The New Albany, Ohio-based company surprised some investors with its fourth-quarter update after market close on Thursday when it announced that its same-store sales had fallen by 6%, which was less than previously expected. Abercrombie also raised its full-year guidance to a range of $1.55 to $1.65 from a range of $1.40 to $1.50.
[F]all season carryover inventory levels are well controlled as we move into the new season," said Chairman and CEO Mike Jeffries in the report. "We continue to focus on execution against our long-term strategic plans, which we believe will drive meaningful improvements in our business in 2014 and beyond."
As of 3:15 p.m. EST, the stock had amassed nearly quadruple its average volume to approximately 12 million from 3,347,890.
TheStreet Ratings team rates ABERCROMBIE & FITCH as a Hold with a ratings score of C. The team has this to say about its recommendation:
"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 reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ANF's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that ANF's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
- The gross profit margin for ABERCROMBIE & FITCH is rather high; currently it is at 68.84%. Regardless of ANF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.51% trails the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 119.60% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- Net operating cash flow has significantly decreased to -$21.44 million or 108.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: ANF Ratings Report