What Happened:
Shares of young adult apparel retailer Abercrombie & Fitch (NYSE:ANF) fell 17.8% in the morning session after the company reported second-quarter earnings results. Its full-year capital expenditure forecast was a bit higher than expected. In addition, management called out an uncertain macro environment. On a more positive note, revenue and EPS beat Wall Street's expectations during the quarter. Overall, this was a decent quarter, but judging by the +10% share price move in the last 30 days leading up to the print, the market was likely hoping for more.
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What is the market telling us:
Abercrombie and Fitch’s shares are quite volatile and over the last year have had 18 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 3 months ago, when the stock gained 27% on the news that 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.
Abercrombie and Fitch is up 52.9% since the beginning of the year, but at $138.83 per share it is still trading 27.8% below its 52-week high of $192.34 from June 2024. Investors who bought $1,000 worth of Abercrombie and Fitch’s shares 5 years ago would now be looking at an investment worth $8,157.
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