Teen Apparel Stocks Try To Rebound For Holiday Season (ANF, ARO)

A recent report from J.P. Morgan discusses how the teen space has been hit hard recently as consumer spending has been at a stand still. Abercrombie and Fitch's ANF margins have troughed following the economic downturn and the bulls believe management's goal of at least 15% operating margin should be achievable in the next 2-3 years. The company has said that it expects margin trends to improve beginning this holiday season. Aeropostale has also been beaten down lately. The bears that have been anxiously awaiting the demise of ARO's 17-18% operating margins hay have gotten an early Christmas present. The stock has been pummeled over the past month as the combination of decelerating comps coupled with a Q3 outlook implying some material margin erosion have weighed on shares. There is also the fear that ARO's comps and margins may have topped out. J.P. Morgan has a Neutral rating on ARO and ANF. Abercrombie & Fitch closed Wednesday at $36.39. Aeropostale closed Wednesday at $22.64.