Note: ANF’s FY’22 ended on January 28, 2023.
After almost a 139% growth year-to-date (and a 40% rise over last month), at the current price of around $55 per share, we believe Abercrombie & Fitch’s stock (NYSE: ANF), a specialty retailer selling casual clothing and footwear – is fairly priced. ANF stock has increased from around $40 to $55 over the last month, outperforming the broader indices, with the S&P falling slightly over the same period. The fiscal year 2023 began with low expectations for the retailer. It was only expected that net sales would grow by 1% to 3% year-over-year (y-o-y) in FY’23. However, the business has so far exceeded those expectations. Additionally, Abercrombie’s profits are significantly higher than expected. In Q2 (ended July), the company had an operating margin of 9.6%, significantly exceeding its original guidance of 4% to 5% for the full year. The company’s management raised its guidance after its Q2 results. As opposed to the high end of the original guidance, the company now expects net sales to grow 10% this year. Moreover, it expects a full-year operating margin of 8% to 9% – double what it was expecting earlier this year. In light of this, we believe the gains realized by the stock have been well deserved.
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