Core Viewpoint - Telsey Advisory analyst Dana Telsey maintains an Outperform rating on Abercrombie & Fitch Co (ANF) shares but reduces the price target from $190.00 to $125.00 due to increased macroeconomic uncertainty [1] Group 1: Financial Performance - ANF concluded FY24 with strong results, exceeding both revenue and earnings expectations, despite a slight decline in gross margin during the fourth quarter [1] - The company reported a 22.5% year-over-year increase in inventories, contrasting with a 9.1% growth in topline revenue for the same period [5] - The projected EPS for FY25 is $11.35, a slight increase from the previous estimate of $11.30 [6] Group 2: Growth and Expansion - ANF has demonstrated consistent growth across its A&F and Hollister brands, supported by a strong holiday performance and an upcoming share repurchase program [2] - The company plans to open 100 new locations in FY25, marking its fourth consecutive year of net store openings [4] - Management anticipates FY25 net sales growth of 3% – 5%, driven by regional and brand expansion [3] Group 3: Operational Insights - ANF's operating margin is expected to range between 14% – 15%, with the first half affected by higher freight costs and inventory selling, while the second half is expected to benefit from lower freight costs [3] - The company has a flexible supply chain that sources products from 17 countries, allowing it to quickly adapt to demand changes [4] - In FY24, ANF achieved a fleet four-wall operating margin of approximately 30% [5] Group 4: Market Conditions - The outlook for ANF considers the impact of newly announced tariffs on China, Canada, and Mexico, which are projected to reduce operating margin by about $5 million for the year [3] - Despite concerns regarding margin and consumer confidence, the company's low valuation supports a positive outlook [2]

Group 1 - Abercrombie & Fitch reported full-year net sales of $4.95 billion, a 16% year-over-year increase, marking a company record [2] - The company's full-year operating margin reached 15%, the best performance in over a decade [2] - Despite strong 2024 results, the stock price fell nearly 60% from its 52-week high due to disappointing guidance for 2025, with net sales expected to grow only 3% to 5% and operating margin projected to decline to 14%-15% [3] Group 2 - Investors are concerned about the potential decline in margins and growth rate after a record year, leading to a negative reaction in the stock price [3] - Abercrombie's management has approved a $1.3 billion stock buyback program, with plans to utilize $400 million in 2025, potentially reducing the outstanding share count by 10% [5] - The company is in a strong financial position, indicating that management is focused on leveraging the current stock price to benefit shareholders [6]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The news team covers medium and small-cap markets, as well as blue-chip companies, commodities, and broader investment stories [3] - Proactive focuses on sectors such as biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] Group 2 - Proactive has a strong emphasis on technology adoption, utilizing various tools to enhance workflows [4] - The company employs automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Core Insights - Abercrombie & Fitch reported revenue of $1.58 billion for the quarter ended January 2025, reflecting a 9.1% increase year-over-year and a surprise of +1.46% over the Zacks Consensus Estimate of $1.56 billion [1] - The company's EPS for the quarter was $3.57, up from $2.97 in the same quarter last year, surpassing the consensus EPS estimate of $3.48 by +2.59% [1] Financial Performance Metrics - Total number of stores at the end of the period was 789, exceeding the average estimate of 785 by four analysts [4] - Comparable store sales for Hollister increased by 24%, significantly higher than the 13.6% estimated by analysts [4] - Comparable store sales for Abercrombie rose by 5%, slightly below the average estimate of 7.9% [4] - Total comparable store sales saw a year-over-year change of 14%, outperforming the average estimate of 10.6% [4] - Net sales for Hollister reached $812.25 million, exceeding the average estimate of $755.57 million and representing a year-over-year increase of +16.4% [4] - Net sales for Abercrombie were reported at $772.67 million, below the average estimate of $807.82 million, but still reflecting a +2.3% change compared to the previous year [4] Stock Performance - Abercrombie's shares have returned -16.3% over the past month, contrasting with the Zacks S&P 500 composite's -4.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Abercrombie & Fitch reported quarterly earnings of $3.57 per share, exceeding the Zacks Consensus Estimate of $3.48 per share, and showing an increase from $2.97 per share a year ago, indicating a positive earnings surprise of 2.59% [1] Group 1: Earnings Performance - The company has surpassed consensus EPS estimates for four consecutive quarters [2] - Abercrombie's revenues for the quarter ended January 2025 were $1.58 billion, exceeding the Zacks Consensus Estimate by 1.46%, and up from $1.45 billion year-over-year [2] - The company has also topped consensus revenue estimates for four consecutive quarters [2] Group 2: Stock Performance and Outlook - Abercrombie shares have declined approximately 35.7% since the beginning of the year, contrasting with the S&P 500's decline of 1.8% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the sustainability of the recent earnings numbers [3][4] - Current consensus EPS estimate for the upcoming quarter is $1.94 on revenues of $1.08 billion, and for the current fiscal year, it is $11.10 on revenues of $5.19 billion [7] Group 3: Industry Context - The Retail - Apparel and Shoes industry, to which Abercrombie belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Abercrombie's stock performance [5][6]

INVESTOR PRESENTATION: FOURTH QUARTER 2024 TABLE OF CONTENTS Safe Harbor and Other Information 3 Company Overview 5 Q4 2024 and Full Year Results 15 Appendix 22 2 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This presentation and related statements by management or spokespeople of A&F contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements, including, without limitation, statements regarding ou ...

