Abercrombie & Fitch Co. (ANF) is scheduled
to report its second-quarter 2011 financial results before the
opening bell on August 17, 2011. The current Zacks Consensus
Estimates for the quarter is earnings of 25 cents a share. This
represents growth of 4.2% from the prior-year earnings per
share
First-Quarter 2011, Summary
Abercrombie registered earnings of 27 cents a share in the first
quarter of fiscal 2011, thereby surpassing the Zacks Consensus
Estimate of 11 cents a share and beating substantially the
prior-year net loss of 13 cents per share.
Abercrombie reported double-digit net sales growth of 22% in the
reported quarter, climbing $836.7 million from $687.8 million in
the prior-year period. Total revenue comprehensively beats the
Zacks Consensus Estimate of $783.0 million.
Preliminary Second Quarter Sales
Abercrombie recently reported preliminary solid sales results
for the second quarter of fiscal 2011. The company recorded a
comparable store sales growth of 9% in the quarter. The result was
aided by strong performances at its existing stores, including the
new store in Paris.
In the quarter under review, total company direct-to-consumer
net merchandise sales spiked 28% to $102.1 million and total
company international net sales, including direct-to-consumer net
sales, jumped 74% to $231.9 million. U.S. sales, including
direct-to-consumer sales, climbed 12% to $684.9 million.
Keeping up with the increasing sales graph, total sales for the
quarter shot up 23.0% to $916.8 million from $745.8 million in the
same quarter last year.
Agreement of Estimate
For the second quarter of fiscal 2011, out of 28 analysts
covering the stock, three have revised their estimates upward,
while 2 moved in the opposite direction in the last 30 days. For
fiscal 2011, out of 30 analysts, 3 analysts have positively revised
their estimate while none moved downwards in the last 30 days.
In the last 7 days, out of 28 analysts 1 moved in the downward
direction while 1 moved upward for the second quarter of fiscal
2011. For fiscal 2011, no movement in estimates has been noticed in
either direction.
Magnitude of Estimate Revisions
With no effect from earnings revisions by analysts in the last
30 and 7 days, the Zacks Consensus Estimates for the second
quarter of fiscal 2011 and fiscal 2011 has remained stagnant at 25
cents a share and $3.18 per share.
Surprise History
With respect to earnings surprises, Abercrombie showed a
favorable trend in the last four quarters. The company has recorded
positive surprises in the trailing four quarters with a low of 4.6%
and a high of 145.5%. On an average, the earnings surprise was a
positive 54.9%. Based on the current flow, we expect the company to
come up with healthy results in the upcoming quarter.
Our View
Currently, Abercrombie maintains a Zacks #2 Rank, which
translates into a short-term Buy rating. Moreover, our long-term
recommendation on the stock remains Neutral.
Headquartered in Albany, Ohio, Abercrombie operates as a
specialty retailer of premium, high quality casual apparels for
men, women, and kids through a network of 1,069 stores across the
U.S., Canada and Europe. The company has a strong portfolio of
well-established brands, each of which is focused on the unique
characteristics and rapidly changing preferences of its target
customers.
Moreover, Abercrombie is focused on increasing its presence in
international markets in order to drive top-line growth. During
fiscal 2011, the company plans to open new stores in Paris, Madrid,
Dusseldorf, Brussels, Dublin and Singapore under its Abercrombie
& Fitch flagship stores. Apart from this, the company has
planned to open 40 international mall-based Hollister stores.
Consequently, this provides a strong upside potential to the
company.
Furthermore, in an effort to improve cash flow and enhance
management’s focus toward core brands, the company has terminated
its entire chain of underperforming RUEHL branded stores and
associated direct-to-consumer operations. This is expected to
increase its long-term profitability. Currently, the company has a
solid balance sheet with cash and cash equivalents of $741.8
million and long-term debt of only $69.9 million at the end of the
first quarter of fiscal 2011. This offers Abercrombie financial
flexibility to drive future growth.
However, Abercrombie does not own or operate any manufacturing
facility and therefore purchases all its merchandise requirements
from independent third parties. The company's operations may be
adversely affected if these manufacturers are not able to ship
orders in a timely manner or meet the company’s quality
standards.
Above all, Abercrombie operates in a highly fragmented market
and competes with national as well as regional players.
Furthermore, apart from competing with larger retailers such as
Gap Inc. (GPS), Abercrombie is facing increasing
competition from value-priced specialty retailers such as
Aeropostale Inc. (ARO) and Buckle
Inc. (BKE).
ABERCROMBIE (ANF): Free Stock Analysis Report
AEROPOSTALE INC (ARO): Free Stock Analysis Report
BUCKLE INC (BKE): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
Zacks Investment Research
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From Jul 2023 to Jul 2024