NEW YORK (TheStreet) -- Abercrombie & Fitch (ANF) was rising 8.92% to $39.20 on Wednesday morning after the apparel retailer reported fourth-quarter earnings that beat analysts' expectations and announced it would buy back $150 million in shares in the current quarter.
Profit in the fourth quarter, excluding items such as asset-impairment charges and $36.8 million in charges tied to the restructuring of the Gilly Hicks brand, was $1.34 a share. This easily beat the consensus estimate of $1.04 from analysts polled by Bloomberg. Including those items, Abercrombie & Fitch earned $66.1 million, or 85 cents a share, down 58% from $157.2 million, or $1.95 a share, in the same period one year earlier.
Revenue also fell 12% to $1.3 billion, which came up short of the consensus of $1.36 billion. Same-store sales fell 8% in the quarter.
The retailer forecast full-year earnings per share of $2.15 to $2.35 with high-single digit decline in same-store sales and a 20% spike in direct-to-consumer sales. Analysts estimated EPS of $2.33.
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"We rate ABERCROMBIE & FITCH (ANF) a HOLD. 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 31.97%, 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