Abercrombie Fitch (ANF) AI Stock Analysis

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Abercrombie Fitch

(NYSE:ANF)

63Neutral

Abercrombie & Fitch shows solid revenue growth and operational efficiency, but fluctuating margins and cash flow stability are challenges. Technically, the stock faces downward pressure, although it is fundamentally undervalued with a low P/E ratio. The recent earnings call conveys optimism for future growth, despite some operational challenges. The overall score reflects these dynamics, balancing growth prospects with existing risks.

Positive Factors

Marketing and Product Strategy

Sales momentum is expected to continue as multi-year efforts in marketing, product, and in-store presentation have created distinctive brands that resonate strongly with audiences.

Operational Efficiency

The company's flexibility in the supply chain and automation systems should help continue to provide on-trend merchandise, reducing markdown risk over time.

Sales Growth

Strong top-line results led by Hollister with 4Q sales of $1.59B (+9% YoY) coming in ahead of consensus.

Negative Factors

Brand Performance Concerns

Soft near-term trends at Abercrombie and costs are weighing on Q1 profitability.

Operational Margin Pressure

Management guided EPS below consensus, confirming the view that record operating margins could be difficult to maintain against moderating sales growth.

Tariff Impact

Tariffs are expected to remain a headwind, with uncertainty about their impact on the business.

Abercrombie Fitch (ANF) vs. S&P 500 (SPY)

Market Cap

$3.50B

Dividend YieldN/A

Average Volume (3M)2.63M

Price to Earnings (P/E)6.7

Beta (1Y)1.25

Revenue Growth15.60%

EPS Growth71.45%

CountryUS

Employees6,600

SectorConsumer Cyclical

Sector Strength66

IndustryApparel - Retail

Share Statistics

EPS (TTM)10.70

Shares Outstanding48,869,057

10 Day Avg. Volume1,830,865

30 Day Avg. Volume2,627,923

Financial Highlights & Ratios

PEG Ratio0.09

Price to Book (P/B)N/A

Price to Sales (P/S)0.83

Price to Cash Flow (P/CF)7.00

P/FCF Ratio10.80

Enterprise Value/Market Cap1.81

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit2.35

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$124.13

Price Target Upside73.27% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

Abercrombie Fitch Business Overview & Revenue Model

Company DescriptionAbercrombie & Fitch Co., through its subsidiaries, operates as a specialty retailer. The company operates in two segments, Hollister and Abercrombie. It offers an assortment of apparel, personal care products, and accessories for men, women, and children under the Hollister, Abercrombie & Fitch, abercrombie kids, Moose, Seagull, Gilly Hicks, and Social Tourist brands. As of January 29, 2022, it operated approximately 729 retail stores in Europe, Asia, Canada, the Middle East, United States, and internationally. The company sells products through its stores; various third-party wholesale, franchise, and licensing arrangements; and e-commerce platforms. Abercrombie & Fitch Co. was founded in 1892 and is headquartered in New Albany, Ohio.

How the Company Makes MoneyAbercrombie & Fitch Co. primarily generates revenue through the sale of its apparel and accessories in retail stores and online platforms. The company's revenue streams are driven by direct-to-consumer sales from its global network of physical stores and e-commerce sites. Additionally, the company benefits from strategic partnerships and collaborations that enhance brand visibility and attract new customers. Seasonal promotions and membership programs also play a significant role in driving sales and customer engagement. Furthermore, the company invests in marketing and brand positioning to maintain a strong market presence and appeal to its target demographics.

Abercrombie Fitch Key Performance Indicators (KPIs)

Any

Operating Expense Breakdown

Operating Expense Breakdown
Details core costs like R&D, marketing, and admin, offering insight into how efficiently Abercrombie Fitch operates and where it’s focusing its spending to drive growth and maintain competitiveness.

Chart InsightsAbercrombie & Fitch's operating expenses have shown a notable increase, particularly in the Stores and Distribution and Marketing, General, and Administrative segments. This aligns with their strategic expansion and omnichannel growth efforts. The earnings call highlights robust revenue growth and brand performance, but also flags increased freight costs and inventory challenges that could pressure margins in early 2025. Despite these concerns, the company remains optimistic about sustaining growth through strategic investments and expanding their store footprint, aiming for a 3-5% sales growth in 2025.

