Is The Mall Making A Comeback? Abercrombie, Best Buy And American Eagle Beat Expectations

Staples of American retail Abercrombie & Fitch Co. ANF, Best Buy BBY and American Eagle Outfitters Inc. AEO surprised the street on Tuesday with better-than-expected results for the third quarter.

Shares from Abercrombie & Fitch Co. jumped 19.7% after posting earnings per share of $0.01, beating a pessimistic consensus that anticipated a $0.14 loss per share.

Net sales reached $880 million, down 3% as compared to last year, but also higher than expectations of $831 million.

Gross margin and expense deleverage also came in better than expected.

The company’s results still present a decline from last year, where earnings per share were $0.86. The drop can be explained by higher freight and raw material costs. Expenses increased 0.5%

Analysts at Telsey Advisory Group maintained an Outperform rating for Abercrombie with a price target of $25, against a current price of $21.54.

The company is down 38.4% since January, dropping 54% in one year.

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Meanwhile, Best Buy was up by almost 11% on Tuesday after also beating analyst expectations as well as its own forecast for sales losses.

High inflation was expected to take a significant toll on the sales of the consumer electronics retailer.

Still, Best Buy’s earnings per share came in at $1.38 when adjusted, against an expected $1.03. Revenue also topped expectations by reaching $10.58 billion, against the $10.31 billion expected.

Truist Securities analyst Scot Ciccarelli said that the results suggest that “the worst of the sales declines may be behind the company.”

Best Buy shared new optimism for its sales forecast, which is now reflecting a drop of 10% for 2022, against a previous guidance of 11%.

Bloomberg Intelligence analyst Lindsay Dutch said that the outlook “may leave room for the electronics retailer to surprise again in 4Q.”

The company has launched a strategy of cutting jobs to make up for the loss in sales prompted by higher inflation. The strategy falls in line with most companies in the tech sector, which have announced massive layoffs in recent months.

The stock of American Eagle Outfitters was also rising on Tuesday, up 17.1% after beating expectations.

“Bold actions to rationalize inventory and reduce expenses are paying off,” said Jay Schottenstein, CEO and executive chairman.

Schottenstein commented on inventory being in good shape, up 8% from last year.

Nordstrom Inc. JWN will release earnings after the close on Tuesday. Shares are already up 5.2% as expectations for the retail industry improve upon surprisingly positive results from other companies in the sector.

The same goes for Guess Inc. GES, which is up 2.5% ahead of its results being released after market close on Tuesday. 

The SPDR S&P Retail ETF XRT, which tracks the U.S. retail sector, was up by 2.1% on Tuesday and 10.8% in the last month.
Photo by Viktor Bystrov on Unsplash.