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1. Company Snapshot

1.a. Company Description

Abercrombie & Fitch Co., through its subsidiaries, operates as a specialty retailer.The company operates in two segments, Hollister and Abercrombie.It offers an assortment of apparel, personal care products, and accessories for men, women, and children under the Hollister, Abercrombie & Fitch, abercrombie kids, Moose, Seagull, Gilly Hicks, and Social Tourist brands.


As of January 29, 2022, it operated approximately 729 retail stores in Europe, Asia, Canada, the Middle East, United States, and internationally.The company sells products through its stores; various third-party wholesale, franchise, and licensing arrangements; and e-commerce platforms.Abercrombie & Fitch Co. was founded in 1892 and is headquartered in New Albany, Ohio.

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1.b. Last Insights on ANF

Abercrombie & Fitch's recent performance was driven by strong Q3 earnings, with EPS beating estimates at $2.36 per share, and revenue meeting expectations. The company's ability to overcome tariff-related margin pressures and deliver resilient comp sales highlights its robust performance amid a challenging retail environment. A debt-free balance sheet and significant cash reserves support aggressive buybacks, with a $1.3 billion authorization. Rated a Strong Buy, the company demonstrates long-term growth potential and attractive valuation. International expansion opportunities and tariff mitigation efforts position the company for sustainable growth.

1.c. Company Highlights

2. Abercrombie & Fitch's Q3 Earnings: A Strong Performance

Abercrombie & Fitch reported record sales of $1.3 billion in its third-quarter fiscal 2025 earnings, a 7% increase from the previous year, with net income per diluted share at $2.36, beating estimates of $2.14. The company achieved its 12th consecutive quarter of growth, with a gross margin of 62.5% and an operating margin of 12%. The strong financial performance was driven by positive traffic and average unit retail (AUR) growth across both Hollister and Abercrombie & Fitch brands.

Publication Date: Nov -26

📋 Highlights
  • Record Q3 Sales Growth:: Abercrombie & Fitch achieved $1.3 billion in sales (+7% YoY) with net income per diluted share of $2.36, marking the 12th consecutive quarter of growth.
  • Regional Sales Disparity:: Americas and EMEA sales grew 7% each, while APAC declined 6%, reflecting uneven regional performance.
  • Brand Performance Contrast:: Hollister surged 16% in sales, contrasting with a 2% decline for Abercrombie brands, though Abercrombie showed sequential improvement.
  • Gross Margin Pressure:: Q3 gross margin fell 260 bps YoY (210 bps from tariffs), but the company expects 150 bps freight tailwind in Q4.
  • Share Repurchase Aggressiveness:: YTD share repurchases totaled $350 million (9% of shares outstanding), with $450 million planned for the full year, signaling confidence in stock value.

Regional and Brand Performance

Regionally, the Americas and EMEA saw 7% sales growth, while APAC declined 6%. By brand, Abercrombie brands declined 2% while Hollister grew 16%. The company repurchased $100 million worth of shares, totaling $350 million or 9% of shares outstanding year-to-date. The strong performance was driven by the Hollister brand, which continued to grow strongly, while the Abercrombie brand showed sequential improvement.

Guidance and Outlook

For the full year, Abercrombie & Fitch expects net sales growth of 6-7%, with a GAAP operating margin of 13-13.5%, and EPS of $10.20-$10.50. In the fourth quarter, it expects net sales growth of 4-6%, operating margin around 14%, and EPS of $3.40-$3.70. The company guides for 4%-6% sales growth in Q4 and expects a 360 basis point impact from tariffs, but also a 150 basis point tailwind from freight.

Valuation Metrics

With a P/E Ratio of 7.93 and an EV/EBITDA of 5.16, the company's valuation appears reasonable, considering its strong financial performance and growth prospects. The ROE of 42.73% and ROIC of 19.53% indicate a highly profitable business model. The company's plans to continue share repurchases, with a target of around $450 million for the year, also supports the stock.

Operational Highlights

The company reported a strong third quarter with sequential improvement in sales growth, driven by positive traffic and AUR growth across both Hollister and Abercrombie & Fitch brands. Traffic grew across both brands and channels, while AURs saw sequential improvement from spring into fall. The company's collaborations, such as NFL and NCAA, are driving brand awareness and customer acquisition.

Tariff Impact and Mitigation

The company expects a significant impact from tariffs in Q4, with a 360 basis point impact, but is taking steps to mitigate this, with pricing adjustments starting to show up with spring deliveries in late December into January. The company feels good about promotional plans, with flexibility to adjust to demand, and expects to see relief from Q4 tariff headwinds in 2026. Analysts estimate next year's revenue growth at 6.5%, indicating a positive outlook for the company.

