Abercrombie and Fitch Co (ANF)

[MiamiGent]

ANF I continued shorting from yesterday. The 40% rise in PPS last four days has as much to do with an ex dividend date of 11/21, a short squeeze and market exuberance as it does Earnings reported on 11/14. (A)
Beating revised down earnings (1.) and recent GS involvement are likely goosing things along here.(2.)
Same store sales were down 3% and domestic sales were flat.
Reliance on international growth is a dubious expectation in today's global economy.
Improved earnings from shuttering stores (3.) does not equate to growth and belies A&B's Trailing 12 month P/E of 31
Experts expect this year's retail holiday sales to be below last year, which was below the previous year.(4.)
A&F's CEO is thought to be overpaid and flaky by some and will be pre-occupied with court proceedings near term.(5.)
A&F lags its direct competitor GAP in several key measurements (GPS).
The RSI shows overbought.
I am playing for a pullback of a good few dollars from today's 43.80 close.
MG

http://stockcharts.com/h-sc/ui?s=ANF

A. Abercrombie & Fitch 3rd-Quarter Profit Up 40% on Stronger Margins, Sales Growth Abroad
BY Dow Jones & Company, Inc. — 7:27 AM ET 11/14/2012

Abercrombie & Fitch Co.'s (ANF) fiscal third-quarter earnings rose 40% as the teen apparel retailer posted stronger margins and stronger sales abroad.

Shares surged 21% to $37.70 in premarket trading as the results topped expectations and Abercrombie raised its fiscal-year earnings outlook. Through Tuesday's close, the stock was down 36% this year.

For the fiscal year, Abercrombie now expects per-share earnings of $2.85 to $ 3, compared with the company's prior estimate for $2.50 to $2.75.

Abercrombie has shown weakness in recent quarters amid disappointing sales in Europe and an increase in markdowns. The company has been closing stores in an effort to improve margins in its U.S. business.

Chief Executive Mike Jeffries on Wednesday said "Our U.S. chain store business posted healthy growth on top of a strong quarter a year ago, and we saw sequential trend improvement in our international business."

For the period ended Oct. 27, Abercrombie reported a profit of $71.5 million, or 87 cents a share, up from $50.9 million , or 57 cents a share, a year earlier. Revenue increased 8.7% to $1.17 billion.

Analysts polled by Thomson Reuters most recently projected earnings of 59 cents on revenue of $1.11 billion.

Gross margin rose 2.4 percentage point to 62.5%.

Total domestic sales, including direct-to-consumer sales, were flat at $818.6 million, while sales abroad climbed 37% to $351.1 million.

However, same-store sales were down 3%, including a 4% drop for the namesake brand, 3% for abercrombie kids, and 1% for Hollister Co.

The results topped expectations and Abercrombie raised its fiscal-year earnings outlook. Through Tuesday's close, the stock was down 36% this year.

Abercrombie has struggled in recent quarters as its fashions did not resonate with its teen and young adult clientele. Coming into the report, a number of analysts were expecting more of the same.

Instead Abercrombie delivered sequential improvement in comparable-store sales, a better tone regarding the business, and improvement in international business and 240 basis points in gross margin expansion. "The question will be this as the shorts get squeezed in the early going: is Abercrombie back in a big way in the malls," said independent analyst Brian Sozzi.

For the fiscal year, Abercrombie now expects per-share earnings of $2.85 to $ 3, compared with the company's prior estimate for $2.50 to $2.75.

Abercrombie has shown weakness in recent quarters amid disappointing sales in Europe and an increase in markdowns. The company has been closing stores in an effort to improve margins in its U.S. business.

In the first and second quarters, "We were on the defense (with) too much inventory and we weren't flowing newness," Mr. Jeffries said. "So that's the biggest change. I think we're flowing faster and better than we ever have."

Still, "with the critical fourth quarter still largely ahead of us and significant macroeconomic uncertainties remaining, we continue to be cautious in our near-term outlook," Mr. Jeffries said.

Abercrombie delivered improvement in comparable-store sales, international business and gross margin. "The question will be this as the shorts get squeezed in the early going: Is Abercrombie back in a big way in the malls," said independent analyst Brian Sozzi.

Write to Karen Talley at [e-mail] and write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires
11-14-12 0727ET


1.(prior lowering of Guidance)
Guidance EX-99.1 2 d390397dex991.htm PRESS RELEASE
Exhibit 99.1

ABERCROMBIE & FITCH PROVIDES BUSINESS UPDATE

New Albany, Ohio, August 1, 2012: Abercrombie & Fitch Co. (NYSE: ANF) today reported on the Company’s performance for the quarter ended July 28, 2012.

Net sales increased 4% to $951.4 million for the quarter, compared to net sales of $916.8 million for the fiscal quarter ended July 30, 2011. Total US sales, including direct-to-consumer sales, decreased 5% to $648.0 million. Total international sales, including direct-to-consumer sales, increased 31% to $303.4 million. Total Company direct-to-consumer sales, including shipping and handling, increased 25% to $127.7 million.

