Stephanie Keith via Bloomberg
The Key Take-Aways
- Apparel retailer Abercrombie & Fitch lifted its end-of-year outlook today, but its shares were down nearly 20% in recent trading.
- The company's latest fourth quarter sales growth guidance isn't far off Wall Street's expectations for the company, suggesting that investors were hoping for an even more optimistic number.
- Some analysts were optimistic and suggested that the recent pullback represented a great opportunity for investors.
Apparel retailer Abercrombie & Fitch lifted its end-of-year outlook today. The company’s stock is falling.
Some of that might be attributable to an iffy day for stocks, with the S&P 500 recently down about 3%. But the scale of Abercrombie’s (ANF) move—the shares were recently down about 19% to roughly $130, undoing some recent upward momentum that started around mid-December—suggests more serious investor disappointment.
Abercrombie informed investors of an increase of up to 8% in fourth-quarter sales, compared to the earlier forecast of between 5% to 7 %. The company also increased its quarterly guidance for operating margins.
Investors may have expected an even bigger surprise, or perhaps a more long-term outlook. According to Visible Alpha, analysts expected a quarterly revenue increase of approximately 7%. This preannouncement was made ahead of management’s planned Monday morning appearance at an investor meeting.
Wall Street analysts thought that the future was good. Analysts are broadly bullish on the shares, which have climbed over the past 12 months, and Jeffries—which has a “buy” rating and a $220 price target on the stock, the latter which is substantially higher than Visible Alpha’s consensus—called today’s drop an “opportunity.”
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