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UPDATE: Oppenheimer Lowers Estimates For Abercrombie, American Eagle and Aeropostale


In a report published Thursday, Oppenheimer analyst Anna Andreeva reduced estimates on Abercrombie & Fitch Co. (NYSE: ANF), American Eagle Outfitters (NYSE: AEO) and Aeropostale (NYSE: ARO) based on the challenged teen sub-sector.

Oppenheimer noted that fast fashion retailers outpaced "traditional brick & mortar players" with a 16 percent CAGR growth. The analyst commented that Zara, H&M and Uniqlo are threatening the three A's. Andreeva wrote, "Lack of strong fashion trends, shift in spending from apparel and toward home/auto, growing share of technology goods are some of the hurdles. Traditional key item retailers are also becoming less relevant as share gets re-distributed toward fast fashion retailers/online pure plays. With promotions escalating and inventories high, we are reducing estimates on ANF, AEO and ARO."

The analyst lowered Abercrombie's 3Q13 EPS estimate to $0.25 versus guidance of $0.40-0.45, and decreased the PT from $53 to $45.

Oppenheimer kept the Outperform rating noting, "While it will take some time to regain relevance across A&F and especially Hollister banners, any sign of sales stabilization should warrant investor interest again, plus strategic review next week, SG&A cuts (we think additional payroll opportunity still coming) and valuation sub 5x EV/EBITDA (on reasonable EPS) should be cushions."

Andreeva slightly lowered American Eagle's third quarter EPS estimate from $0.16 to $0.15 versus guidance of $0.14-0.16 based on a comp decline algorithm. The analyst noted that Aeropostale will likely remain under deflationary pressure in basics and lowered 3Q EPS to $0.30 versus guidance of $0.21-0.26.

ANF, AEO and ARO closed at 37.48/ 15.11/ 9.07, respectively, on Thursday.

Latest Ratings for ANF

Sep 2019Initiates Coverage OnNeutral
Sep 2019UpgradesUnderperformPeer Perform
Sep 2019MaintainsUnderweight

View More Analyst Ratings for ANF
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Posted-In: Anna Andreeva OppenheimerAnalyst Color Analyst Ratings


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