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Abercrombie (ANF) Outpaces Industry Year to Date: Here's Why
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Abercrombie & Fitch Company (ANF - Free Report) has displayed strong momentum so far this year, thanks to the renewed industry trends as well as continued growth efforts. The company’s store optimization, cost containment and digital expansion strategies have been beneficial to uphold a strong performance compared with the industry and the sector.
The Zacks Rank #1 (Strong Buy) stock has gained 125.1% year to date compared with the industry’s growth of 33.3%. Also, the company’s shares have comfortably outpaced the Zacks Retail-Wholesale sector and the S&P 500’s growth of 0.3% and 16.6%, respectively, in the same period.
Additionally, an uptrend in the Zacks Consensus Estimate echoes the same sentiment. In the past seven days, the consensus marks for fiscal 2021 and fiscal 2022 earnings per share have moved up 16.2% and 6.9%, respectively. For fiscal 2021, its earnings estimates are pegged at $3.30 per share, suggesting a rise of 552.1% from the year-ago period’s reported figure.
Image Source: Zacks Investment Research
Notably, the stock’s Momentum Score of A and long-term earnings growth rate of 18% indicate that it is poised for more growth ahead.
Let’s Find Out More
Retailers witnessed a strong rebound in sales for the first quarter as the lifting of restrictions, vaccination rollouts and government stimulus packages led to increased consumer demand. Consumers are now venturing out to stores for their purchases, while e-commerce continues to retain momentum. This has led to strong traffic trends in stores as well as online portals. Abercrombie has been one of the beneficiaries of the revived business trends.
The company reported better-than-expected first-quarter fiscal 2021 results, with earnings and sales improving year over year. Moreover, the fiscal first quarter marked the company’s return to profits after reporting a loss in the prior quarter. Abercrombie, in first-quarter fiscal 2021, reported strong growth in key metrics on a two-year basis (compared with first-quarter fiscal 2019), reflecting robust growth from the pre-pandemic levels.
Earnings growth demonstrated the company’s robust digital sales momentum, coupled with gross margin expansion and tight expense management. The top line benefited from strong digital momentum and the reopening of stores across all regions, except for Western Europe.
Furthermore, the company is gaining from digital investments as well as store and cost optimization efforts. It has been making significant progress in expanding digital and omnichannel capabilities to better engage with consumers. This helped it deliver digital sales growth of 45% in the fiscal first quarter, contributing about 52% to total sales. The digital business mainly benefited from the addition of customers in the channel, backed by robust digital marketing efforts. Also, high customer retention and spend per customer aided sales growth.
The company remains encouraged with its strong online presence and expects to keep gaining from the platform. For fiscal 2021, it expects 50% of its planned $100-million capital spending to be used for investments in digital and technology. It also plans to continue investing to bolster omnichannel capabilities, including curbside and ship-from-store services. It is also striving to optimize capacity at its distribution centers to meet increasing digital demand.
Abercrombie has been on track with its cost-minimization measures through prudent expense management strategies, including reducing in-store payroll and store occupancy expenses, and lowering marketing costs and COVID-related rent abatements. These have contributed to significant margin growth in the first quarter of fiscal 2021.
Looking ahead, management remains on track to control spending by undertaking measures like occupancy cost reduction through store closures and right-sizing. In fiscal 2021, the company expects to tightly control operating costs, with a focus on using a portion of the occupancy savings for funding fulfillment, marketing and digital investments.
As part of its store optimization strategies, Abercrombie plans to reposition larger format flagship locations to smaller omnichannel-enabled stores. Progressing on these efforts, the company earlier closed eight European flagship locations in fiscal 2020, bringing the total count of flagship stores to seven at the beginning of fiscal 2021. In the first quarter of fiscal 2021, it closed the Abercrombie & Fitch brand’s store in Orchard Road Singapore flagship, bringing the flagship store count to six. Apart from flagship stores, the company closed seven stores in the fiscal first quarter. It also opened four stores in the same quarter. As of May 1, 2021, the company’s total store base was 731, including 533 in the United States and 198, internationally.
L Brands, Inc. (LB - Free Report) has a long-term earnings growth rate of 13%. It currently carries a Zacks Rank #1.
