Goldman Sachs Reports Upside Potential In Domestic On Abercrombe & Fitch

According to Goldman Sachs, Abercrombie & Fitch ANF targets are driven largely by intl & direct. Goldman Sachs reported that management laid out a 2012 EPS goal of $4.75 vs. consensus $3.97 ($2.04 LY). “As we detail inside, the vast majority of growth is driven by accelerating international openings. By 2012, mgmt plans to almost quadruple the overseas base with 80 more European Hollisters and 15 A&F flagships, which we estimate can drive ~15% avg annual revenue growth and ~40% avg annual EBIT growth (vs. total company avg annual EPS growth of ~52%). While mgmt tweaked up US sales recovery targets, that is offset by a lower gross margin target due to cost pressure. Mgmt also laid out a 2015 sales goal of $7.5 bn+, implying >40% growth on top of our 2012 sales estimate (3/4th coming from international & direct). On lower gross margins and higher pre-opening spend, we lower our 2011 EPS to $2.92 from $3.25, but we maintain our 2012 estimate of $5.14 and raise our 2013 EPS to $7.10 from $6.40 on higher international revenues. Our 6-month price target of $72 (based on 7X EV/EBITDA and LBO valuation) is unchanged.” Abercrombie & Fitch closed yesterday at $65.57.