Abercrombie's Robust Comparables - Analyst Blog

Abercrombie & Fitch Co. (ANF), a specialty retailer of casual apparel, reported solid sales for the four-week period ended November 27, 2010.  After a smart increase of 12% in September, the comparables moderated to a 2.0% growth in October before recording a whopping increase of 22.0% in November 2010.

In the month under review, total company direct-to-consumer net merchandise sales climbed 40% to $32.6 million and total company international net sales, including direct-to-consumer net sales, jumped 73% to $64.2 million.

Abercrombie's brand names, Abercrombie & Fitch and Hollister, delivered same-store sales growth of a respective 23.0% and 22.0%, while its children's brand, Abercrombie Kids, witnessed a 19% increase.

Keeping up with the increase in sales, total sales for November shot up 32.0% to $318.9 million from $241.2 million in the same month last year, following a 13.0% year-over-year growth in October 2010.

Year to date, comparable-store sales climbed 7.0% and total sales were up 18.0% to $2.64 billion from $2.23 billion in the year-ago period. 
  
Abercrombie operated a total of 1,112 stores. The company operated 340 Abercrombie & Fitch stores, 202 Abercrombie Kids stores, 511 Hollister Co. stores and 17 Gilly Hicks stores in the United States. The company also operated 9 Abercrombie & Fitch stores, 4 Abercrombie Kids stores, 28 Hollister Co. and 1 Gilly Hicks store internationally. 

The Zacks Consensus Estimate for the fiscal year ending January 2011 is currently pegged at $1.85 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 10 of 29 covering analysts increased their projections, while 8 moved in the opposite direction. 

Abercrombie operates in a highly fragmented market and competes with national as well as regional players. Besides competing with larger retailers such as Gap Inc. (GPS), Abercrombie is facing increasing competition from value-priced specialty retailers such as Aeropostale Inc. (ARO).

Our long-term recommendation remains ‘Neutral'.

 
ABERCROMBIE (ANF): Free Stock Analysis Report
 
AEROPOSTALE INC (ARO): Free Stock Analysis Report
 
GAP INC (GPS): Free Stock Analysis Report
 
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