Data provided by:

Main Street Data

Abercrombie Fitch Financial Statement Overview

Summary

Abercrombie Fitch demonstrates strong revenue and profit growth, effective cost management, and improved cash flow metrics. The balance sheet reflects moderate leverage and improved equity returns, though high liabilities remain a potential risk. Overall, the company is well-positioned for future growth, but must navigate industry challenges carefully.

Income Statement

Very Positive

Abercrombie Fitch has demonstrated strong revenue growth with a notable increase in total revenue from $3.7 billion to $4.8 billion in TTM. The gross profit margin is robust at approximately 64.7%, and the net profit margin is healthy at 11.2%. Both EBIT and EBITDA margins have shown improvement, indicating effective cost management and operational efficiency. However, the retail industry remains susceptible to market volatility and consumer behavior shifts.

Balance Sheet

Positive

The company's balance sheet reflects a moderate debt-to-equity ratio of 0.76, which suggests a balanced approach to leveraging. Return on equity has improved significantly, indicating enhanced profitability relative to equity. The equity ratio is around 38.1%, reflecting a reasonable level of financial stability. However, the total liabilities remain high compared to equity, which could pose risks if market conditions worsen.

Cash Flow

Very Positive

Abercrombie Fitch has shown positive free cash flow growth and a strong operating cash flow to net income ratio, highlighting efficient cash generation relative to profits. Free cash flow has increased from $495 million to $544 million, supporting future investments and debt repayments. Despite this, fluctuations in investing and financing cash flows suggest a need for careful cash management in the volatile retail sector.

Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
4.28B	3.70B	3.71B	3.13B	3.62B
	Gross Profit
2.69B	2.10B	2.31B	1.89B	2.15B
	EBIT
484.67M	92.65M	343.08M	-20.47M	70.07M
	EBITDA
659.71M	240.55M	494.99M	151.00M	243.69M
	Net Income Common Stockholders
328.12M	2.82M	263.01M	-114.02M	39.36M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
900.88M	517.60M	823.14M	1.10B	671.27M
	Total Assets
2.97B	2.71B	2.94B	3.31B	3.55B
	Total Debt
1.05B	1.22B	1.22B	1.55B	1.77B
	Net Debt
147.48M	706.59M	400.52M	445.48M	1.10B
	Total Liabilities
1.92B	2.01B	2.10B	2.37B	2.48B
	Stockholders Equity
1.04B	694.84M	826.09M	936.63M	1.06B
Cash Flow		Free Cash Flow
495.63M	-166.91M	177.02M	303.01M	97.90M
	Operating Cash Flow
653.42M	-2.34M	274.00M	404.92M	300.69M
	Investing Cash Flow
-157.18M	-140.68M	-96.98M	-51.91M	-202.78M
	Financing Cash Flow
-111.20M	-155.33M	-446.90M	69.72M	-147.87M

Abercrombie Fitch Technical Analysis

Technical Analysis Sentiment

Negative

Last Price71.64

Price Trends

50DMA

83.59

Negative

100DMA

110.72

Negative

200DMA

128.95

Negative

Market Momentum

MACD

-3.18

Negative

RSI

42.30

Neutral

STOCH

42.27

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ANF, the sentiment is Negative. The current price of 71.64 is below the 20-day moving average (MA) of 73.70, below the 50-day MA of 83.59, and below the 200-day MA of 128.95, indicating a bearish trend. The MACD of -3.18 indicates Negative momentum. The RSI at 42.30 is Neutral, neither overbought nor oversold. The STOCH value of 42.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ANF.

Abercrombie Fitch Risk Analysis

Abercrombie Fitch disclosed 25 risk factors in its most recent earnings report. Abercrombie Fitch reported the most risks in the “Macro & Political” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Abercrombie Fitch Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TJX	77 Outperform	$141.38B	29.71	61.98%	1.19%	3.95%	10.34%
URBN	76 Outperform	$4.76B	12.06	17.56%	―	7.71%	40.01%
ROST	73 Outperform	$45.94B	22.12	40.28%	1.08%	3.69%	13.71%
AEO	68 Neutral	$1.93B	6.68	18.80%	4.46%	1.27%	96.32%
ANF	63 Neutral	$3.50B	6.69	47.77%	―	15.60%	71.45%
Sector *	60 Neutral	$6.85B	11.71	3.15%	4.16%	2.38%	-21.88%
LB	59 Neutral	$5.50B	250.87	7.53%	0.28%	―	―

