Will Abercrombie & Fitch Co. (NYSE:ANF) Follow Macy’s, JC Penny, and Sears?

Abercrombie & Fitch Co. (NYSE:ANF)

Abercrombie & Fitch Co. (NYSE:ANF) shares are up over 13% on news of unexpected positive performance from the company’s value-line Hollister brand. Also contributing is news that the youth-oriented retail clothing chain will attempt to improve productivity by shuttering 60 stores. News that its online sales increased 28% also contributed to a belief that better financial performance is on the horizon.

Overall, for the year, Abercrombie & Fitch Co. (NYSE:ANF) posted net sales of $3.326 billion versus last year’s figure of $3.518 billion. Gross profit also dropped from $1.361 billion last year to $2.028 billion. Net income per share also dropped from last year $0.52/share versus $0.06/share. While the Abercrombie brand posted a -13% in comparable sales, the Hollister brand achieved a positive 1% increase in comparable sales. For the quarter, ANF reported earnings of $0.71/share on $1.04 billion in revenues which was lower than analyst estimates of $0.75/share on $1.05 billion.

Some analysts see some silver linings in today’s financial earnings release. International sales declined by only 4%, compared to the third quarter drop of 10%. Additionally, half of the company’s 700+ domestic leases are up for renewal by the end of FY 2018. This will give management additional flexibility to pursue productivity increases while not absorbing extraordinary expenses that might be involved with buying out existing leases.

Fran Horowitz, Chief Executive Officer, said:

Results for the quarter reflect a still challenging and competitive retail environment, however we continue to make progress on our strategic priorities. Hollister, our largest brand, achieved positive comp sales and the Abercrombie brand renewal continues, although it is a work in progress. International markets improved measurably from last quarter, for both Abercrombie and Hollister brands, and the direct-to-consumer business continued to deliver positive comparable sales in both the U.S. and international markets. However, the competitive environment resulted in more promotional activity and a lower gross margin rate than planned.

Retail experts have noted that the financial health and action plan for Abercrombie & Fitch Co. (NYSE:ANF) is not unlike what is being observed at Macy’s (NYSE:M), JC Penny’s (NYSE:JCP), or Sears (NASDAQ:SHLD).

3/2/2017
Ticker Symbol ANF
Last Price a/o 11:34 AM EST  $                    13.15
Average Volume                3,320,000
Market Cap (mlns)  $                  794.63
Sales (mlns) $3,400.00
Shares Outstanding (mlns) 67.98
Share Float (mlns) 67.16
Shortable Yes
Optionable Yes
Inside Ownership 0.20%
Short Float 29.05%
Short Interest Ratio 5.88
Quarterly Return -18.48%
YTD Return -0.93%
Year Return -57.77%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy. 

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

Author: James Marion

James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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