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The Anti-Abercrombie & Fitch Co. (ANF): Attractive & Fat

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Can’t say I didn’t warn you about Abercrombie & Fitch Co. (NYSE:ANF) with its PR nuclear meltdown thanks to CEO Michael Jeffries. The company reported on May 24 with disappointing numbers, and the stock tanked over 10% intraday.

Abercrombie & Fitch Co. (NYSE:ANF)

The company claimed inventory shortages, and analysts dismissed the anti-Abercrombie & Fitch Co. (NYSE:ANF) blowback from CEO Jeffries’ 2006 remarks claiming the brand was only for the cool, attractive kids. Revelations (not new) had hit the wires that the company doesn’t carry women’s sizes above a 10 (the average American woman is a size 12 or 14) or XL and bigger.

While the company apologized, I can’t say I felt any sadness when the stock tumbled. Several retail and consumer goods names celebrate the beauty of all kinds of women and are making money doing so.

Attractive (valuations) & Fat (profits)

A young blogger calling herself the Militant Baker has started the Attractive & Fat campaign with softbox lit photos of her Rubenesque self wearing Abercrombie & Fitch Co. (NYSE:ANF). Jeffries must be writhing with fury, especially when other companies that welcome his “uncool kids” are making money hand over fist.

It’s sad that the fashion world encourages a body image so unsustainable that young models (mostly under 22) resort to eating tissues to stay slender. But fashion designers are starting to take notice of a $13.9 billion US market, the fastest-growing market in fashion, and the fourth annual Full Figured Fashion Week next month in NYC will feature full-figured models strutting retailers like Ralph Lauren Corp (NYSE:RL), Jones New York, and Michael Kors Holdings Ltd (NYSE:KORS). These companies are bucking the trend and winning the grateful custom of women.

Three companies in particular that curry the favor of larger woman without being patronizing are Ascena Retail Group Inc (NASDAQ:ASNA), Chico’s FAS, Inc. (NYSE:CHS), and Nordstrom, Inc. (NYSE:JWN). A surprise to me was Nordstrom. Like many, I thought of it as a high end proposition, the province of skinny blonde socialites, but while researching found several plus-size fashionista sites listing Nordstrom as a great place to shop. The Curvy Fashionista had a feature on Nordstrom’s assortment of really stunning prom dresses.

Nordstrom, Inc. (NYSE:JWN) is simply a peerless retailer. Their customer service is the gold standard for any industry. Why Warren Buffett doesn’t own their stock is beyond me when it has everything a Buffett stock personifies: sterling reputation, a 2.00% yield, over a century of experience, and solid management (corporate governance risk rating of 1, the best). Nordstrom would never allow the likes of a Jeffries to endanger their customers’ and shareholders’ trust.

Nordstrom’s forward P/E is 14.15 and the PEG is 1.38, and it also has a sustainable payout ratio of 31%. The return on equity is 36.82%.

Nordstrom, Inc. (NYSE:JWN) is tech-fashion forward, taking the lead in using iPads and tablets on the floor to order inventory from another store to help a customer or to check out. Their 124 Nordstrom Rack outlet stores are the Holy Grail for the budget fashionista, with better deals than TJ Maxx.

Analysts expects an 11.54% five year growth rate (yoy) and give the company a price target of $62.00. The stocks compares favorably with Macy’s, Inc. (NYSE:M), although Macy’s, Inc. (NYSE:M) is a slightly better value with a lower PEG of 0.86 and a slightly higher yield of 2.10%.

A women’s specialty retailer that has exposure to the lush and fabulous is Chico’s FAS, Inc. (NYSE:CHS), owner of brands Chico’s, Soma Intimates, WhiteHouse/Black Market, and Boston Proper. It has 600 Chico’s, 400 White House/Black Market, and 190 Soma boutiques. Boston Proper is mainly an e-commerce site with one bricks and mortar store. Analysts like the name, with 4 Strong Buys, 4 Buys, and 8 Holds.

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