In an environment where consumer spending on discretionary apparel is under pressure and import tariffs are looming large, many retailers find themselves contending with slowing top-line growth, margin headwinds and shrinking earnings expectations. Today’s Bear of the Day, is a stock that despite a recent rebound off deep lows, has seen its outlook darkened. Unfortunately, analysts have trimmed their profit forecasts, the company has cut its guidance, and macro-driven costs threaten to erode any near-term upside.
I’m talking about Zacks Rank #5 (Strong Sell) Abercrombie & Fitch (ANF). Abercrombie & Fitch operates as an omnichannel retailer in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. The company offers an assortment of apparel, personal care products, and accessories for men, women, and kids under the Abercrombie & Fitch, abercrombie kids, Your Personal Best, Hollister, and Gilly Hicks brands.
On its most recent earnings call, management lowered full-year EPS guidance to $9.50–$10.50 from a prior range of $10.40–$11.40, attributing the change largely to an expected $50 million in tariff expenses on Chinese and other imports. While net sales growth of 8% in Q1 FY 2025 (to $1.1 billion) beat expectations by 7%, adjusted EPS of $1.59 still fell short of what would be required to meet prior targets
That prompted no fewer than seven analysts to cut estimates for the current year and next year. Those bearish moves are the reason why the stock is currently a Zacks Rank #5 (Strong Sell). They have also cut our Zacks Consensus Estimate for the current year from $11.06 to $10.17 while next year’s number is off from $11.68 to $10.57.
The Retail – Apparel and Shoes industry is in the Bottom 15% of our Zacks Industry Rank. There are, however, a handful of names within the industry which are in the good graces of our Zacks Industry Rank. These include Zacks Rank #1 (Strong Buy) Stitch Fix (SFIX) and Urban Outfitters (URBN).
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Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Stitch Fix, Inc. (SFIX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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