AEO & ANF: No Showers in April
The presence of spring has brought about colorful quarters for specialty retailers such as American Eagle Outfitters (NYSE: AEO) and Abercrombie & Fitch (NYSE: ANF). The youth inspired stores shared a positive start to the week, with research firms clamoring for upgrades and price changes today.
AEO recently underwent a management change-up by placing Robert Hanson in the chief executive officer position. Clearly, the strategy has paid off. The company endured intensive checks by Wedbush over the past few days that resulted in a rating upgrade from Neutral to Outperform and price target increase from $14 to $22.
According to the firm, American Eagle has implemented a new approach for the company to purchase less inventory and utilize design improvements to increase full-priced selling. The fresh approach has been successful thus far, with recent trends becoming more encouraging and improved products restoring customer dedication.
Beyond Hanson's refreshing and firm grasp on the company's needs, consumers love the bohemian looks AEO introduced this quarter. Brean Murray Carret & Co. conducted a Facebook study that proved most shoppers are pleased with this season's newest styles, especially the lengthy boho dresses that garnered a 95% approval rating.
ANF is getting fan approval for their newest dress trends as well. It seems that Abercrombie & Fitch customer's value the "less is more" approach to their spring styles, as the brand new mini eyelet dress appears to be the complete opposite of the look AEO is trying to sell. However, it too received majority approval with 90% of the survey participants loving it.
And it's not just the dresses bringing the teens in to shop. ANF has seen YoY improvement through promotion initiatives and free shipping options.
"[Promotional] details within e-mails started to ease year-over-year as monitored by higher free shipping spending thresholds and lower levels of additional savings from redlines sale events this year vs. last year," Piper Jaffray commented in a report this morning.
Another analyst group that has taken notice to Abercrombie & Fitch's most recent accomplishments, UBS Investment Research, upgraded the retailer this afternoon from Neutral to Buy. The company initiated the rating revamp due to U.S. trends being in-line with muted expectations, recent store checks and the stabilization of European trends.
With earnings set to be reported in the summer months, both ANF and AEO have plenty of time to convince consumers they are providing the hottest styles for the warmer days ahead. With stellar approval ratings from customers to improved numbers and management, both companies will likely report results ahead of expectations.
AEO is currently trading at $18.25, up +19.29% YTD, while ANF is trading at $53.13, up +8.74% YTD.
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|May 2015||CRT Capital||Maintains||Fairly Valued|
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