Shares of Abercrombie & Fitch (NYSE: ANF) have fallen 42% over the past one year and 21% in the past one month. As of Friday, the stock was trading 57% below its 52-week high of $30.63. As the next quarterly report nears, there appears to be less optimism surrounding the stock.
On its part, Abercrombie has been undertaking several initiatives to improve its performance and drive growth. These include optimizing its store network, enhancing its digital and omnichannel capabilities, improving its supply chain efficiency and ramping up marketing efforts.
As part of its store optimization efforts, the company has
been moving away from large format stores to smaller ones with a focus on a more
productive omnichannel strategy. Abercrombie expects to deliver approx. 85 new
store experiences in fiscal 2019, which will include around 40 new stores, 25
remodeled stores, and 20 right-sizes.
The retailer has also been trying to offer a better customer
experience, both in-store and online, through loyalty programs and other
marketing initiatives. Abercrombie is focused on investing in high-return projects
that will help drive sustainable long-term growth.
Last month, the company said it had achieved record revenues in the US during the Black Friday week and that Abercrombie comps are expected to outperform Hollister with the US outperforming international.
Also read: Abercrombie & Fitch Q3 2019 Earnings Call Transcript
Abercrombie also reaffirmed its guidance for the fourth
quarter of 2019. The company expects net sales to be flat to up 2% and
comparable sales to be flat to up 2% while gross profit rate is estimated to
drop by around 150 basis points.
However, over the past two quarters, the company’s sales have not seen much of a pickup and comps have remained flat. Gross margins have also declined during the period. The retailer also faces tough competition in the industry. In this scenario, despite its best efforts, the road ahead looks slightly bumpy for the company.
Abercrombie is set to report fourth quarter 2019 earnings results on Wednesday, March 4. Analysts are looking for earnings of $1.23 per share on revenue of $1.17 billion. If the company beats estimates, the stock could see a pickup.