'Labor Day Sale On Abercrombie' After Lower Q2 Sales

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Abercrombie & Fitch
ANF
shares are off nearly five percent after it posted disappointing second-quarter sales earlier this week and some analysts questioned its prospects. "The number-one fear that prevents investors from owning Abercrombie is concern that the brand is becoming irrelevant," Macquarie's Liz Dunn said in a note Friday maintaining a Neutral rating and $45 target. So on Thursday, Chief Executive Michael Jeffries, said the company is "looking to take the North American logo business to practically nothing." Although logo sales have recently fallen considerably, UBS' Roxanne Meyer sees a downside to de-emphasizing the segment in an increasingly crowded fashion market place. Meyer fears that "Abercrombie will become less differentiated versus other global fast fashion retailers, Meyer said in a note maintaining a Neutral rating and $40 target. And with total U.S. denim sales down six percent last year, Meyer thinks Abercrombie's current plan to make the category a centerpiece of its fashion lineup is "risky." But Oppenheimer's Anna Andreeva maintained a Buy rating and $50 target Friday, calling Abercrombie "one of our favorite names." Andreeva's modeling a same-store sales decline of three percent to four percent in the third quarter, but raised her 2015 earnings estimate to $2.35 from $2.25 a share, citing lower operating costs. Abercrombie closed Friday at $41.80, nearly unchanged.
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Posted In: Analyst ColorEarningsNewsGuidancePrice TargetReiterationAnalyst RatingsAnna AndreevaMacquarieOppenheimerRoxanne MeyerUBS
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