Abercrombie & Fitch Co., (NYSE: ANF), defied fears of an economic slowdown by reporting a revenue increase of 21% over the previous year for the second quarter.
The company’s stock, however, is down around 10% in premarket trading despite its strong earnings.
This decline is likely due to the cautious guidance given by CEO Fran Horowitz for the full year, who cited economic uncertainty.
Abercrombie & Fitch has posted impressive growth but the company has tempered expectations for the rest of the year.
The retailer is now expecting a 12%-13% increase in sales by 2024, which is in line with analyst expectations.
The fact that the current fiscal period has one fewer week than the previous fiscal year may have contributed to its conservative guidance.
Abercrombie & Fitch reports strong Q2 earnings
Abercrombie & Fitch surpassed Wall Street’s expectations for the second quarter. This was due to resilient consumer spending despite growing concerns about a US recession.
The company reported $1.13billion in revenue, and adjusted earnings of $2.50 per share, exceeding analysts’ expectations of $1.10billion in revenue and 2.22 per share.
According to CEO Fran H. Horowitz, this company is on course to achieve sustainable and profitable growth in 2018.
The retailer is investing strategically in marketing, digital platforms and technology as well as stores to support future growth.
The strong performance was driven by a successful back-to-school and summer season, which led an 18% growth in comparable sales year-over-year.
Abercrombie & Fitch’s shares have risen by approximately 15% since their recent low.
Should you buy Abercrombie & Fitch Stock?
CEO Horowitz acknowledged that the company’s past performance was negatively affected by aggressive spending on international expansion.
The retailer is being more cautious this time.
Abercrombie & Fitch partnered with Haddad Brands recently to expand its global reach, engage new customers and increase sales.
The sell-off that followed the earnings report could present a good opportunity to buy. Wall Street analysts rate Abercrombie & Fitch as “overweight” with an average price of $192. This suggests a potential gain of over 25%.
In a recent commentary, our analyst Crispus Nyaga also expressed a favorable outlook on ANF’s shares.
Abercrombie & Fitch is facing economic uncertainty, but its strong Q2 results and strategic initiatives make it an attractive investment.
This post Abercrombie & Fitch exceeds Q2 sales expectations with 21% surge may be updated as new developments unfold.
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