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Here's Why Abercrombie (ANF) is Poised for Earnings Beat in Q1

·4 min read
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Abercrombie & Fitch Co. ANF is scheduled to report first-quarter fiscal 2021 results on May 26, before the opening bell. The leading apparel retailer is likely to register robust top- and bottom-line growth when it reports first-quarter fiscal 2021 numbers.

The Zacks Consensus Estimate for fiscal first-quarter loss is pegged at 45 cents per share. This suggests a narrower loss from $3.29 reported in the year-ago quarter. The consensus estimate has witnessed positive revisions of 5 cents in the past 30 days. For revenues, the consensus mark is pegged at $682.1 million, suggesting growth of 40.5% from the year-ago quarter’s reported figure.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 25%. However, it has a negative earnings surprise of 404.9%, on average, for the trailing four quarters.

Abercrombie & Fitch Company Price, Consensus and EPS Surprise
Abercrombie & Fitch Company Price, Consensus and EPS Surprise

Abercrombie & Fitch Company Price, Consensus and EPS Surprise
Abercrombie & Fitch Company price-consensus-eps-surprise-chart | Abercrombie & Fitch Company Quote

Key Factors to Note

Abercrombie’s first-quarter fiscal 2021 results are expected to reflect gains from a robust online demand, which has been aiding the otherwise drab top line since the onset of the pandemic. In the fourth quarter of fiscal 2021, continued strength in traffic across the company’s websites and apps led to its highest-ever digital sales and gross margins in the past eight years. It remains encouraged with its strong online presence. The momentum in the digital platform is expected to have continued in the fiscal first quarter.

Benefits of investments in omni-channel capabilities as well as marketing, data and analytics have been growth drivers. The company’s results are expected to reflect gains from the progress on its continued investments toward bolstering omni-channel capabilities, including curbside and ship-from-store services. Abercrombie has also been striving to optimize capacity at its distribution centers to meet the increased digital demand, which is expected to have bolstered digital sales.

Moreover, the company’s bottom line in the fiscal first quarter is expected to have gained from strong margins, stemming from prudent inventory-management strategies. Also, cost-cutting measures like occupancy cost reduction through store closures and right-sizing are anticipated to have bolstered margins in the to-be-reported quarter.

On the last reported quarter’s earnings call, management predicted year-over-year gross margin growth of at least 500 bps for the fiscal first quarter.

However, Abercrombie has been witnessing adverse impacts of the COVID-19 outbreak, which have been hurting the top line. Sales have been primarily impacted by the pandemic-induced store closures and sluggish store traffic at stores. Also, elevated marketing, general and administrative expenses, stemming from greater performance-based incentive compensation, are expected to have remained headwinds.

What the Zacks Model Unveils

Our proven model conclusively predicts an earnings beat for Abercrombie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Abercrombie sports a Zacks Rank #1 and has an Earnings ESP of +43.82%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:

Capri Holdings Limited CPRI currently has an Earnings ESP of +528.57% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK’S Sporting Goods, Inc. DKS has an Earnings ESP of +17.59% and a Zacks Rank #2 at present.

Nordstrom, Inc. JWN currently has an Earnings ESP of +14.93% and a Zacks Rank #3.

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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

Nordstrom, Inc. (JWN) : Free Stock Analysis Report

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