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Last Tuesday was not a fun surprise for investors in Abercrombie & Fitch (NYSE:ANF) shares. The company's 43% earnings miss vs. analyst profit estimates sent the shares down nearly $10 (over 20%) at one point in after-hours trading, and the damage was solidified on the open Wednesday. Many institutional investors must have been caught way off guard and then threw in the towel as 18 million shares traded that day, over nine times the 90-day average of 1.9 million. And many questions have been circling between analysts, big investors, and the company about how they could all be so surprised by this wipeout.

Blame the Kids

Lower-than-expected results were due to poor performance of the business catering to women's and teen's fashion needs and overall reduced traffic volume. Brand-wise, Abercrombie's comparable sales including direct-to-consumer sales at its Abercrombie & Fitch, abercrombie kids and Hollister stores declined 6%, 3%, and 13%, respectively.

Should much, if any, of this be a surprise? In an era when fashion brands and fortunes are built on the fickle wishes of teenagers (and their parent's credit cards), all it takes is the next hot brand like Michael Kors (NYSE:KORS) or a revival in tastes for budget-friendly alternatives like the Gap (NYSE:GPS) to quiet the registers of an ANF or Aeropostale (NYSE:ARO).

Below are the EPS tables that tell you what's been happening to estimates since the big miss. With only about a third of covering analysts lowering their targets so far in the past seven days, there are probably more downward revisions to come.

Click to enlarge image.

Dressed to Disappoint

Abercrombie's net sales for the quarter declined marginally to $945.7 million from $951.4 million in the year-ago quarter, primarily due to weak performance in the domestic market, partially offset by robust sales abroad. Moreover, the quarterly revenue missed the Zacks Consensus Estimate of $998.0 million.

The decrease in total sales reflects a decline of 8% in total domestic sales (including direct-to-consumer sales) to $597.3 million, which was partially offset by an increase of 15% in international business (including direct-to-consumer sales) to $348.4 million.

Overall, direct-to-consumer sales increased 21% year over year to $154.3 million. Including direct-to-consumer sales, the company's total comparable-store sales (comps) decreased 10%. Abercrombie’s comps, including direct-to-consumer sales in the U.S. declined 11%, while internationally it declined 7%.

Global Growth, Domestic Reversal

During the quarter, the company opened four international Hollister stores and launched a combined Abercrombie & Fitch and abercrombie kids store in both the U.K. and the U.S. They ended the quarter with a total of 1,057 stores, including 285 Abercrombie & Fitch stores, 150 abercrombie kids stores, 594 Hollister Co. stores, and 28 Gilly Hicks stores.

During fiscal 2013, Abercrombie intends to open a flagship store in Seoul and nearly 20 international Hollister stores. It also plans to shut down 40-50 domestic stores. The company anticipates capital expenditure of approximately $200.0 million toward new store openings and other planned expenditures in fiscal 2013.

Based on assumption of lower comps in the third quarter, Abercrombie projected its third-quarter 2013 earnings guidance range to be 40-45 cents per share. And you can see from the tables above that the analyst consensus has not caught up (or down, I should say) to that guidance yet.

Hot Fashion

The Abercrombie brand was once one of the most-desired and talked about among slaves to fashion. In 2011, the stock almost recovered its 2007 glory days above $80 per share. Now this once hot rocket may need a lot more time to cool off after its scorching re-entry into the atmosphere. Watch for the estimates to bottom and turn before touching it.

Disclosure: I own KORS for the Zacks Follow The Money portfolio.

American Eagle Outfitters: Free Stock Analysis Report (email registration required)

Abercrombie: Free Stock Analysis Report (email registration required)

Aeropostale: Free Stock Analysis Report (email registration required)

Gap: Free Stock Analysis Report (email registration required)

Michael Kors: Free Stock Analysis Report (email registration required)

Source: Bear Of The Day: Abercrombie & Fitch