On Wednesday, Abercrombie & Fitch (NYSE:ANF) received a reiterated Neutral rating with a steady price target of $150.00 from a Citi analysis.
The company reported an exceptional first quarter, with Abercrombie & Fitch brand's comparable sales (comp) rising by 29% compared to the fourth quarter's 28% increase, and Hollister's comp growing by 13%, a significant jump from the previous quarter's 6%.
The management at Abercrombie & Fitch has increased its fiscal year 2024 guidance more than anticipated, with the implied earnings per share (EPS) for the year now expected to shift from approximately $7.15 to around $9.50. This forecast surpasses the consensus estimate of $8.14.
The second-quarter guidance suggests an EPS of roughly $2.00, topping the consensus of $1.55. This projection is based on mid-teen sales growth, which includes a roughly 300 basis points benefit due to a calendar shift.
Even after adjusting for this shift, the company's guidance for low double-digit (LDD) second-quarter sales growth exceeds the consensus expectation of 9%.
Abercrombie & Fitch's performance indicates a continued momentum, with no signs of a slowdown. The acceleration of Hollister's comparable sales by 700 basis points compared to the fourth quarter indicates that their customer base is responding positively to the brand's offerings. This response suggests that the strength in sales could persist.
Despite the strong performance and raised guidance, the stock's price target remains unchanged due to high market expectations before the earnings release. However, the stock is anticipated to trade slightly higher today following the positive report.
InvestingPro Insights
As Abercrombie & Fitch (NYSE:ANF) showcases robust performance and raised guidance, an analysis of real-time data from InvestingPro provides additional insights. With an adjusted market capitalization of $7.79 billion and a price-to-earnings (P/E) ratio of 23.25, the company stands on a solid financial footing. The gross profit margin for the last twelve months as of Q4 2024 is particularly impressive at 62.92%, underscoring the company's efficiency in managing its cost of goods sold. Additionally, Abercrombie & Fitch's stock has delivered a stellar one-year price total return of 408.81%, highlighting the significant investor confidence and market performance.
Two InvestingPro Tips that may be of interest to investors include the fact that six analysts have revised their earnings upwards for the upcoming period, suggesting a positive outlook on the company's financial prospects. Moreover, the company's strong gross profit margins are a testament to its operational effectiveness. It's worth noting that while the Relative Strength Index (RSI) indicates the stock is in overbought territory, this should be balanced against the company's overall financial health and market performance. For those seeking a deeper dive into Abercrombie & Fitch's financials, there are 18 additional InvestingPro Tips available at https://www.investing.com/pro/ANF. To access these tips and more, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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