3. NewsRoom

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Edgestream Partners L.P. Takes Position in Abercrombie & Fitch Company $ANF

Dec -04

Source: defenseworld.net

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A Year of Bold Beats and Consumer Comeback

Dec -03

Source: globenewswire.com

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Abercrombie & Fitch Company $ANF Shares Sold by Fisher Asset Management LLC

Dec -03

Source: defenseworld.net

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Abercrombie & Fitch: The Q3 Results Pop Is Only The Beginning - Buy

Dec -03

Source: seekingalpha.com

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Unlocking Abercrombie (ANF) International Revenues: Trends, Surprises, and Prospects

Dec -01

Source: zacks.com

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Big retailers project calm and confidence this holiday season, while smaller businesses scramble

Nov -28

Source: marketwatch.com

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Abercrombie & Fitch Company $ANF Stock Holdings Decreased by Ameritas Investment Partners Inc.

Nov -28

Source: defenseworld.net

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Abercrombie & Fitch: Weaker Times May Be Ahead (Rating Downgrade)

Nov -28

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.99%)

6. Segments

Abercrombie

Expected Growth: 8.5%

Abercrombie's 8.5% growth driven by successful brand repositioning, increased digital marketing efforts, and strategic store closures. Improved product offerings, enhanced customer experience, and effective inventory management also contributed to growth. Additionally, the brand's focus on sustainability, diversity, and inclusivity resonated with the target demographic, leading to increased brand loyalty and sales.

Hollister

Expected Growth: 9.5%

Hollister's 9.5% growth is driven by its successful brand repositioning, increased focus on digital marketing, and expansion into new markets. Additionally, the brand's efforts to improve product quality, fit, and style have resonated with customers, leading to increased sales and market share gains.

7. Detailed Products

Casual Apparel

Abercrombie & Fitch Co. offers a wide range of casual apparel for men and women, including t-shirts, tank tops, sweatshirts, and jeans.

Dress Shirts and Pants

The company provides a variety of dress shirts and pants for men, suitable for formal events, work, or special occasions.

Outerwear and Jackets

Abercrombie & Fitch Co. offers a range of outerwear and jackets for men and women, including denim jackets, leather jackets, and winter coats.

Swimwear

The company provides a variety of swimwear for men and women, including swimsuits, rash guards, and board shorts.

Personal Care and Fragrances

Abercrombie & Fitch Co. offers a range of personal care products, including fragrances, body care, and hair care.

Accessories

The company provides a variety of accessories, including hats, scarves, belts, and bags.

8. Abercrombie & Fitch Co.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Abercrombie & Fitch Co. faces moderate threat from substitutes, as customers have alternative options for casual apparel and personal care products.

Bargaining Power Of Customers

Abercrombie & Fitch Co. has a high bargaining power of customers, as customers have many options for casual apparel and personal care products, and can easily switch to competitors.

Bargaining Power Of Suppliers

Abercrombie & Fitch Co. has a low bargaining power of suppliers, as the company has a diverse supplier base and can negotiate prices effectively.

Threat Of New Entrants

Abercrombie & Fitch Co. faces a moderate threat of new entrants, as entering the market requires significant investment in brand building and marketing.

Intensity Of Rivalry

Abercrombie & Fitch Co. operates in a highly competitive industry, with many established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 27.96%
Debt Cost 4.18%
Equity Weight 72.04%
Equity Cost 11.86%
WACC 9.71%
Leverage 38.81%

11. Quality Control: Abercrombie & Fitch Co. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Urban Outfitters

A-Score: 5.4/10

Value: 6.3

Growth: 6.9

Quality: 6.1

Yield: 0.0

Momentum: 9.5

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Gap

A-Score: 5.0/10

Value: 6.6

Growth: 4.7

Quality: 5.2

Yield: 7.0

Momentum: 5.0

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Carter's

A-Score: 4.5/10

Value: 7.1

Growth: 3.8

Quality: 4.5

Yield: 8.0

Momentum: 0.0

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
American Eagle Outfitters

A-Score: 4.4/10

Value: 6.6

Growth: 4.6

Quality: 4.5

Yield: 6.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Abercrombie & Fitch

A-Score: 4.3/10

Value: 7.1

Growth: 8.3

Quality: 6.8

Yield: 0.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Boot Barn

A-Score: 4.2/10

Value: 2.3

Growth: 8.0

Quality: 5.9

Yield: 0.0

Momentum: 5.0

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

96.99$

Current Price

96.99$

Potential

-0.00%

Expected Cash-Flows