Shares of Abercrombie & Fitch (ANF) posted a record high Tuesday and are up nearly +300% this year through Thursday’s close, the company’s best annual performance since going public in 1996. Abercrombie has outperformed its peers and even managed to beat out Nvidia’s +240% gain this year. The strength of Abercrombie also helped push the S&P Retail Select Industry Index to a 21% gain this year.
Abercrombie’s strong showing this year is a complete reversal from 2022, when its shares fell -34% as an uncertain economic backdrop and cautious consumers dragged down the broader market. However, sales picked up, and the company cleared excess inventory as shoppers returned to work, school, and social lives after the pandemic. Earlier this month, Argus Research raised its price target on Abercrombie to $97 and said they expect the company to continue its momentum of higher sales and margins through the holiday season.
The bullish outlook shows that the company’s Abercrombie & Fitch brand is again fashionable in its targeted audience of young millennial and Gen Z shoppers. CEO Horowitz said, “We are no longer a jeans and T-shirt brand as we have expanded into a lot of categories.” Back in August, Abercrombie reported its highest second-quarter sales since 2011, and in November, it reported the eleventh consecutive quarter of revenue growth in Q3. It also hiked its full-year 2024 net sales outlook to an increase of 12% to 14% from an earlier projection of 10%. CEO Horowitz said, “Entering the important holiday season, our fiscal 2023 year-to-date results give us the confidence we can continue to deliver for our customers and drive profitable growth.”
Despite Abercrombie’s bullish outlook, most analysts are neutral on the stock. According to data compiled by Bloomberg, only about a third of analysts covering the company have given the stock a buy-equivalent rating. Analysts' average price target for Abercrombie is $78, implying a -13% decrease from where shares currently trade. Shares have fallen back more than -4% from Tuesday’s record high after Bloomberg News reported that Abercrombie said it plans to shift to air freight from shipping products through the Red Sea to avoid disruptions, which could raise shipping costs and reduce its profits.
Some analysts are optimistic that Abercrombie can maintain its sales momentum and continue to deliver strong profits. According to Bloomberg data, analysts have boosted Abercrombie’s Q4 adjusted earnings-per-share expectations by more than 30% in the past month. Citigroup believes the company can deliver another earnings beat this quarter, saying, “Abercrombie’s momentum can continue, though it will be tougher to deliver upside against already high expectations.”
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
