Abercrombie & Fitch Co. (NYSE: ANF); a bit shaky after a disastrous 3rd quarter


Abercrombie & Fitch Co. (NYSE: ANF) had a rough third quarter. The retailer made 0.25 dollars in adjusted earnings per share on revenue of 911 million. Last year, in the same period, the company reported loss of 0.20 in its earnings per share on $1.03 billion revenue. So, it’s quite clear that company’s revenue has dwindled down since the last year. The market consensus for Abercrombie & Fitch Co. (NYSE: ANF) was earnings per share of 0.41 on 916.03 million revenue so as we can the company has underperformed on all fronts.

In U.S, same store sales dropped by 10 percent while direct sales went up by 5 percent. The combine decline was 7 percent. Internationally, Abercrombie & Fitch Co. (NYSE: ANF) suffered much more, losing 22 percent in same store sales while the direct sales went up by 15 percent and the combine decline of the company amounted to 15 percent. Gross margin of the company dropped from 63 percent to 62.2 percent.

Abercrombie & Fitch Co. (NYSE: ANF) has lowered its earnings per share guidance for the next year to 1.50 dollars from 2.35 dollars. The company is being realistic about how much it can post in next year’s quarters. The company hasn’t provided any guidance for the 4th quarter but analysts aren’t expecting anything substantial. The market consensus for the 4th quarter is 1.33 dollar earnings per share on 1.18 billion. The market estimate for the second quarter was 0.72 EPS. For the whole year, the consensus was 1.74 earnings per share on 3.81 billion revenue. Nothing turned out the way the company wanted it to be or what the market was expecting it to be.

The company’s CEO commented on the slow 3rd quarter stating that the results weren’t as expected and that expecting anything substantial from the fourth quarter would be foolish but for the long run the company is taking the right steps and there is hope that things will turn around for the company. Comparable store sales have been improving lately and that is a good sign if the company wants to get steady for the long run. The losses have left a mark on the company and radical changes shall be made in assortment, branding structure and the approach of engaging a customer will change too.

Abercrombie & Fitch Co. (NYSE: ANF) is relying currently relying on hope but it has to get realistic if it wants to change the trend of losses. It has to move on from the past and focus on what lies ahead. The best thing to do now would be to focus on rebuilding revenue and profit. That will be the first thing that will interest investors because investors sniff a growing company from a mile. Then the second thing the company should do is to give out healthy dividends to the shareholders because that keeps the current shareholders happy and gets a good word of mouth going. Abercrombie & Fitch Co. (NYSE: ANF) has much to prove and now is the time when all eyes will be fixed on the company.