Abercrombie and Fitch (ANF) Shares Skyrocket, What You Need To Know

Petr Huřťák /
2024/05/29 3:56 pm EDT

What Happened:

Shares of young adult apparel retailer Abercrombie & Fitch (NYSE:ANF) jumped 27% in the afternoon session after the company reported a "beat and raise" quarter. First quarter results blew past analysts' revenue and EPS expectations, driven by its insanely high 21% year-on-year same-store sales growth (vs analysts' estimates of 12%). The sales performance was broad-based with Abercrombie brands up 31% while Hollister brands delivered growth of 12%. On the back of the strong print, the company raised its full-year revenue guidance from 5% growth at the midpoint to 10%, a massive jump. Zooming out, we think this was a fantastic quarter that shareholders will appreciate.

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What is the market telling us:

Abercrombie and Fitch's shares are somewhat volatile and over the last year have had 12 moves greater than 5%. But moves this big are very rare even for Abercrombie and Fitch and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 9 months ago, when the company gained 15.4% on the news that the company reported second quarter results that blew past Wall Street's expectations. Revenue beat by 11% while earnings per share also came in strong at $1.10 compared to analysts' estimates of $0.15. This impressive performance was driven by sales growth at Abercrombie brands and a huge operating margin increase. 

On top of that, the company raised its full-year revenue guidance from 3% growth all the way up to 10% while changing its operating margin estimate from 5.5% to 8.5%. Both of these are sizeable upward revisions you don't see too often. Lastly, management provided reassuring comments on the outlook for the second half of the year, stating, "While the macro environment remains dynamic, our first half results give us confidence to stay on offense for the second half. Consistent with our Always Forward Plan, we are continuing to open stores and make critical long-term investments in digital and technology that will keep our brands in position to exceed our customers' expectations." 

Overall, this was a good quarter for Abercrombie & Fitch, considering the macro challenges highlighted by some retailers that have reported earnings this season.

Abercrombie and Fitch is up 107% since the beginning of the year. Investors who bought $1,000 worth of Abercrombie and Fitch's shares 5 years ago would now be looking at an investment worth $10,217.

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