NEW YORK (TheStreet) --Abercrombie & Fitch Co. (ANF) - Get Report stock is gaining by 5.99% to $27.07 in early afternoon trading on Tuesday, as the company hired a new merchandising head and suspended their search for a new chief executive officer.
The company promoted Fran Horowitz, the president of its Hollister stores, to chief merchandising officer. This is a new role Abercrombie created to appeal to more teen shoppers, Reuters reports.
Executive Chairman Arthur Martinez also said the clothing company is suspending their search for a CEO and the executives who have shared power since CEO Mike Jefferies stepped down a year ago will continue to run the company, Bloomberg reports.
"Given our encouraging performance, the board believes we're on the right track and we intend to continue with the current governance structure," Martinez said in a statement to Bloomberg. "We are not actively conducting a search for a CEO at this time."
The company is expecting to meet profit expectations for the fourth quarter and deliver sequential improvements in comparable sales, Reuters added.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate ABERCROMBIE & FITCH as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ABERCROMBIE & FITCH reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ABERCROMBIE & FITCH increased its bottom line by earning $0.73 versus $0.70 in the prior year. This year, the market expects an improvement in earnings ($1.04 versus $0.73).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 129.8% when compared to the same quarter one year prior, rising from $18.23 million to $41.89 million.
- ANF's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.73 is somewhat weak and could be cause for future problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Specialty Retail industry and the overall market, ABERCROMBIE & FITCH's return on equity significantly trails that of both the industry average and the S&P 500.
- ANF has underperformed the S&P 500 Index, declining 5.89% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: ANF