Abercrombie reported strong Q2 results but stock fell 17% due to profit margin concerns

From Nasdaq: 2024-09-03 00:17:15

Abercrombie & Fitch (ANF) stock fell 17% on August 28th despite strong Q2 results, including an 18% growth in comparable sales and raised full-year guidance. ANF’s profit margin slightly missed expectations, leading to a projected lower operating margin for Q3, causing investor concerns.

ANF’s current stock price of $138 is about 10% below Trefis’ valuation estimate of $154, based on expected EPS and revenue growth. Despite a 575% stock increase from 2021, ANF has seen volatile returns of 71%, -34%, and 285% in recent years, underperforming the S&P 500. ANF’s growth outlook is uncertain amidst economic challenges.

In Q2, ANF saw a strong 21% sales growth to $1.13 billion, driven by a 18% increase in comparable sales. Hollister and the Abercrombie brand both saw sales growth, with improved pricing management and product assortment. Operating margin and EPS also increased, leading to a positive outlook for FY’24.

Returns for ANF in August 2024 are -7% MTD and 55% YTD, with a 1235% total return from 2017-2024. In comparison, the S&P 500 has seen 2% MTD and 18% YTD returns. Trefis’ Reinforced Value Portfolio has also outperformed the S&P 500 with 3% MTD and 11% YTD returns.



Read more at Nasdaq: Abercrombie Reports Strong Q2 Beat, Yet Its Stock Tanks 17%: What’s Going On?