This Analyst Isn't Convinced On Abercrombie & Fitch's 'Comeback'

Abercrombie & Fitch Co. ANF is scheduled to report its 1Q17 results on May 26.

Wunderlich’s Eric Beder maintained a Hold rating on the company, with a price target of $21.

Come Back Unlikely

Beder prefers to maintain a cautious stance on Abercrombie & Fitch, given the continuing FX headwinds and tourist traffic still in the negative.

The analyst believes that the company continues to face several key issues associated with its fashion outlook, productivity and an overall weak teen segment.

“[W]e have seen the Street continue to accept virtually any level of mediocrity from the company as a "come back;" we are not convinced, and remain on the sidelines,” Beder explained.

1Q Expectations

Beder believes that the consensus loss per share and comp forecasts were aggressive, given that Abercrombie & Fitch continued to face tourist traffic and FX issues, as well as the mall traffic issues at its domestic brick and mortar stores.

“We also expect the company to once again inflate comps by only reporting on a constant currency basis; we know of no other player with material international operations that reports only constant currency comps,” the analyst noted.

Beder does not expect the company to provide a formal guidance, although management could reiterate currency comps in the low single digit to flat range for FY17.

The analyst also pointed out that “while price increases have been key for the business, we also are not sure they have the ability to drive higher productivity or sales.”