Abercrombie & Fitch Earnings: Exceeds Expectations, Shares Explode Higher

S&P 500 (NYSE:SPY) component Abercrombie & Fitch (NYSE:ANF) reported net income above Wall Street’s expectations for the third quarter. Abercrombie & Fitch is an American specialty retailer company that, through its wholly-owned subsidiaries, operates stores and direct sales of casual apparel for men, women, and children.

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Abercrombie & Fitch Earnings Cheat Sheet

Results: Net income for Abercrombie & Fitch rose to $71.5 million (87 cents per share) vs. $50.9 million (57 cents per share) in the same quarter a year earlier. This marks a rise of 40.5% from the year-earlier quarter.

Revenue: Rose 8.7% to $1.17 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Abercrombie & Fitch beat the mean analyst estimate of 59 cents per share. It beat the average revenue estimate of $951.4 million.

Quoting Management: Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said: “These significantly improved financial results reflect progress on several fronts over the past quarter. Our US chain store business posted healthy growth on top of a strong quarter a year ago, and we saw sequential trend improvement in our international business. Our principal focus remains to execute against our key strategic initiatives to leverage our iconic brands and to continue to be judicious in our use of our shareholders` capital to drive long-term shareholder value.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 3.8% to $951.4 million in the second quarter. The figure rose 10.1% in the first quarter from the year earlier and climbed 15.6% in the fourth quarter of the last fiscal year from the year-ago quarter.

Last quarter’s profit increase breaks a streak of three consecutive quarters of year-over-year profit decreases. In the second quarter, net income fell 51.6% from the year earlier, while the figure dropped 88.1% in the first quarter and 78.9% in the fourth quarter of the last fiscal year.

The company has now topped analyst estimates for the last three quarters. It beat the mark by 2 cents in the second quarter and by one cent in the first quarter.

Margins increased in the second quarter after dropping the quarter before. Gross margin grew 2.5 percentage points from the year-earlier quarter to 62.5%. In the first quarter, the figure rose 1.1 percentage points to 62.5% from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from $1.72 a share to $1.69 over the last sixty days. The average estimate for the fiscal year is $2.48 per share, down from $2.55 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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