Abercrombie & Fitch (NYSE:ANF) provided investors with a bullish future outlook on sales and earnings growth at an analyst meeting held in April 2011. The company hopes to achieve these ambitious goals through growth overseas and in the direct to consumer segment.

TUTORIAL: Brokers and Online Trading

Fiscal 2010 Review
Abercrombie & Fitch reported total sales in fiscal 2010 (ended January 29, 2011) of $3.47 billion, with 73% of these sales from its U.S. store base. Another 15% sales were generated internationally, and 12% came from the direct to consumer segment. Abercrombie & Fitch reported GAAP net income of $1.67 per diluted share in fiscal 2010.

Comparable store sales grew nicely in fiscal 2010, ending the year up by 7%. Abercrombie & Fitch did better than many of its competitors in this metric.

Aeropostale (NYSE:ARO) reported only a 1% increase in comparable store sales in the fiscal year ending January 29, 2011, while American Eagle Outfitters (NYSE:AEO) reported a 1% decline in comparable store sales in the most recent fiscal year. Urban Outfitters (Nasdaq:URBN) reported a 2% decline in the final quarter of the most recent fiscal year.

Sales and Earnings Goals
Abercrombie & Fitch plans to grow earnings to $4.75 per share in fiscal 2012 (ends January 2013). The consensus earnings estimates for the company were at $3.97 per share just prior to the meeting. Abercrombie & Fitch also expects to reach sales in fiscal 2015 of $7.5 billion.

Abercrombie & Fitch is counting on better growth opportunities overseas, and will invest in increasing the number of International Flagship stores and Hollister locations in Asia and Europe.

Expansion Plans: International Flagship Stores and Hollister Europe
Abercrombie & Fitch currently has five International Flagship stores open, including two in Asia and three in Europe. During the current fiscal year, the company plans to double this store base, with locations in Paris, Madrid and several other select cities. Abercrombie & Fitch plans some aggressive expansion here over the next few years with a long-term goal of approximately 30 stores.

Another area of growth for Abercrombie & Fitch is in its Hollister brand in Europe. The company currently has 29 stores in four countries and has a long-term goal of increasing its store count to 185 across 15 countries.

Direct to Consumer and Domestic Stores
Abercrombie & Fitch is also counting on strong growth in direct-to-consumer or internet sales to meet its earnings goals. The company reported direct-to-consumer net merchandise sales of $352.5 million in fiscal 2010, and expects to increase this to $1 billion.

Abercrombie & Fitch is planning to shrink its store base in the United States and will close 50 locations during the current fiscal year. The company will also work to increase its U.S. store productivity with a goal of 90% of 2007 levels by 2012.

The Bottom Line
Abercrombie & Fitch promised the investment community strong growth in sales and earnings over the next few years, and expects to keep this promise through the expansion of its international store base and increased internet sales. (For related reading, also take a look at Analyzing Retail Stocks.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Fundamental Analysis

    5 Must-Have Metrics For Value Investors

    Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know.
  2. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  3. Stock Analysis

    6 Risks International Stocks Face in 2016

    Learn about risk factors that can influence your investment in foreign stocks and funds, and what regions are more at-risk than others.
  4. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  5. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  6. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  7. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  8. Investing News

    Tufts Economists: TPP Will Reduce U.S. GDP

    According to economists at Tufts University, the TPP agreement will destroy half a million jobs in the U.S. by 2025.
  9. Stock Analysis

    The Top 5 Micro Cap Alternative Energy Stocks for 2016 (AMSC, SLTD)

    Follow a cautious approach when purchasing micro-cap stocks in the alternative energy sector. Learn about five alternative energy micro-caps worth considering.
  10. Stock Analysis

    Analyzing Porter's Five Forces on Under Armour (UA)

    Learn about Under Armour and how it differentiates itself in the competitive athletic apparel industry in light of the Porter's Five Forces Model.
RELATED FAQS
  1. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  2. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  3. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  4. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  5. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
  6. What is the formula for calculating earnings per share (EPS)?

    Earnings per share (EPS) is the portion of a company’s profit that is allocated to each outstanding share of common stock, ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center