Abercrombie's Soft Comparables - Analyst Blog

Abercrombie & Fitch Co. (ANF), a specialty retailer of casual apparel, reported somewhat soft sales results for the four-week period ended October 2010. After sharp increases of 12.0% in September 2010 and 6.0% in August 2010, the company reported comparable-store sales growth of just 2.0% for October 2010.

Abercrombie's brand names, Abercrombie & Fitch and Hollister, delivered same-store sales growth of a respective 3.0% and 2.0%, while its children's brand, Abercrombie Kids, witnessed 4.0% shrinkage.

Keeping up with the increase in sales streak, total sales for October increased 13.0% to $226.8 million from $200.2 million in the same month last year, following a 25.0% year-over-year growth in September 2010.

Year to date, comparable-store sales climbed 5.0% with total sales growth of $16.0% to $2.32 billion compared with $1.99 billion in the year-ago period.

Abercrombie operated a total of 1,106 stores. The company operated 340 Abercrombie & Fitch stores, 201 Abercrombie Kids stores, 510 Hollister Co. stores and 17 Gilly Hicks stores in the United States. The company also operated 7 Abercrombie & Fitch stores, 4 Abercrombie Kids stores and 27 Hollister Co. stores internationally.

During fiscal 2010, Abercrombie expects to open flagship stores in Copenhagen, Denmark and Fukuoka, Japan and a Hollister Epic store on Fifth Avenue in New York. In addition, the company also expects to open approximately 25 international mall-based Hollister stores and 1 Abercrombie & Fitch store in Canada.

The Zacks Consensus Estimate on Abercrombie's earnings for the fiscal year ending January 2011 is currently pegged at $1.79 per share, which increased by 6 cents over the past 30 days. For the current quarter, the Zacks Consensus Estimate has moved up by 2 cents over the past month as 12 of 26 covering analysts increased their projections, while 1 moved in the opposite direction.

Abercrombie's shares maintain a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation on the stock remains Neutral.