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Abercrombie & Fitch Not a Buy Yet

(Abercrombie & Fitch articles updated with additional analysis of the stock, updated stock prices, and analyst commentary.)

NEW YORK ( TheStreet) -- Don't call Abercrombie & Fitch (ANF - Get Report) a recovery story -- or a buy -- just yet.

While the teen retailer easily topped Wall Street's forecast (excluding restructuring costs related to the closure of Ruehl) and is seeing margin improvement, without its gift card promotion, things would have been worse in the fourth quarter.

"With select early spring already marked down and CEO Mike Jeffries charged with fixing merchandise himself, we're not expecting improvement until fall," UBS analyst Roxanne Meyer wrote in a note.

During the quarter, Abercrombie earned $47.5 million, or 53 cents a share, a 31% plunge from $68.4 million, or 78 cents, in the year-ago period for the teen retailer .

However, excluding charges related to the shuttering of the Ruehl chain, Abercrombie actually earned 91 cents, beating analysts' forecast of 87 cents a share.

In June, Abercrombie's board approved the closure of the Ruehl chain, which was sucking profit from the company.

Abercrombie sales declined 5% to $936 million from $980.8 million, while same-store sales tumbled 13%.

During Abercrombie's conference call management hinted that it could attain 15% operating margin in three years. But Wall Street Strategies analyst Brian Sozzi does not believe this is possible given all the hurdles stacked against them.

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