Apparel maker Abercrombie & Fitch Co. (NYSE:ANF) saw its share prices climb by 32 percent week-on-week, with investor optimism primarily bolstered by a massive earnings beat.
In an earnings call earlier in the week, the apparel maker said that earnings per share in the second quarter of fiscal year 2026 ended at $4.17, markedly exceeding Wall Street’s expectations of $1.99.
Attributable net income grew by 13 percent to $250.8 million from $221.8 million in the same period last year, while net sales jumped by 5 percent to $1.27 billion, from $1.208 billion year-on-year. The increase marked its 15th consecutive quarter of net sales growth.
Photo by Tima Miroshnichenko on Pexels
By segment, the Americas remained the highest net sales contributor, at $1.02 billion, or a 5 percent jump from $974.2 million in the same period last year, followed by the EMEA (Europe, the Middle East, and Africa) region with $201.99 million, or an increase of 2.4 percent from $197.21 million.
The Asia Pacific region accounted for $44.16 million in sales, also a jump of 19 percent from $37.15 million year-on-year.
Analysts Mixed
Two investment companies issued coverage on the stock following its second-quarter earnings results.
UBS, for its part, raised its price target to $185 from $153 previously, while keeping its buy recommendation, citing its position as a leading player in specialty retail, which supported the success of Abercrombie and Hollister brands.
It also believed that Abercrombie & Fitch Co. (NYSE:ANF) was well-positioned to sustain its growth through its strategies such as product innovation, category expansion, disciplined inventory management, and a larger international footprint.
UBS was projecting a 13-percent compounded annual growth rate in earnings per share for Abercrombie & Fitch Co. (NYSE:ANF) over the next five years, with robust growth expected to propel share price higher to the $185 price target.
For its part, Citigroup cited accelerating sales from Hollister, a second-quarter beat, and an encouraging third-quarter outlook.
However, it noted that the risk/reward profile was “not as attractive as it was before,” leading it to downgrade its rating to neutral from buy previously.
“We rate the shares of Abercrombie & Fitch Neutral. ANF has two brands that each seem well-positioned for growth in [fiscal year 2026] at both A&F and Hollister. We believe the company will have another year of strong FCF and earnings upside, but we think this is priced in at current trading levels, and we now see a more balanced risk/reward,” it said.
Lower Hedge Fund Positions in Q2
Institutional investors also appeared to have become more cautious about the stock, as evidenced by the drop in hedge fund positions and their committed investments.
Data from Insider Monkey showed that 36 hedge funds held positions in the company as of the second quarter of the year, down from 39 in the first three months.
Their combined holdings also fell by 20.4 percent to $609.9 million from $766.5 million quarter-on-quarter.
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