Here's How Abercrombie Stock is Poised Ahead of Q3 Earnings

Abercrombie & Fitch Co. ANF is scheduled to report third-quarter fiscal 2025 results on Nov. 25, before the opening bell.

The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $1.28 billion, indicating 5.6% growth from that reported in the year-ago quarter. For fiscal third-quarter earnings, the consensus mark is pegged at $2.15 per share, implying a decrease from $2.50 reported in the year-ago quarter. The consensus estimate for earnings has dipped 1.4% in the past 30 days.

In the last reported quarter, the company’s earnings beat the consensus estimate by 2.2%. ANF has delivered an earnings surprise of 7.6%, on average, in the trailing four quarters.

Factors to Note

Abercrombie’s quarterly performance is likely to have benefited from its Always Forward plan, brand strength and store-optimization efforts. The company has been strengthening its brand portfolio and enhancing its agile operating model, with the Read & React inventory approach remaining central to execution. Digitally, ANF continues to elevate the customer experience through faster shipping, better product discovery and greater localization, supported by ongoing technology investments to advance omnichannel engagement.

Abercrombie has been gaining from the continued momentum in the Hollister brand. Balanced growth across both men’s and women’s segments, as well as key product categories, continues to demonstrate the brand’s strong resonance with its teen customer base. Cross-channel traffic and stepped-up marketing efforts, including activations at events like Lollapalooza and the updated Collegiate collection, further fueled Hollister’s momentum. Also, the company is seeing strength in its regional performance, with the Americas, EMEA and APAC all performing well. All these strengths are likely to have bolstered ANF’s top line in the quarter to be reported.

However, higher expenses resulting from inflation and increased investment are likely to have been concerns in the to-be-reported quarter. Additionally, investments in digital and technology and higher incentive-based compensation are expected to add to costs.  Amid a shifting global trade landscape, heightened tariffs are adding cost pressures. In fiscal 2025, the company now assumes a net tariff impact of approximately $90 million, up from $50 million in prior guidance, reflecting recent updates to trade rates. We expect the adjusted operating expenses to decrease 16.3% year over year in the fiscal third quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Abercrombie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks before they're reported with our Earnings ESP Filter.

Abercrombie currently has an Earnings ESP of -2.79% and carries a Zacks Rank of 3.

ANF’s Stock Price Performance & Valuation Picture

From a valuation perspective, Abercrombie is trading at a discount relative to industry benchmarks. The company has a forward 12-month price-to-earnings of 7.09X, lower than the Retail - Apparel and Shoes industry’s average of 16.63X.
 
The recent market movements show that ANF’s shares have lost 4% in the past six months compared with the industry's 5.3% drop.

Stocks Poised to Beat Earnings Estimates

Here are some companies, which according to our model, have the right combination of elements to post an earnings beat:

American Eagle Outfitters AEO currently has an Earnings ESP of +2.67% and a Zacks Rank of 2. AEO is likely to register top-line growth when it reports third-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.32 billion, indicating 2.3% growth from that reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for American Eagle’s fiscal third-quarter earnings is pegged at 43 cents per share, indicating a 10.4% decline from the year-ago quarter's actual. The consensus mark has risen a penny in the past 30 days. AEO has an average trailing four-quarter earnings surprise of 30.3%.

Ross Stores, Inc. ROST currently has an Earnings ESP of +3.41% and a Zacks Rank of 3. The company is likely to register growth in the top line when it reports third-quarter fiscal 2025 results. 

The consensus mark for ROST’s quarterly revenues is pegged at $5.41 billion, which indicates a 6.7% rise from the figure reported in the prior-year quarter. The consensus mark for ROST’s quarterly earnings has moved a couple of cents in the past 30 days to $1.40 per share. The consensus estimate indicates a drop of 5.4% from the year-ago quarter’s actual. ROST has an average trailing four-quarter earnings surprise of 30.3%.

lululemon athletica LULU currently has an Earnings ESP of +0.56% and a Zacks Rank of 3. 
LULU is likely to register top-line growth when it reports third-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.49 billion, which indicates 3.8% growth from the prior-year quarter.

The consensus estimate for earnings has been stable in the past 30 days at $2.22 per share, which implies a 22.7% decrease from the year-ago quarter's actual. LULU has an average trailing four-quarter earnings surprise of 5.3%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research