Citi Raises Price Target for Abercrombie & Fitch (ANF), Keeps Buy Rating

On Thursday, May 29, Citi analyst Paul Lejeuz raised the price target for Abercrombie & Fitch Co. (NYSE:ANF) from $98 to $105 and kept a “Buy” rating. This decision came after the company reported strong Q1 fiscal 2025 earnings per share (EPS) of $1.59, which beat expectations thanks to stronger sales even when the gross margins were lower than expected because Abercrombie & Fitch offered higher promotions.

A close-up of a customer trying on a piece of apparel in the retailer’s spacious dressing room, emphasizing the company’s focus on personal care and experience.

Although Abercrombie & Fitch Co.’s (NYSE:ANF) Q1 comparable sales dropped by 10%, which was below management’s own forecast, the company expects sales to rebound in the second half of the year. Abercrombie & Fitch Co. (NYSE:ANF) also expects that the current pressure on gross margins, caused by higher inventory levels, will ease later in the year. Hollister, one of the company’s brands, is expected to maintain strong sales trends and average unit retail prices, though with some deceleration compared to the first half.

According to Citi’s analysis, there are some doubts regarding the improvement in Abercrombie & Fitch’s sales trends and average unit retail prices in the second half of the year. However, the firm’s analysis suggests that the company has the flexibility to protect its margins. This is partly because it managed its selling, general, and administrative expenses well in Q1 fiscal 2025. Additionally, the strong performance of the Hollister brand helps Abercrombie & Fitch Co. (NYSE:ANF) offset challenges. Moreover, the company’s cash position, which is about 15% of its market value, even after buying back about 5% of its shares in Q1 for $200 million, supports a good risk/reward balance according to the firm’s analyst.

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