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Abercrombie & Fitch Boosts Forecast as Q3 Profit Surges 40%, Despite Lower Comps (ANF)

Teen clothing retailer Abercrombie & Fitch Co. (ANF) on Wednesday posted much better-than-expected third quarter earnings and lifted its full-year outlook.

All of the sales growth came from overseas, however, and ANF’s same-store sales actually fell from last year.

The New Albany, OH-based company reported third quarter net income of $71.5 million, or 87 cents per share, compared with $50.9 million , or 57 cents per share, in the year-ago period.

Revenue rose 8.7% from last year to $1.17 billion.

On average, Wall Street analysts expected a much smaller profit of 59 cents per share, on lower revenue of $1.11 billion.

On a sour note, ANF said its same-store sales across all its brands fell 3% in the period. Same-store sales, also known as comparable sales, are an important metric used to gauge a retailer’s performance, since they only take into account sales from stores open at least one year. The company didn’t provide any detail regarding how same-store sales declined yet its profit and revenue rose so significantly.

Looking ahead, ANF raised its full-year earnings outlook to a range of $2.85 to $3.00 per share, up from a prior estimate of $2.50 to $2.75.

Abercrombie shares rose $9.42, or +30%, in premarket trading Wednesday.

The Bottom Line
Shares of Abercrombie & Fitch (ANF) have a 2.25% dividend yield, based on last night’s closing stock price of $31.18. The stock has technical support in the $27-$29 price area. If the shares can firm up, we see overhead resistance around the $35-$39 price levels.

Abercrombie & Fitch Co. (ANF) is not recommended at this time, holding a DARS™ Rating of 3.0 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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