|
Related Topics
|
Category: Stock Market and Ambercrombie & Fitch
Date: 28 November 2019 Stock Price: $16.74 We take a look at the 3rd quarter 2019 earnings report of Abercrombie & Fitch, a global speciality retailer of apparel and accessories for Men, Woman and Kids through their 3 brands
|
About Abercrombie & Fitch
Abercrombie & Fitch Co. (NYSE: ANF) is a leading, global specialty retailer of apparel and accessories for Men, Women and Kids through three renowned brands. For more than 125 years, the iconic Abercrombie & Fitch brand has outfitted innovators, explorers and entrepreneurs. Today, the brand reflects the updated attitude of the modern consumer, while remaining true to its heritage of creating expertly crafted products with an effortless, American style. The Hollister brand epitomizes the liberating and carefree spirit of the endless California summer for the teen market. abercrombie kids creates smart, playful apparel for children ages 5-14, celebrating the wide-eyed wonder of childhood.
The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers around the world to express their own individuality and style. The Company operates more than 850 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce site
The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers around the world to express their own individuality and style. The Company operates more than 850 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce site
Overview of Abercrombie & Fitch's 3rd quarter 2019 earnings report
Data below refers to the latest quarter unless specified otherwise:
- Total revenue: $863.471 million (up from $861.194 million for the same quarter of the previous year)
- Total revenue increased by 0.26% over the last 12 months
- Cost of sales: $344.541 million (up from $333.375 million for the same quarter of the previous year)
- Cost of sales increased by 3.3% over the last 12 months
- Net earnings: $6.532 million (down from $23.919 million for the same quarter of the previous year)
- Diluted earnings per share: $0.10 (down from $0.35 for the same quarter of the previous year)
- PE ratio of Abercrombie & Fitch: 18.4
- Diluted number of shares outstanding: 63.911 million (down -6.4% from 68.308 million for the same quarter of the previous year)
- Cash and cash equivalents: $410.775 million
- Cash and cash equivalents per share: $6.42
- Cash and cash equivalents makes up 38.3% of Abercrombie & Fitch's market capital
- Cash and cash equivalents makes up 11.7% of Abercrombie & Fitch's total assets
- Inventories $590.883 million
- Inventories makes up 16.9% of Abercrombie & Fitch's total assets
- Stockholders’ equity in Abercrombie & Fitch: $994.366 million
- Stockholders equity per share: $15.55
- Abercrombie & Fitch is trading at 1.07 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
Abercrombie & Fitch management commentary on their 3rd quarter 2019 earnings
NEW ALBANY, Ohio, Nov. 26, 2019 (GLOBE NEWSWIRE) -- Abercrombie & Fitch Co. (NYSE: ANF) today announced results for the third quarter ended November 2, 2019. These compare to results for the third quarter ended November 3, 2018. A description of the use of non-GAAP financial measures and a schedule reconciling GAAP financial measures to adjusted non-GAAP and constant currency financial measures accompanies this release.
Fran Horowitz, Chief Executive Officer, said “We achieved another quarter of constant currency revenue growth and positive U.S. comps across brands, while maintaining tight expense management. Continued U.S. momentum was offset by challenges across several of our key international markets as well as a complicated global operating environment, which weighed on overall results. Despite these challenges, we ended the quarter with a balanced inventory position and have seen good response to our new assortments as weather has turned more seasonal, giving us confidence in our product and messaging for the important holiday period.”
“While we are focused on the upcoming holiday season, we also continue to make progress against our long-term transformation initiatives including: delivering 34 new store experiences, keeping us on track for our goal of 85 for the year; continuing the global rollout of omni capabilities and new payment options; and building our customer and product-facing teams in the EMEA and APAC regions. These transformation initiatives, along with accelerating top line growth, are essential to achieving our 2020 profitability target.”