Core Viewpoint - Abercrombie & Fitch Co. anticipates a sales increase of 3% to 5% for 2025, which is below the analyst expectation of 5.5% growth [1] - The company projects earnings per share for 2025 to be between $10.40 and $11.40, while analysts expect earnings of $11.28 per share [1] Summary by Category - **Sales Expectations** - The retailer expects a sales growth of 3% to 5% for 2025, falling short of the 5.5% growth anticipated by analysts [1] - **Earnings Projections** - Abercrombie & Fitch forecasts earnings per share in the range of $10.40 to $11.40 for 2025, compared to the analyst consensus of $11.28 per share [1] - **Market Reaction** - The stock of Abercrombie & Fitch Co. declined by 6.5% in premarket trading following the announcement of its sales and earnings expectations [1]

Core Viewpoint - Abercrombie & Fitch is experiencing a slowdown in growth, with weaker-than-expected guidance for the current quarter and fiscal 2025, anticipating sales growth of only 3% to 5%, below the 6.8% estimate from Wall Street [1] Group 1: Financial Performance - The company reported a net income of $187 million, or $3.57 per share, for the fiscal fourth quarter, compared to $158 million, or $2.97 per share, a year earlier [2] - Sales increased to $1.58 billion, reflecting a 9% rise from $1.45 billion in the previous year [3] - Earnings per share for the current quarter are expected to be between $1.25 and $1.45, falling short of the $1.97 expectation [1] Group 2: Market and Consumer Trends - Consumer confidence has declined to its lowest levels since 2021, impacting discretionary spending on apparel [6] - The proposed TikTok ban may have affected Abercrombie's marketing efforts, similar to its impact on E.l.f. Beauty's performance [7] Group 3: Strategic Focus - The company is shifting its focus towards boosting profits rather than just sales, aiming for sustainable, profitable growth through effective execution of its strategies [8] - CEO Fran Horowitz expressed confidence in the brand's potential and the operational model, emphasizing the goal of growing operating income and earnings per share at rates faster than sales [8] Group 4: Market Sentiment - Following a period of rapid growth, Abercrombie's business appears to be stabilizing, with market interest potentially shifting towards other retail companies with more immediate growth prospects [4][5]

Core Insights - Abercrombie & Fitch Co. reported strong financial results for fiscal 2024, achieving a 16% increase in net sales to nearly $5 billion and expanding operating margin to 15% [2][4][5] - The company anticipates continued profitable growth in fiscal 2025, with projected net sales growth of 3% to 5% and an operating margin between 14% and 15% [4][13] Financial Performance - For the fourth quarter ended February 1, 2025, net sales reached $1.58 billion, a 9% increase year-over-year, with comparable sales growth of 14% [4][5] - Full year net sales totaled $4.95 billion, up 16% from the previous year, driven by a 17% increase in comparable sales [4][5] - Operating income for the full year was $741 million, compared to $485 million in the previous year, reflecting a significant increase in profitability [5][8] Earnings and Shareholder Returns - Net income per diluted share for the fourth quarter was $3.57, up from $2.97 in the prior year, while for the full year, it was $10.69, a 72% increase from $6.22 [3][4][8] - The company repurchased approximately 1.6 million shares for $230 million during fiscal 2024, representing a 3% reduction in shares outstanding [10][12] Segment Performance - In the Americas segment, net sales increased by 17% for the full year, while the EMEA segment saw a 12% increase [6][43] - The Hollister brand experienced a 15% increase in net sales for the full year, with comparable sales growth of 19% [4][6] Cash Flow and Liquidity - As of February 1, 2025, the company had cash and equivalents of $773 million and marketable securities of $116 million [9][18] - The company announced a new $1.3 billion share repurchase authorization, with expectations to repurchase $400 million in shares during fiscal 2025 [4][12] Outlook - The company expects net income per diluted share for fiscal 2025 to be in the range of $10.40 to $11.40, with a first quarter outlook for net sales growth of 4% to 6% [4][13] - Capital expenditures for fiscal 2025 are projected to be approximately $200 million, with plans for around 40 net store openings [13][14]

Core Viewpoint - Abercrombie & Fitch Co. is expected to report strong fourth-quarter fiscal 2024 results, with anticipated revenue growth and earnings increase compared to the previous year [2][5][20] Financial Performance Expectations - The Zacks Consensus Estimate for fourth-quarter revenues is $1.56 billion, indicating a 7.6% growth year-over-year [2] - The consensus estimate for earnings per share is $3.49, reflecting a 17.5% increase from $2.97 reported in the same quarter last year [2] - Management expects net sales growth of 7-8% for the fiscal fourth quarter and an operating margin of 16% [8] Recent Business Trends - Abercrombie has seen positive momentum in both the Abercrombie and Hollister brands, supported by store optimization and digital investments [5][6] - The company reported strong performance during the holiday season, exceeding management's expectations [6][7] - Comparable sales growth across regions and brands contributed to net sales growth, driven by positive product assortments and marketing [6] Operational Insights - Abercrombie's operating costs have increased due to higher technology expenses and incentive-based compensation, with a projected 6% rise in adjusted operating expenses for the fourth quarter [10][11] - The company has maintained a healthy balance sheet and consistent free cash flow, which are expected to support growth [7] Stock Performance and Valuation - Abercrombie's shares have declined 25% over the past year, underperforming its industry peers and the S&P 500 [12][15] - The stock currently trades at a forward P/E multiple of 9.22X, which is lower than the industry average of 17.94X and the S&P 500's average of 21.96X, indicating an attractive valuation [16] Strategic Positioning - Abercrombie has strengthened its market position through digital initiatives and store optimization, which have driven sales and profitability growth [19] - The company's commitment to premium casual apparel and rebranding efforts have significantly boosted sales, particularly among millennial consumers [18][19] - Abercrombie is well-positioned for sustainable long-term success, capitalizing on market trends and creating shareholder value [19][20]