What Happened?
Shares of young adult apparel retailer Abercrombie & Fitch (NYSE:ANF) jumped 6.1% in the morning session after fellow clothing brand Gap (NYSE:GAP) reported strong third-quarter results that blew past analysts' profits and earnings expectations. The improved results and observations of strong demand heading into the holiday season helped Gap raise its sales forecast for the fiscal year. This positive trend likely influenced investor sentiment toward peers such as V.F. Corporation (VFC) and Abercrombie & Fitch (ANF), which are also positioned to benefit from strong spending in apparel.
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What The Market Is Telling Us
Abercrombie and Fitch’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 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 66.3% since the beginning of the year, but at $151.25 per share, it is still trading 21.4% 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 $9,494.
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