* Consumer Cyclical Sector Average

Performance Comparison

ANF

Abercrombie Fitch

71.64

-53.75

-42.87%

AEO

American Eagle

11.20

-12.86

-53.45%

ROST

Ross Stores

139.71

10.03

7.73%

TJX

TJX Companies

126.56

32.95

35.20%

URBN

Urban Outfitters

51.41

11.30

28.17%

LandBridge Company LLC Class A

72.00

49.11

214.55%

Abercrombie Fitch Earnings Call Summary

Earnings Call Date:Mar 05, 2025

(Q4-2024)

% Change Since: -25.46%|

Next Earnings Date:May 21, 2025

Earnings Call Sentiment Positive

The earnings call reflected a strong performance with record-breaking revenue and growth, driven by successful brand strategies and global expansion. However, increased freight costs, a slower start for Abercrombie in Q1 2025, and inventory management challenges were notable concerns. The company remains optimistic about sustaining growth through strategic investments and omnichannel development.

Q4-2024 Updates

Positive Updates

Record-Breaking Revenue and Growth

Abercrombie & Fitch achieved a record annual sales level in 2024 with net sales growth of 16% to $4.95 billion and a 53% increase in operating income, reaching $741 million. Earnings per share rose by 72% to $10.69.

Strong Brand Performance

Both Abercrombie and Hollister brands delivered record fourth-quarter net sales. Hollister's net sales grew 15% year-over-year, while Abercrombie brands achieved their 16th consecutive quarter of net sales growth at 2%.

Global Expansion Success

Net sales increased across all regions: 17% in the Americas, 12% in EMEA, and 9% in APAC. The company successfully opened 125 new store experiences, showing strong productivity across regions.

Operational Efficiency

Operating margin expanded by 90 basis points in Q4 2024, and the company achieved a 64% gross margin for the year, driven by lower promotions and increased efficiency.

Digital and Omnichannel Growth

Digital sales accounted for 46% of total sales, demonstrating the company's strong omnichannel presence. The company was a net store opener for the third consecutive year, with 789 stores worldwide.

Negative Updates

Increased Freight Costs

Higher freight costs due to increased freight rates and air usage impacted gross margins in Q4 2024, contributing to a 61.5% gross margin compared to 62.9% the previous year.

Abercrombie's Slower Q1 Start

Abercrombie brand experienced a slower start into Q1 2025, showing negative comparable sales, partly due to a more normalized transition compared to the previous year's flawless transition.

Inventory Management Challenges

Inventory at cost was up 22%, with a 6% increase in units and higher costs related to freight and seasonal carryover inventory, which could affect first-half 2025 margins.

Company Guidance

During the Abercrombie & Fitch Fourth Quarter Fiscal Year 2024 earnings call, the company provided robust guidance for 2025, aiming to build on their significant achievements from 2024. For the full fiscal year 2024, Abercrombie & Fitch reported net sales growth of 16% to $4.95 billion, a 53% increase in operating income, an operating margin of 15%, and a 72% rise in earnings per share to $10.69. The fourth quarter alone saw net sales growth of 9%, with a 14% increase excluding the 550 basis point headwind from the 53rd week in 2023. Hollister showed a remarkable comparable sales growth of 24%, while Abercrombie grew by 5%. The company significantly surpassed all 2025 financial targets from its Always Forward Plan. For 2025, they expect net sales growth between 3% and 5% and operating margins from 14% to 15%, despite facing a 70 basis point adverse impact from foreign currency. Abercrombie & Fitch plans to leverage their strong brand positioning, expand their store footprint with around 100 new experiences, and enhance their omnichannel capabilities to drive sustainable growth.

Abercrombie Fitch Corporate Events

Business Operations and StrategyFinancial Disclosures

Abercrombie & Fitch Raises Sales Outlook for 2024

Positive

Jan 13, 2025

Abercrombie & Fitch Co. has increased its net sales outlook for the fourth quarter and full fiscal year 2024 following better-than-expected holiday sales. The company anticipates a net sales growth of 7-8% for the fourth quarter and around 15% for the full year, while maintaining a strong operating margin. This improvement reflects the company’s effective brand strategies and operational execution, positioning it for sustainable, profitable growth and exceeding its ‘Always Forward Plan 2025’ targets.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.