Abercrombie & Fitch: Sales Falls and Losses in the First Quarter

According to the market, the results have been very bad. Sales have fallen by 3% to $685 million, which contrasts with the expectations of analysts, who expected an increase of 3%. Comparable sales, which are recorded by the shops that have been open at least 12 months, fell even more: 4%. The company also continues to accumulate losses; in the first quarter were almost $40 million, although it is true that halved which was suffered in the same period last year.

The main reason of this decline is competition, especially in the United States. In this country, its revenues were down 5%, while revenue remained constant at international level. In terms of brands, sales of its parent brand as well as Hollister brand fell in the quarter. The company has increasing problems in supporting tough competition from its competitors, led by Zara and H&M.

The company expects to soar from the fiscal second half thanks to the effect of the restructuring that has taken place since 2014, which has been a major change in the executive positions of the company and its strategy. Two years earlier, Abercrombie results began to suffer after the departure of Mike Jeffries as CEO, the executive that drives the company becoming an icon of youth and transgressive fashion. Under his tenure, the company earned almost $200 million.

So far and in the absence of analysis of these results, the consensus holds a price target of $27.6 per share, with an upside potential close to 30%, with an average recommendation to “hold” its titles.

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