What Happened?
Shares of young adult apparel retailer Abercrombie & Fitch (NYSE:ANF) fell 15.9% in the morning session after the company reported weak fourth quarter earnings: its EPS in the quarter missed and sales and EPS guidance for the next quarter were below expectations. The company expects 4-6% revenue growth in the first quarter and 3-5% for the full year, with 2025 operating margins projected to remain flat or decline slightly relative to the previous year.
A bright spot in the report was Abercrombie & Fitch narrowly surpassing analysts' revenue expectations, fueled by continued strength in Hollister, which posted 16% sales growth. However, the cautious guidance reflects concerns over consumer demand and potential margin pressures ahead.
Looking forward, the company announced a $1.3 billion share repurchase program, signaling the focus on returning value to shareholders. Nonetheless, the results were underwhelming.
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What The Market Is Telling Us
Abercrombie and Fitch’s shares are very volatile and have had 29 moves greater than 5% over the last year. But moves this big are rare even for Abercrombie and Fitch and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 27% on the news that the company reported a "beat and raise" quarter. First quarter results blew past analysts' revenue and EPS expectations, driven by its insanely high 21% year-on-year same-store sales growth (vs analysts' estimates of 12%). The sales performance was broad-based with Abercrombie brands up 31% while Hollister brands delivered growth of 12%. On the back of the strong print, the company raised its full-year revenue guidance from 5% growth at the midpoint to 10%, a massive jump. Zooming out, we think this was a fantastic quarter that shareholders will appreciate.
Abercrombie and Fitch is down 44.7% since the beginning of the year, and at $84.68 per share, it is trading 56% below its 52-week high of $192.34 from June 2024. Investors who bought $1,000 worth of Abercrombie and Fitch’s shares 5 years ago would now be looking at an investment worth $7,256.
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