Abercrombie's Positive Comparables - Analyst Blog

Abercrombie & Fitch Co. (ANF), a specialty retailer of casual apparel, reported solid sales for the five-week period ended January 1, 2011.  After a moderate increase of 2% in October, the comparables increased to 22.0% growth in November before recording a growth of 15.0% for December 2010.

In the month under review, total company direct-to-consumer net merchandise sales climbed 59% to $66.9 million and total company international net sales, including direct-to-consumer net sales, jumped 65% to $115.9 million.

Abercrombie's brand names, Abercrombie & Fitch and Hollister, delivered same-store sales growth of a respective 13.0% and 17.0%, while its children's brand, Abercrombie Kids, witnessed a 12% increase.

Keeping up with the increase in sales, total sales for December shot up 26.0% to $596.3 million from $473.3 million in the same month last year, following a 32.0% year-over-year growth in November 2010.

Year to date, comparable-store sales climbed 8.0% and total sales were up 20.0% to $3.24 billion from $2.71 billion in the year-ago period. 
  
Abercrombie operated a total of 1,121 stores. The company operated 339 Abercrombie & Fitch stores, 202 Abercrombie Kids stores, 510 Hollister Co. stores and 18 Gilly Hicks stores in the United States. The company also operated 9 Abercrombie & Fitch stores, 4 Abercrombie Kids stores, 38 Hollister Co. and 1 Gilly Hicks store internationally. 

The Zacks Consensus Estimate for the fiscal year ending January 2011 is currently pegged at $1.93 per share, which increased by 3 cents over the past 30 days. For the fourth quarter of fiscal 2010, the Zacks Consensus Estimate has moved up by 3 cents to $1.25 over the past month.

Abercrombie operates in a highly fragmented market and competes with national as well as regional players. Furthermore, apart from 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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