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What's in the Cards for Abercrombie (ANF) in Q2 Earnings?

Zacks Equity Research
·3 min read

Abercrombie & Fitch Co. ANF is scheduled to report second-quarter fiscal 2020 results on Aug 27, before the opening bell. Notably, the company has a negative earnings surprise of 36.2%, on average, for the trailing four quarters.

The Zacks Consensus Estimate for the second-quarter bottom line has widened to a loss of 90 cents in the past 30 days from a loss of 86 cents mentioned earlier. Moreover, the company reported a loss of 48 cents in the year-ago quarter. For revenues, the consensus mark is pegged at $660.3 million, suggesting a decline of 21.5% from the year-ago quarter’s reported figure.

Key Factors to Note

Abercrombie has been witnessing adverse impacts of the COVID-19 outbreak. Apart from impacts on sales, the company is likely to have witnessed additional costs related to the reduction of inventory due to the COVID-19 outbreak as well as lower promotions. This is expected to have impacted margins and the bottom line in the to-be-reported quarter. Further, sluggish performance in Hollister and Abercrombie brands is expected to have hurt the top line to some extent.

Abercrombie Fitch Company Price and EPS Surprise

 

Abercrombie  Fitch Company Price and EPS Surprise
Abercrombie Fitch Company Price and EPS Surprise

Abercrombie Fitch Company price-eps-surprise | Abercrombie Fitch Company Quote

Nevertheless, the company’s efforts to expand digital and omni-channel capabilities are likely to have provided some cushion. While stores remained closed since mid of March, it is expected to have witnessed strong online demand and leveraged its omni-channel capabilities to fulfill online orders and serve customers. The company’s investments in mobile, omni-channel and fulfillment are anticipated to have significantly aided growth of its digital business. These are likely to have cushioned the top line to some extent in the to-be-reported-quarter.

Moreover, the company is on track with the reopening of stores after the temporary closures due to the COVID-19 outbreak. On its last reported quarter’s earnings call, it expected the majority of the stores to reopen by the end of June. The store re-openings are anticipated to have contributed to sales in the fiscal second quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Abercrombie has a Zacks Rank #4 (Sell) and an Earnings ESP of -7.85%.

Stocks Poised to Beat Earnings Estimates

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

Best Buy Co., Inc. BBY currently has an Earnings ESP of +6.63% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation DG presently has an Earnings ESP of +9.64% and a Zacks Rank #2.

DICK’S Sporting Goods, Inc. DKS currently has an Earnings ESP of +30.93% and a Zacks Rank #3.

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