Fran Horowitz, Chief Executive Officer, said “We achieved another quarter of constant currency revenue growth and positive U.S. comps across brands, while maintaining tight expense management. Continued U.S. momentum was offset by challenges across several of our key international markets as well as a complicated global operating environment, which weighed on overall results. Despite these challenges, we ended the quarter with a balanced inventory position and have seen good response to our new assortments as weather has turned more seasonal, giving us confidence in our product and messaging for the important holiday period.”
“While we are focused on the upcoming holiday season, we also continue to make progress against our long-term transformation initiatives including: delivering 34 new store experiences, keeping us on track for our goal of 85 for the year; continuing the global rollout of omni capabilities and new payment options; and building our customer and product-facing teams in the EMEA and APAC regions. These transformation initiatives, along with accelerating top line growth, are essential to achieving our 2020 profitability target.”
Fiscal 2019 Outlook
For fiscal 2019, the company expects:
Fiscal 2019 Fourth Quarter Outlook
For the fourth quarter of fiscal 2019, the company expects:
Estimated Impact of China Tariffs
As a reminder, in fiscal 2018 roughly 25% of the company’s merchandise received was sourced from China and imported into the U.S. and the outlooks above assume this figure will be approximately 16% for fiscal 2019. The outlooks provided above incorporate the estimated impact of tariffs imposed on merchandise imported from China into the U.S. in effect as of the end of the third quarter of fiscal 2019, which is based on a 25% rate for List 3 items and the starting rate of 15% for List 4 items. These tariffs are expected to have a direct adverse impact on cost of merchandise and gross profit of approximately $4 million and $5 million in the fourth quarter and the full year, respectively, and did not have a significant impact on third quarter results.
For fiscal 2019, the company expects:
- Net sales to be in the range of flat to up 1%, driven by comparable sales and net new store contribution, partially offset by an adverse impact from changes in foreign currency exchange rates of approximately $40 million of which approximately $35 million has been reflected in year-to-date results.
- Comparable sales to be in the range of flat to up 1%, against positive comparable sales of 3% last year.
- Gross profit rate to be down approximately 100 basis points from the fiscal 2018 rate of 60.2%, reflecting a combined adverse impact of 40 basis points from changes in foreign currency exchange rates and anticipated China tariffs.
- Operating expense, excluding other operating income, to be up in the range 2% to 3% from fiscal 2018 adjusted non-GAAP operating expense of $2.03 billion, reflecting second quarter flagship store exit charges of $45 million and third quarter asset impairment charges of $13 million.
- Effective tax rate to be in the mid 20s.
- Diluted weighted-average shares outstanding of approximately 66 million shares, excluding the effect of potential share buybacks.
- Capital investments of approximately $200 million.
Fiscal 2019 Fourth Quarter Outlook
For the fourth quarter of fiscal 2019, the company expects:
- Net sales to be in the range of flat to up 2%, reflecting an adverse impact from changes in foreign currency exchange rates of approximately $5 million.
- Comparable sales to be in the range of flat to up 2%, against positive comparable sales of 3% last year.
- Gross profit rate to be down approximately 150 basis points as compared to fiscal 2018 rate of 59.1%, reflecting a combined adverse impact of 70 basis points from changes in foreign currency exchange rates and anticipated China tariffs.
- Operating expense, excluding other operating income, to be in the range of flat to up 2% from fiscal 2018 adjusted non-GAAP operating expense of $555 million.
- Effective tax rate to be in the mid-to-upper 20s.
Estimated Impact of China Tariffs
As a reminder, in fiscal 2018 roughly 25% of the company’s merchandise received was sourced from China and imported into the U.S. and the outlooks above assume this figure will be approximately 16% for fiscal 2019. The outlooks provided above incorporate the estimated impact of tariffs imposed on merchandise imported from China into the U.S. in effect as of the end of the third quarter of fiscal 2019, which is based on a 25% rate for List 3 items and the starting rate of 15% for List 4 items. These tariffs are expected to have a direct adverse impact on cost of merchandise and gross profit of approximately $4 million and $5 million in the fourth quarter and the full year, respectively, and did not have a significant impact on third quarter results.
