Abercrombie & Fitch Co. (ANF): Great Brands And A Great Plan

Page 1 of 2

Abercrombie & Fitch Co. (NYSE:ANF) shareholders have had a bit of a roller-coaster ride over the past several years.  This company has several brands that are and have been popular among the “cool kids” even since I was in high school.  However, as their products are relatively expensive, the recession of a few years ago hit Abercrombie particularly hard, as it did most retailers of “luxury” items.

With the massively declining sales during the recession, the stock hit a low of $13.66 in 2009, down from the peak of $85.77 just the year before.  Since then, the company’s cost-cutting and growth efforts have paid off; sales are up, and the shares have rebounded nicely.  With the company set to report earnings on February 13, shareholders will be looking for signs that in 2012 the company continued on the right path for growth.

Abercrombie & Fitch Co. (NYSE:ANF)Company Profile

Abercrombie has been around since 1892; however, it gained its widespread popularity much more recently, with most of its rapid growth occurring in the 1990’s.  Sales rose from $85 million in 1992 to $1 billion by 1999, and have continued to climb steadily to over $4 billion today.

The company operates four retail brands; Abercrombie and Fitch, Abercrombie Kids, Gilly Hicks, and Hollister Co., with a total of over 1,000 stores.  Most of the company’s stores are in the U.S., with 131 of the stores being international.

Abercrombie’s target demographic is the 7-24 age group, with a special emphasis on teenagers (and those who wish they were still teenagers).  According to consumer data reports, this age group accounts for 31% of apparel spending, with teenagers accounting for 18%.  Teens tend to have the most apparel spending influence of all age groups, which is the main reason that Abercrombie (and others) tailor their clothing lines to teens’ preference.

Growth Prospects

Abercrombie’s plans to increase shareholder value are more focused on getting rid of underperforming stores than they are on growth and expansion.  Since 2010 the company has closed 135 stores, with another 180 underperforming stores identified as possible closures by 2016.  The company wants the primary driver of growth to be increasing same-store sales, as well as increasing their online business, where overhead is much less.

That said, there are some international markets that Abercrombie has active plans to expand into, particularly the U.K, Canada, and Asia.  During 2013, the company plans to open a total of 40 stores (mostly Hollister) in those countries.

Finally, one of the best ways the company plans to return value to its shareholders is through its aggressive buyback program, which was increased this past year to authorized buybacks of 22.9 million shares.  Bear in mind, there are only 79.6 million outstanding shares currently.

Valuation

Speaking of creating shareholder value, those who invest now may be handsomely rewarded if the company’s plans pan out over the next few years.  When the company reports its earnings, the consensus calls for $2.98 per share for the fiscal year, meaning Abercrombie trades at 17.1 times earnings.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!