Is Abercrombie & Fitch's Q3 Report Really That Bad?

When Abercrombie & Fitch Co. (NYSE: ANF) reported its most recent quarterly results before the markets opened on Tuesday, the lifestyle retailer posted $0.76 in earnings per share (EPS) and $820 million in revenue. Consensus estimates had called for breakeven earnings and revenue of $739.36 million, while the fiscal third quarter of last year reportedly had earnings of $0.23 per share and $863.47 million in revenue.

During the most recent quarter, net sales decreased 5% year over year. At the same time, digital revenue increased by 43% to $382 million, reflecting robust growth in every month of the quarter.

In terms of its segments, Abercrombie & Fitch reported that Hollister net sales decreased 7% year over year to $476.67 million and Abercrombie net sales decreased 2% to $342.99 million.

The company noted that the company ended the quarter with roughly $1.2 billion of liquidity. Cash and cash equivalents totaled $813 million at the end of the quarter, up from $671 million at the end of the previous fiscal year.

Management said that it is encouraged by quarter-to-date results, including ongoing strong digital demand, with customers responding favorably to new product and messaging. However, this is tempered by uncertainty regarding the potential for increased COVID-related store restrictions and the expectation for elevated shipping, handling and freight costs.

The company did not provide any guidance, citing uncertainty regarding COVID-19. Consensus estimates call for $1.16 in EPS and $1.1 billion in revenue for the fiscal fourth quarter.

Abercrombie & Fitch stock traded down about 2% on Tuesday, at $22.25 in a 52-week range of $7.42 to $23.81. The consensus price target is $16.64.

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