Is Abercrombie & Fitch’s Q3 Report Really That Bad?
Despite a strong showing on the top and bottom lines, Abercrombie & Fitch failed to live up to investor expectations.
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When Abercrombie & Fitch Co. (NYSE: ANF | ANF Price Prediction) 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.
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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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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
