Earnings Preview: Abercrombie & Fitch

Abercrombie & Fitch (ANF) is expected to report Q4 earnings Friday with a conference call scheduled for 8:30 a.m. ET.

Guidance

Analysts are looking for a profit of $2.36 on revenue of $1.25B. The consensus is $2.33 to $2.41 for EPS, and revenue of $1.21B to $1.31B, according to First Call. Abercrombie recently reported December same store sales down -2.0% vs. consensus of down -0.8% and flat January same store sales, in line with forecasts.

Analyst Views

Apparel companies will be vulnerable to ratings downgrades in the coming months as a weak economy hurts sales, according to analysts at Standard & Poor's. Factors most likely to affect their ratings include brand relevance and acquisitions. The firm maintains a Cautious stance on the sector. Friedman Billings is positive on Abercrombie's new Gilly Hicks concept, an all-female intimates and swimwear store. The firm believes there are tremendous opportunities internationally for the company in Asia and Europe.

Despite the soft retail sector, Stifel Nicolaus view Abercrombie as a compelling growth story. Each of the company's segments sells its branded merchandise at high prices, which are "enabled by the company's unique and attractive brands," the analyst said. Additionally, the firm believes Abercrombie has the ability to nearly double the number of its domestic stores over the next eight years and will be driven mainly by the addition of Hollister stores.

Baird analysts agreed that the stock is not as depressed as other teen retailers, but said they would look for more attractive valuation before becoming positive on Abercrombie.

Next event: Abercrombie will report its February SSS on March 6 and 8:30 am ET.