The Story Of Two Bears And A Bull: Abercrombie & Fitch Ahead Of Q2 Results

Abercrombie & Fitch Co. ANF is scheduled to report its second-quarter results before Wednesday's market open. The Estimize community (based on 13 estimates) is expecting the company to loss $0.11 per share on revenue of $796.63 million while the Street's consensus estimate is calling for a loss of $0.08 per share on revenue of $811.27 million.

Here is a roundup of what some of Wall Street's top analysts are saying ahead of the print.

Wunderlich: ‘Dismal' Report Expected

Eric Beder of Wunderlich commented in a note that Abercrombie is expected to release "dismal" results as the company's "material structural issues" continue.

According to Beder, Abercrombie continues to suffer from unfavorable exchange rates in its international operations while the domestic core customer no longer views the brand as "highly relevant or desirable." In addition, the customers who still shop at the brand are "more than willing" to wait for "deeper" discounts before making purchases.

Beder said the second-quarter print will likely be a "complete mess" and the Street's expectations of an $0.08 loss per share is "too aggressive." He also added that comps will be "materially negative" as the company will continue feeling the negative shifts from "poor fashion choices" as its brands struggle "to find relevancy."

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Finally, the analyst pointed out that his store checks revealed a "boring" series of offerings which resulted in a "weak" back-to-school performance. Meanwhile, the company also suffered from declining tourist traffic at key stores.

Shares remain Sell rated with an unchanged $15 price target.

Piper Jaffray: ‘Getting Its House In Order'

Neely Tamminga of Piper Jaffray upgraded shares of Abercrombie to Overweight from Neutral with a newly assigned $27 price target ahead of the print.

According to Tamminga, the company is "getting its house in order" at a time when denim is "cycling back to the forefront." The company is now well positioned to offer its consumers "innovation" in fashion while recent store checks gave the analyst "confidence" that it is seeing "appropriate" sell-through in its fall assortments.

Tamminga said overall promotional activity during the second quarter appeared to be lower than a year ago. In addition, checks done in the third quarter showed "steady" pricing in denim year-over-year which is a "good leading indicator" to average unit revenue which acts as a "significant" driver of comparable-store sales.

Tamminga also added that management is "likely to at least" reiterate their views of sequential comparable sales improvement for the back half of 2015 and gross margins to be flat or up slightly for the year.

Finally, the analyst suggested shares could see upside as the company's EBIT margins are "on a journey" from a 4 percent level to 10 percent-plus over time given a "better-aligned" organization structure, a new management roster, stabilizing brand relevance, improved fashion, and the fact that nearly 33 percent of the outstanding shares are held short.

Stephens: Expecting ‘Sequential Improvements,' But Confidence ‘Remains Low'

Rick Patel of Stephens commented in a note that Abercrombie's top line remains its "biggest challenge."

Patel said the company showed sequential improvement in comps in the first quarter (at Hollister) and continued into the second quarter only to be offset offset by deceleration at A&F. As such, the analyst is estimating a total company wide comp decline of 6 percent (Hollister at -4 percent and A&F at -8 percent). Meanwhile, negative traffic trends will also offset improvements in average unit revenue.

Patel further noted that the company's back-to-school assortment "does not appear to be drastically different" than what was seen in prior quarters and new back-to-school products were already being discounted as early as the first week of Jul, a sign of "continued challenges."

Finally, Patel pointed out that the company's European operation remains challenged and vulnerable to continued foreign exchange headwinds.

Shares remain Underweight rated with an unchanged $16 price target.