The Children’s Place, Inc. (PLCE - Free Report) has a long-term earnings growth rate of 8%. It presently flaunts a Zacks Rank #1.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Abercrombie (ANF) Outpaces Industry Year to Date: Here's Why
Abercrombie & Fitch Company (ANF - Free Report) has displayed strong momentum so far this year, thanks to the renewed industry trends as well as continued growth efforts. The company’s store optimization, cost containment and digital expansion strategies have been beneficial to uphold a strong performance compared with the industry and the sector.
The Zacks Rank #1 (Strong Buy) stock has gained 125.1% year to date compared with the industry’s growth of 33.3%. Also, the company’s shares have comfortably outpaced the Zacks Retail-Wholesale sector and the S&P 500’s growth of 0.3% and 16.6%, respectively, in the same period.
Additionally, an uptrend in the Zacks Consensus Estimate echoes the same sentiment. In the past seven days, the consensus marks for fiscal 2021 and fiscal 2022 earnings per share have moved up 16.2% and 6.9%, respectively. For fiscal 2021, its earnings estimates are pegged at $3.30 per share, suggesting a rise of 552.1% from the year-ago period’s reported figure.
Notably, the stock’s Momentum Score of A and long-term earnings growth rate of 18% indicate that it is poised for more growth ahead.
Let’s Find Out More
Retailers witnessed a strong rebound in sales for the first quarter as the lifting of restrictions, vaccination rollouts and government stimulus packages led to increased consumer demand. Consumers are now venturing out to stores for their purchases, while e-commerce continues to retain momentum. This has led to strong traffic trends in stores as well as online portals. Abercrombie has been one of the beneficiaries of the revived business trends.
The company reported better-than-expected first-quarter fiscal 2021 results, with earnings and sales improving year over year. Moreover, the fiscal first quarter marked the company’s return to profits after reporting a loss in the prior quarter. Abercrombie, in first-quarter fiscal 2021, reported strong growth in key metrics on a two-year basis (compared with first-quarter fiscal 2019), reflecting robust growth from the pre-pandemic levels.
Earnings growth demonstrated the company’s robust digital sales momentum, coupled with gross margin expansion and tight expense management. The top line benefited from strong digital momentum and the reopening of stores across all regions, except for Western Europe.
Furthermore, the company is gaining from digital investments as well as store and cost optimization efforts. It has been making significant progress in expanding digital and omnichannel capabilities to better engage with consumers. This helped it deliver digital sales growth of 45% in the fiscal first quarter, contributing about 52% to total sales. The digital business mainly benefited from the addition of customers in the channel, backed by robust digital marketing efforts. Also, high customer retention and spend per customer aided sales growth.
The company remains encouraged with its strong online presence and expects to keep gaining from the platform. For fiscal 2021, it expects 50% of its planned $100-million capital spending to be used for investments in digital and technology. It also plans to continue investing to bolster omnichannel capabilities, including curbside and ship-from-store services. It is also striving to optimize capacity at its distribution centers to meet increasing digital demand.
Abercrombie has been on track with its cost-minimization measures through prudent expense management strategies, including reducing in-store payroll and store occupancy expenses, and lowering marketing costs and COVID-related rent abatements. These have contributed to significant margin growth in the first quarter of fiscal 2021.
Looking ahead, management remains on track to control spending by undertaking measures like occupancy cost reduction through store closures and right-sizing. In fiscal 2021, the company expects to tightly control operating costs, with a focus on using a portion of the occupancy savings for funding fulfillment, marketing and digital investments.
As part of its store optimization strategies, Abercrombie plans to reposition larger format flagship locations to smaller omnichannel-enabled stores. Progressing on these efforts, the company earlier closed eight European flagship locations in fiscal 2020, bringing the total count of flagship stores to seven at the beginning of fiscal 2021. In the first quarter of fiscal 2021, it closed the Abercrombie & Fitch brand’s store in Orchard Road Singapore flagship, bringing the flagship store count to six. Apart from flagship stores, the company closed seven stores in the fiscal first quarter. It also opened four stores in the same quarter. As of May 1, 2021, the company’s total store base was 731, including 533 in the United States and 198, internationally.
3 More Stocks Worth a Look
Hibbett Inc. (HIBB - Free Report) has a long-term earnings growth rate of 17.7%. It presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
L Brands, Inc. (LB - Free Report) has a long-term earnings growth rate of 13%. It currently carries a Zacks Rank #1.
The Children’s Place, Inc. (PLCE - Free Report) has a long-term earnings growth rate of 8%. It presently flaunts a Zacks Rank #1.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>