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. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  2. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Investing

    Retailers Rebel Against Black Friday: Bad Move?

    The Black Friday creep may have hit a wall as some stores are shutting their doors on Thanksgiving and even Black Friday to give employees the day off.
  5. Investing

    What’s the Difference Between Duration & Maturity?

    We look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
  6. Trading Strategies

    How to Trade In a Flat Market

    Reduce position size by 50% to 75% in a flat market.
  7. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  8. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  9. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  10. Markets

    Will Paris Attacks Undo the European Union Dream?

    Last Friday's attacks in Paris are transforming the migrant crisis into an EU security threat, which could undermine the European Union dream.
  1. How do mutual funds work in India?

    Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian ... Read Full Answer >>
  2. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  3. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  4. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  5. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  6. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>

You May Also Like

Trading Center