Abercrombie & Fitch Shines Among Retailers

Abercrombie & Fitch

ANF reported a 13% comp, above our/consensus estimates of 4.0%/3.6%, and compares to 18% last year. Each division, A&F adult, A&F kids, Hollister, comped positively, with guys consistently outperforming girls. Sales were in line with company expectations reflecting sufficient inventory positioning to support demand. Combined with improved product, proactive promotional cadence, compelling sales events and premium-brand positioning, ANF is well positioned to weather the current competitive landscape. Looking ahead, domestic store closures/international expansion opportunity provide unique go-forward catalysts. Reflecting Oppenheimer's near and long term confidence, it raises the 12-18 month PT to $48, which assumes 18x FY11E EPS of $2.70, a slight premium to its historical average of 17x. Oppenheimer has an Outperform rating on Abercrombie ANF is trading higher again today at $42.50. ANF is up more than 10% the past two days.