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Abercrombie & Fitch (ANF) in Troubled Waters: Time to Sell
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Abercrombie & Fitch Co. (ANF - Free Report) appears to be in troubled waters as the company’s shares have declined nearly 26% in the past six months. Moreover, the stock has underperformed the Zacks categorized Retail-Apparel/Shoe industry, which has witnessed an impressive growth of more than 20% in the same time frame. This Zacks Rank #5 (Strong Sell) stock has VGM Score of “C”, which further gives an indication that all is not well with the stock. Let’s find out what is troubling the specialty retailer.
Abercrombie & Fitch’s both top and bottom-line have missed the Zacks Consensus Estimate in the last three concluded quarters. On Nov 18, 2016, the company reported dismal third-quarter fiscal 2016 results. Quarterly adjusted earnings per share of 2 cents significantly lagged the Zacks Consensus Estimate of 19 cents and declined 95.8% from the prior-year quarter earnings of 48 cents.
A soft sales performance due to traffic headwinds at its namesake U.S. flagship and tourist location stores was primarily responsible for the quarter’s weakness. This was, however, mitigated by the sequential growth in Hollister brand along with solid direct-to-customer and omni-channel performance.
Following the dismal fiscal third quarter, the company expects comps to remain challenging in fourth-quarter fiscal 2016 compared to last year, while the same is anticipated to improve modestly on a sequential basis. Further, it expects foreign currency headwinds to hurt sales and operating income in the fiscal fourth quarter.
For fiscal fourth-quarter, the company expects adjusted gross margin to decline marginally from last year’s rate of 60.7%, owing to a decline in average unit retail, offset by lower average unit cost.
Following bleak quarterly performance and a dull outlook, the Zacks Consensus Estimate has naturally witnessed a downtrend. Analysts polled by Zacks are now skeptical about the stock’s future performance. In the past 30 days, the Zacks Consensus Estimate for the fourth quarter has declined 26.6% to 80 cents, while for fiscal 2016 it has moved down to a loss of 1 cent from a profit of 45 cents. Moreover, the company’s Zacks Consensus Estimate has declined by 44 cents to 28 cents for fiscal 2017.
Stocks to Consider
Better-ranked stocks include Burlington Stores, Inc. (BURL - Free Report) , Zumiez, Inc. (ZUMZ - Free Report) and The Tile Shop Holdings, Inc. . While Burlington Stores and Zumiez sport a Zacks Rank #1 (Strong Buy), The Tile Shop Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Zumiez delivered an average positive earnings surprise of 30.9% in the trailing four quarters and has a long-term earnings growth rate of 15%.
The Tile Shop Holdings delivered an average positive earnings surprise of 15.1% in the trailing four quarters and has a long-term earnings growth rate of 25%.
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Abercrombie & Fitch (ANF) in Troubled Waters: Time to Sell
Abercrombie & Fitch Co. (ANF - Free Report) appears to be in troubled waters as the company’s shares have declined nearly 26% in the past six months. Moreover, the stock has underperformed the Zacks categorized Retail-Apparel/Shoe industry, which has witnessed an impressive growth of more than 20% in the same time frame. This Zacks Rank #5 (Strong Sell) stock has VGM Score of “C”, which further gives an indication that all is not well with the stock. Let’s find out what is troubling the specialty retailer.
Abercrombie & Fitch’s both top and bottom-line have missed the Zacks Consensus Estimate in the last three concluded quarters. On Nov 18, 2016, the company reported dismal third-quarter fiscal 2016 results. Quarterly adjusted earnings per share of 2 cents significantly lagged the Zacks Consensus Estimate of 19 cents and declined 95.8% from the prior-year quarter earnings of 48 cents.
A soft sales performance due to traffic headwinds at its namesake U.S. flagship and tourist location stores was primarily responsible for the quarter’s weakness. This was, however, mitigated by the sequential growth in Hollister brand along with solid direct-to-customer and omni-channel performance.
Following the dismal fiscal third quarter, the company expects comps to remain challenging in fourth-quarter fiscal 2016 compared to last year, while the same is anticipated to improve modestly on a sequential basis. Further, it expects foreign currency headwinds to hurt sales and operating income in the fiscal fourth quarter.
For fiscal fourth-quarter, the company expects adjusted gross margin to decline marginally from last year’s rate of 60.7%, owing to a decline in average unit retail, offset by lower average unit cost.
Following bleak quarterly performance and a dull outlook, the Zacks Consensus Estimate has naturally witnessed a downtrend. Analysts polled by Zacks are now skeptical about the stock’s future performance. In the past 30 days, the Zacks Consensus Estimate for the fourth quarter has declined 26.6% to 80 cents, while for fiscal 2016 it has moved down to a loss of 1 cent from a profit of 45 cents. Moreover, the company’s Zacks Consensus Estimate has declined by 44 cents to 28 cents for fiscal 2017.
Stocks to Consider
Better-ranked stocks include Burlington Stores, Inc. (BURL - Free Report) , Zumiez, Inc. (ZUMZ - Free Report) and The Tile Shop Holdings, Inc. . While Burlington Stores and Zumiez sport a Zacks Rank #1 (Strong Buy), The Tile Shop Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Zumiez delivered an average positive earnings surprise of 30.9% in the trailing four quarters and has a long-term earnings growth rate of 15%.
The Tile Shop Holdings delivered an average positive earnings surprise of 15.1% in the trailing four quarters and has a long-term earnings growth rate of 25%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>