With much better-than-expected January sales results and raised fourth-quarter guidance,

Abercrombie & Fitch

(ANF) - Get Report

seems to have put its troubled times behind it.

The company's same-store sales grew by 2% last month, while its overall sales surged 22%. Based on that showing, the retailer said it expects to exceed its earnings guidance of 90 cents to 93 cents per share for the fourth quarter.

In recent trading, the firm's stock was up $1.81, or 7.1%, to $27.35.

But there's evidence to suggest Abercrombie's revival will prove fleeting.

Investors should give the company credit for posting positive same-store sales growth in January, said Rob Wilson, an analyst who covers the company for Tiburon Research Group. But Abercrombie posted a positive same-store sales number in January 2003, then posted 11 straight months of comparable-store sales declines, Wilson recalled.

"They got worse and worse as the year went on," Wilson said. "People are buying into the idea that they've bottomed out, but I still think this is another fool's-gold scenario." (Tiburon Research doesn't do investment banking, and Wilson doesn't hold any Abercrombie shares.)

One hedge fund manager, who asked not to be named, was even more skeptical. Abercrombie's January sales appear to have been driven primarily by promotions that cleared out inventory the company couldn't sell during the holidays, said the source, who decided to short Abercrombie's shares following its sales report.

For now, however, January's sales may relieve some of the pressure that's been on the company. Until last month, Abercrombie had posted same-store sales declines in 30 of the previous 32 months.

Same-store sales measure the results at outlets open for more than one year. Although not always a predictor of a company's overall results, they can indicate the productivity of a company's older store base and market share gains, or losses, within particular markets.

Despite the continued declines in same-store sales, Abercrombie has been able to post continuous earnings per share gains. In fact, the company's earnings have improved on a year-over-year basis for 45 straight quarters.

But the company has been able to achieve that streak largely though cost savings, noted the short-seller.

"They've already cut expenses as far as they could cut them," he said. "They're right on the precipice of where they had better start

posting consistent same-store sales gains or they're going to start having earnings problems."

The company indicated in November that earnings problems may be nigh,

warning analysts that its earnings streak may be coming to an end. It brought down its guidance again last month after disappointing sales in November and December. The company's same-store sales declined by 13% in both months, a nasty trend broken by January's upside surprise.

Prior to Thursday's rise, Abercrombie was trading at less than 13 times its projected fiscal 2003 earnings. That's cheap for a specialty retailer, and investors and analysts had been hoping for some news that could boost the stock.

Abercrombie's stock is "slightly undervalued," said Joe Beaulieu, an analyst who covers the company for Morningstar. "I think they have continued growth opportunities

and room for

another store concept." (Morningstar doesn't do investment banking and Beaulieu doesn't hold the company's shares.)

But even Beaulieu is skeptical about the significance of the company's January sales. On a prerecorded conference call, Seth Johnson, Abercrombie's chief operating officer, said January sales were boosted by "colder-than-normal" weather and sales promotions.

Part of the problem that Abercrombie faces is that it appeals to a very limited age group -- its stores basically cater to kids and young adults, Beaulieu said. Compounding the problem, its three store concepts -- Abercrombie & Fitch, Abercrombie and Hollister -- divvy up that broad age group into three different segments. So unlike

Gap

(GPS) - Get Report

, which has a much wider age appeal, Abercrombie has to keep winning back customers every four years, and risks losing them permanently when they graduate from college.

"They don't have lots of room to make fashion mistakes," he said.

But fashion may be precisely the company's problem. Abercrombie has focused on providing its own line of preppy clothes. But its core audience of teenage buyers have been moving in other fashion directions.

Pacific Sunwear

(PSUN)

, for instance, has had a lot of success with branded surf and skateware, noted Wilson. Other retailers have been successful focusing on the increasing popularity of hip-hop.

"Their preppy college-kid niche has been shrinking," Wilson said. "I think the overall big picture is that they're in trouble."