Shares of Abercrombie & Fitch Co. ANF hit a 52-week low of $16.39 yesterday and eventually closed at $16.76. Notably, this Zacks Rank #4 (Sell) stock has witnessed a nearly 47% decline over the past six months.
What Led to the Slump?
Abercrombie posted wider-than-expected loss for the second consecutive quarter when it reported second-quarter fiscal 2016 results. It recorded adjusted loss per share of 25 cents, which was wider than the Zacks Consensus Estimate of a loss of 23 cents and the prior-year quarter loss of 12 cents. Results for the quarter included an impact of nearly 8 cents per share from adverse currency exchange rates.
Net sales were down nearly 4% year over year at $783.2 million and short of the Zacks Consensus Estimate of $789 million owing to soft traffic trends in its U.S. flagship and tourist stores. Further, comparable store sales (comps) slipped 4%.
Going forward, management warned of challenging comps performance in the second half of fiscal 2016, anticipating the aforementioned traffic trends to continue along with adverse impact from currency rates.
Over the past 30 days, the Zacks Consensus Estimate of 49 cents and 79 cents for fiscal 2016 and fiscal 2017 has decreased 34 cents and 27 cents, respectively.
Also, the stock has been underperforming for quite a while due to intense competition, risks associated with overseas market and macroeconomic challenges, which have been plaguing the apparel retail industry.
Nonetheless, the company remains encouraged by the performance of its Hollister brand. Also, management remains optimistic about Abercrombie’s prospects, given its efficient cost management and constant focus on reviving its brands and enhancing performance.
Stocks that Warrant a Look
Some better-ranked stocks in the same industry include American Eagle Outfitters, Inc. AEO, The Children's Place, Inc. PLCE and Urban Outfitters Inc. URBN, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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