Abercrombie & Fitch (NYSE:ANF) stock price history
The image below obtained from Google shows the stock price history of Abercrombie & Fitch (NYSE: ANF) for the last 5 years. And its not been a good time for Abercrombie & Fitch stockholders. 5 years ago the stock of Abercrombie & Fitch was trading at $28.90 and its currently trading at $16.74. That's a loss of -% suffered by Abercrombie & Fitch stockholders over the last 5 years.
The stock of Deere and Company is trading at a lot closer to its 52 week high of $180.48 than it is to its 52 week low of $132.68 which to us is a clear indication that the short term sentiment and momentum of Deere and Company's stock is very positive.
The stock of Deere and Company is trading at a lot closer to its 52 week high of $180.48 than it is to its 52 week low of $132.68 which to us is a clear indication that the short term sentiment and momentum of Deere and Company's stock is very positive.
Recent coverage of Abercrombie & Fitch
The extract below refers to the latest earnings from Abercrombie & Fitch as obtained from TheStreet.com
Apparel retailer Abercrombie & Fitch (ANF - Get Report) came up just short of Wall Street estimates on some key metrics in the third quarter, leading the stock lower in premarket trading Tuesday. The New Albany, Ohio-based company reported third-quarter net sales of $863.5 million and adjusted earnings of 23 cents a share. Analysts were expecting the company to report revenue of $868 million and earnings of 24 cents, according to FactSet.
Meanwhile, comparable-store sales were flat in the period, falling short of Wall Street's expectations that called for a 0.3% increase. The company said that both its Hollister and Abercrombie brands had U.S. comp-sales increases of 3%, but those sales gains were offset by comps of negative 8% overseas. "Continued U.S. momentum was offset by challenges across several of our key international markets as well as a complicated global operating environment, which weighed on overall results," CEO Fran Horowitz said in a press statement.
Read the full article
Apparel retailer Abercrombie & Fitch (ANF - Get Report) came up just short of Wall Street estimates on some key metrics in the third quarter, leading the stock lower in premarket trading Tuesday. The New Albany, Ohio-based company reported third-quarter net sales of $863.5 million and adjusted earnings of 23 cents a share. Analysts were expecting the company to report revenue of $868 million and earnings of 24 cents, according to FactSet.
Meanwhile, comparable-store sales were flat in the period, falling short of Wall Street's expectations that called for a 0.3% increase. The company said that both its Hollister and Abercrombie brands had U.S. comp-sales increases of 3%, but those sales gains were offset by comps of negative 8% overseas. "Continued U.S. momentum was offset by challenges across several of our key international markets as well as a complicated global operating environment, which weighed on overall results," CEO Fran Horowitz said in a press statement.
Read the full article
Abercrombie & Fitch (NYSE:ANF) stock valuation
So what do we value the stock of Abercrombie & Fitch at based on their latest set of earnings report and fiscal guidance provided? Considering the fact that the group made a profit for the 3rd quarter of 2019 but is still loss making for the 3 quarters of 2019 we have decided to value the stock of Abercrombie & Fitch at its stockholders equity per share, which is our baseline to value a loss making firm as it shows what a company is worth if they sold all their assets, paid all their liabilities and distribute the rest to stockholders. Abercrombie & Fitch's stockholders equity per share is $15.55.
We therefore believe that the stock of Abercrombie & Fitch is overvalued based on its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which is $15.55in this case. A good entry point into Abercrombie & Fitch would therefore be at $14.00 or below. We expect the stock of Abercrombie Fitch to pull back even more from its current price to levels closer to our target (full value) price, which is also their stockholders equity per share
We therefore believe that the stock of Abercrombie & Fitch is overvalued based on its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which is $15.55in this case. A good entry point into Abercrombie & Fitch would therefore be at $14.00 or below. We expect the stock of Abercrombie Fitch to pull back even more from its current price to levels closer to our target (full value) price, which is also their stockholders equity per share
Next earnings release of Abercrombie & Fitch
It is expected that Abercrombie & Fitch will release their 4th quarter and full fiscal 2019 earnings report in late February 2020