Abercrombie Poised For Worst Holiday Teen Retail Performance

Monday was a rough day for Abercrombie & Fitch Co. ANF shareholders as the stock lost nearly 7 percent and was within striking distance of its 52-week lows of $14.00.

Investors hoping for some support from Wall Street analysts were likely disappointed again as Eric Beder of Wunderlich suggested Abercrombie could produce the worst holiday 2016 operating performance within the entire teen retailer space.

The research note comes just days after analysts Argus downgraded Abercrombie to Sell from Hold.

Beder noted that the entire teen retailing space exhibited negative pricing trends throughout the important holiday retail season so far. Weak traffic trends and heavy promotional selling activities hurt many retailers in their respective third-quarter reports, and these trends likely continued through the Thanksgiving/Black Friday holiday selling weekend and into the early December period.

Abercrombie's Woes

The analyst stated that Abercrombie benefited from significantly high year-over-year average unit revenue growth rates in the late 2015 due to a lift from the historical pricing lows in 2014. However, the positive trends fully abated in 2016 and the company is on pace for significant year-over-year declines during the 2016 holiday season.

"Abercrombie appears to be set up to produce the worst Holiday 2016 operating performance, with degrading pricing set to magnify what continues to be definitively negative store traffic," Beder wrote. "Consumers clearly place nil intrinsic value in wearing, and associating with, the Abercrombie brand."

Finally, the analyst suggested that Abercrombie's shift in the brand's core message, especially targeting the mid-20 year old shopping crowd, is a move that is unlikely to improve consumer interest.

Shares of Abercrombie remain Hold rated with an unchanged $12 price target.