Abercrombie & Fitch Earnings: Here’s Why Investors are Selling Shares Now

Abercrombie & Fitch Co. (NYSE:ANF) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 18.76%.

Abercrombie & Fitch Co. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 20% to $0.16 in the quarter versus EPS of $0.20 in the year-earlier quarter.

Revenue: Decreased 0.6% to $945.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Abercrombie & Fitch Co. reported adjusted EPS income of $0.16 per share. By that measure, the company missed the mean analyst estimate of $0.28. It missed the average revenue estimate of $996.17 million.

Quoting Management: Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
“The second quarter was more difficult than expected due to weaker traffic and continued softness in the female business, consistent with what others have reported. In that context we are planning sales, inventory and expenses conservatively for the remainder of the year.
Despite the challenging environment, we are very pleased by strong growth in our direct-to-consumer business and continued strong growth in China. We have also made excellent progress on our profit improvement initiative during the quarter, and we now expect savings from this initiative to exceed $100 million annually. In addition, we are nearing completion of our long-term strategic review, and we are confident that this will provide us with a clear roadmap for sustainable growth in sales, profitability and return on invested capital.”

Key Stats (on next page)…

Revenue increased 12.75% from $838.77 million in the previous quarter. EPS increased to $0.16 in the quarter versus EPS of $-0.09 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.16 to a profit $1.06. For the current year, the average estimate has moved down from a profit of $3.49 to a profit of $3.22 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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