UBS Thinks Abercrombie's Sales Trends Could Improve By Q4

Analyst Michael Binetti noted that a new Hollister loyalty program is responsible for accelerating frequency and solid new customer acquisition. However, the analyst believes current same-store sales trends will remain choppy due to tourism headwinds and hot weather in the United States and Europe.

The firm also noted that the company is seeking to remodel 60 Hollister doors in 2016, close 60 underperforming stores in 2016, looking to lower rents in malls with negative traffic and relocate to smaller stores, while also being able to retain nearly all of the sales — all in a bid to cure its ailing U.S. stores.

Related Link: Mall Traffic Is Actually Increasing Among Teens, According To A Major Survey

However, UBS does not see any near-term catalysts to support positive revisions to consensus estimates, as brick-and-mortar traffic trends are expected to remain negative for the foreseeable future and the limited scope for SG&A deleveraging.

UBS maintains its Neutral rating and a $18 price target on the shares of the company.

At last check, Abercrombie & Fitch shares were down close to 2.5 percent, although volumes were below average.

Full ratings data available on Benzinga Pro.