hollister and advanced 26% to $462.7 million at Abercrombie in second-quarter fiscal 2023.
Additionally, strategic investments made in stores, digital and technology through its Always Forward Plan are yielding favorable outcomes.
The company has been taking a proactive approach to adapt to the evolving retail landscape by optimizing its store portfolio, embracing omni-channel strategies and focusing on flagship locations offering a more diversified product range. These strategies are aimed at improving its overall performance and customer experience.
Abercrombie opened a store on 5th Avenue in New York. This store is a multi-brand location, offering collections for women and men, as well as dedicated shop-in-shop spaces for its kids' brand, Abercrombie kids, and its adult activewear franchise, YPB (Your Personal Best).
For fiscal 2023, Abercrombie plans to open 35 stores, undertake 20 combined remodels and close 30 stores. This indicates an ongoing effort to optimize its store portfolio and adapt to changing market conditions.
Additionally, the company experienced a positive impact on its margins due to a 340-basis-point (bps) gain from reduced freight costs and a 400-bps benefit from AUR growth, suggesting cost savings, and efficiencies in its supply chain and logistics operations in the second quarter of fiscal 2023.
Wrapping Up
Driven by the robust performance, the company raised its guidance for fiscal 2023. Management envisions year-over-year net sales growth of 10% for fiscal 2023, up from the prior mentioned 2-4% growth.
Abercrombie expects an operating margin of 8-9%, an increase from the earlier stated 5-6%. This includes year-over-year gains of 250 bps, driven by reduced freight and raw material costs, and a modest operating expense leverage.
The company expects sales growth in fiscal 2023 to more than offset higher expenses resulting from inflation and increased investment for the 2025 Always Forward Plan.
Other Stocks Looking Red Hot
Here we have highlighted three other top-ranked stocks, namely Urban Outfitters, Inc. (URBN - Free Report) , American Eagle Outfitters Inc. (AEO - Free Report) and Crocs, Inc. (CROX - Free Report) .
Urban Outfitters, which specializes in the retail and wholesale of general consumer products, flaunts a Zacks Rank #1 at present. The company’s expected EPS growth rate for three to five years is 23.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year sales and earnings suggests growth of 6.6% and 81.7% from the year-ago period’s reported figure. URBN has a trailing four-quarter earnings surprise of 19.2%, on average.
American Eagle is a specialty retailer of casual apparel, accessories and footwear. The company currently has a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 9.6%.
The Zacks Consensus Estimate for American Eagle’s current fiscal-year earnings suggests growth of 8.3% from the year-ago reported numbers. AEO has a trailing four-quarter earnings surprise of 9.2%, on average.
Crocs is one of the leading footwear brands with a focus on comfort and style. It currently has a Zacks Rank #2. CROX delivered an earnings surprise of 20.5% in the last reported quarter.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings suggests growth of 12.9% and 11.2%, respectively, from the year-ago reported numbers. CROX has a trailing four-quarter earnings surprise of 19.9%, on average.
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Why is Abercrombie (ANF) Marching Ahead of Its Industry?
Abercrombie & Fitch Co. (ANF - Free Report) has exhibited a decent run on the bourses in the past year, thanks to the continued momentum in the Abercrombie brand and Hollister brands. Lower freight costs and robust AUR growth have been aiding its margins. The company’s store optimization and the Always Forward plan also bode well.
The Zacks Rank #1 (Strong Buy) stock has rallied 251.2% compared with the industry’s growth of 4.9%.
An uptrend in the Zacks Consensus Estimate echoes the same sentiment. The consensus estimate for the current and next fiscal years has increased 93.8% and 69.2% to $4.03 and $4.18, respectively, in the past 30 days.
Image Source: Zacks Investment Research
Let’s Delve Deeper
Abercrombie & Fitch is experiencing positive results due to the sustained momentum of the Abercrombie brand and consecutive enhancements in the Hollister brand. The company has highlighted the success of its initiatives aimed at enhancing the brand positioning of Hollister. Brand-wise, net sales improved 8% year over year to $472.6 million at Hollister and advanced 26% to $462.7 million at Abercrombie in second-quarter fiscal 2023.
Additionally, strategic investments made in stores, digital and technology through its Always Forward Plan are yielding favorable outcomes.
The company has been taking a proactive approach to adapt to the evolving retail landscape by optimizing its store portfolio, embracing omni-channel strategies and focusing on flagship locations offering a more diversified product range. These strategies are aimed at improving its overall performance and customer experience.
Abercrombie opened a store on 5th Avenue in New York. This store is a multi-brand location, offering collections for women and men, as well as dedicated shop-in-shop spaces for its kids' brand, Abercrombie kids, and its adult activewear franchise, YPB (Your Personal Best).
For fiscal 2023, Abercrombie plans to open 35 stores, undertake 20 combined remodels and close 30 stores. This indicates an ongoing effort to optimize its store portfolio and adapt to changing market conditions.
Additionally, the company experienced a positive impact on its margins due to a 340-basis-point (bps) gain from reduced freight costs and a 400-bps benefit from AUR growth, suggesting cost savings, and efficiencies in its supply chain and logistics operations in the second quarter of fiscal 2023.
Wrapping Up
Driven by the robust performance, the company raised its guidance for fiscal 2023. Management envisions year-over-year net sales growth of 10% for fiscal 2023, up from the prior mentioned 2-4% growth.
Abercrombie expects an operating margin of 8-9%, an increase from the earlier stated 5-6%. This includes year-over-year gains of 250 bps, driven by reduced freight and raw material costs, and a modest operating expense leverage.
The company expects sales growth in fiscal 2023 to more than offset higher expenses resulting from inflation and increased investment for the 2025 Always Forward Plan.
Other Stocks Looking Red Hot
Here we have highlighted three other top-ranked stocks, namely Urban Outfitters, Inc. (URBN - Free Report) , American Eagle Outfitters Inc. (AEO - Free Report) and Crocs, Inc. (CROX - Free Report) .
Urban Outfitters, which specializes in the retail and wholesale of general consumer products, flaunts a Zacks Rank #1 at present. The company’s expected EPS growth rate for three to five years is 23.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year sales and earnings suggests growth of 6.6% and 81.7% from the year-ago period’s reported figure. URBN has a trailing four-quarter earnings surprise of 19.2%, on average.
American Eagle is a specialty retailer of casual apparel, accessories and footwear. The company currently has a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 9.6%.
The Zacks Consensus Estimate for American Eagle’s current fiscal-year earnings suggests growth of 8.3% from the year-ago reported numbers. AEO has a trailing four-quarter earnings surprise of 9.2%, on average.
Crocs is one of the leading footwear brands with a focus on comfort and style. It currently has a Zacks Rank #2. CROX delivered an earnings surprise of 20.5% in the last reported quarter.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings suggests growth of 12.9% and 11.2%, respectively, from the year-ago reported numbers. CROX has a trailing four-quarter earnings surprise of 19.9%, on average.