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Abercrombie (ANF) Stock Soars 83.3% in 6 Months: Here's How

Abercrombie & Fitch Co. ANF is well-poised to tap the positive trends in the fashion arena, thanks to its digital endeavors and other robust strategies. The company has been gaining from brand strength and solid demand for its products that resonate well with customers.

Undoubtedly, management is focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda and efficiently controlling expenses.

Buoyed by such strengths, shares of this apparel and accessories dealer have surged 83.3% compared with the industry’s 24.2% growth in the past six months. Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share is currently pegged at $4.52 billion and $7.48, respectively. These estimates show corresponding growth of 5.6% and 19.1% year over year.

What’s More?

Strategic investments across stores, digital and technology via the Always Forward Plan bode well. The company has been working toward rationalizing the store base by reducing its dependence on underperforming tourist-driven locations. As part of its store optimization plans, Abercrombie plans to reposition larger format flagship locations to smaller omnichannel-enabled stores.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research


We note that Abercrombie has been witnessing favorable margin trends, mainly driven by lower freight costs and improved average unit retail (AUR). Abercrombie’s gross margin expanded 720 basis points (bps) to 62.9% in fourth-quarter fiscal 2023. The increase can be attributed to increased AUR coupled with lower freight and raw material expenses. The gross margin expansion included a 290 bps gain from reduced freight costs and a 430-bps benefit from AUR growth. For the first quarter of fiscal 2024, the operating margin is expected in the band of 8-10%, higher than the adjusted operating margin of 4.6% delivered in first-quarter fiscal 2023.

The company has been witnessing momentum in its Hollister label. Brand-wise, net sales improved 9% year over year at Hollister and advanced 35% at Abercrombie in the fourth quarter of fiscal 2023. The Abercrombie brand contributed 52% to the total company sales while Hollister represented 48% of sales.

Abercrombie is on track with its 2025 Always Forward plan, which focuses on brand growth, leveraging its omnichannel capabilities, and expanding digital penetration and financial discipline. As part of this plan, the company had earlier provided a financial outlook for fiscal 2025 and a long-term view. For the long term, management expects annual revenues to be $5 billion and the annual operating margin rate to be 10% or more.

Given all the positives, Abercrombie stock seems to deserve a place in your investment portfolio. A VGM Score of B further adds strength to this current Zacks Rank #1 (Strong Buy) company.

Other Key Picks

We have highlighted three other top-ranked stocks, namely Gap GPS, American Eagle AEO and Deckers DECK.

Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 180.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gap’s current financial-year sales suggests growth of 0.3%, from the year-ago reported figure.

American Eagle, a leading apparel retailer, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 22.7% in the trailing four quarters.

The Zacks Consensus Estimate for American Eagle’s current financial-year sales suggests growth of 3.3% from the year-ago reported figure.

Deckers, a footwear and accessories dealer, currently carries a Zacks Rank #2 (Buy). DECK delivered an earnings surprise of 32.1% in the trailing four quarters.

The Zacks Consensus Estimate for Deckers’ current financial-year sales suggests growth of 15.9% from the year-ago reported figure.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report

Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report

The Gap, Inc. (GPS) : Free Stock Analysis Report

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