Earnings Preview: Abercrombie & Fitch

Aug.14.12 | About: Abercrombie & (ANF)

Abercrombie & Fitch (NYSE:ANF) is expected to report Q2 earnings before the market open on Wednesday, August 15 with a conference call scheduled for 8:30 am ET.


Analysts are looking for EPS of 17c on revenue of $996.87M. The consensus range is 15c-18c for EPS, and $949.17M-$1.04B for revenue, according to First Call. In May, Abercrombie reported Q1 EPS that slightly beat expectations, while its revenue missed estimates. On August 1, Abercrombie forecast Q2 EPS 15c-18c and said it expected gross margin rate erosion of approximately 100bps vs. last year. The company said Q2 revenue was $951.4M and said same-store sales for the quarter declined 10% vs. last year; Abercrombie said U.S. SSS were down 5% and down 26% in international stores. Based on a lower sales trend than previously projected, Abercrombie guided FY12 EPS $2.50-$2.75 and SSS down 10% for 2H. Abercrombie also expects a substantial recovery of the gross margin rate erosion in FY12. The company is expected to update on its strategy in its Q2 report, including: A reduction in the expected number of international Hollister chain store openings to approximately 30; A pause in new flagship store commitments; A reduced run rate for future international chain store openings.

Analyst Views

Following the negative Q2 preannouncement, shares were downgraded Neutral from Outperform at Baird, to Neutral from Overweight at Piper Jaffray, to Neutral from Buy at Bofa/Merill and to Average from Buy at Caris.