Comparable store sales for the quarter were down 10% relative to last year. Comparable store sales were down 5% in US stores and were down 26% in international stores. Within the quarter, comparable store sales were weakest in June.

The Company expects gross margin rate erosion for the second quarter of approximately 100 basis points versus last year. Additionally, the Company expects inventory at cost to be up approximately 20% at the end of the second quarter versus a year ago.

The Company expects to report diluted earnings per share for the quarter of approximately $0.15 to $0.18.

Based on a lower sales trend than previously projected, the Company now expects full year diluted earnings per share of approximately $2.50 to $2.75. This projection assumes same store sales to be down 10% for the second half of the year, consistent with the second quarter trend. The Company continues to expect substantial recovery of the gross margin rate erosion seen in 2011 on a 2012 full year basis. In addition to lower sales, the reduction in projected earnings per share also reflects the impact of a stronger US dollar and the impact of an increase in the effective tax rate primarily as a result of a reduced benefit related to international operations taxed at a lower rate.


2.Abercrombie & Fitch Is Said to Retain Goldman Sachs
BY Dow Jones & Company, Inc. — 1:58 PM ET 09/12/2012

Abercrombie & Fitch Co. (ANF) has retained Goldman Sachs Group Inc. (GS) to advise it amid continued pressure from activist fund Relational Investors LLC, CNBC reported Wednesday citing people familiar with the matter.

The investment fund as of the second quarter held a 3.8% stake in the clothing retailer, CNBC said.

Abercrombie & Fitch (ANF) declined to comment to Dow Jones Newswires.

Full story at http://www.cnbc.com/id/49006989
Write to [e-mail]

(END) Dow Jones Newswires
09-12-12 1358ET


3. Abercrombie & Fitch Closing 180 Stores By 2015
Huffington Business
November 19, 2012
(First Posted: 02/15/2012. Updated: 07/18/2012)

Aberercrombie & Fitch, the Ohio-based teen retailer, plans to close 180 of its U.S. stores by 2015, CEO Mike Jeffries told analysts on a conference call Wednesday.

Unlike its flagship in New York City -- where buff men in minimal clothing lure shoppers around the clock -- many of Abercrombie's 1,014 U.S. stores are under-performing, tucked away in the empty hallways of aging malls. Apparently, you can't just stick shirtless models outside of every store.

By closing unprofitable locations, Abercrombie hopes to elevate its brand image as well as its profit margins. The 180 stores announced today are only the latest in a string of closures: last year, Abercrombie closed 71 U.S. stores, including 68 during the busy holiday shopping season. The company did not specify where the new closures will occur.

Meanwhile, Abercrombie is opening new locations abroad. With the U.S. economy still rocky, retailers like Abercrombie and Gap Inc. are fleeing to Europe and Asia in search of shoppers with deeper pockets.

In Europe, Abercrombie has expanded aggressively, opening seven flagships and 62 Hollister stores since 2007. Yet even this initiative is now hitting economic road bumps. Abercrombie's store traffic and sales slowed down over the past year, as Europeans cut back on spending in the face of a worsening debt crisis.

Asia, it seems, is the next frontier. Abercrombie & Fitch opened its first Singaporian store in December and its first Chinese store, a Hollister Co., in Hong Kong in August. A third Chinese location is slated to open in March. "We see growing awareness and familiarity with our brands in China as a major opportunity," said CEO Mike Jeffries on Wednesday’s call.

In Europe, much of Abercrombie's success came from the appeal of its upscale but casual all-American image. Whether this will seduce Asian shoppers -- and whether the company can snatch back the attention of teens at home -- remains to be seen.


4.The Wall Street Journal
November 18, 2012
Retailers' Wish List: Cheery Shoppers .
By SHELLY BANJO

As retailers approach the holiday shopping season, when consumers traditionally give a big boost to the U.S. economy, some are seeing worrisome signs that Americans are tightening their purse strings.

As retailers approach the holiday shopping season, when consumers traditionally give a big boost to the U.S. economy, some are seeing worrisome signs that Americans are tightening their purse strings.
Their official stance is cautiously optimistic: Retail analysts at Bain & Co. expect holiday-shopping sales to grow 3.5% in 2012, a slight drop from a 3.7% rise in 2011 and 3.8% in 2010. This compares with increases of 5% or more in 2004 and 2005 and a 20-year average of 3.8%, according to Bain's analysis of U.S. Commerce Department retail-sales figures.
Holiday sales account for one-fifth or more of retailers' annual sales and can mean the difference between a successful year and a soft one. But more experts are seeing signs that this year might see sluggish growth akin to last year's.

After posting strong sales growth in the first half of the year, that growth slowed in the third quarter at retailers across the spectrum, including Wal-Mart Stores Inc., WMT +1.46%Target Corp. TGT +1.40%and Saks Inc. SKS +3.15%
"We are optimistic about sales but are also realistic," said Wal-Mart Chief Financial Officer Charles Holley. "Current macroeconomic conditions continue to pressure our customers."

Consumers continue to be worried about jobs, as well as gasoline and food prices, he said. To cater to squeezed Christmas shoppers, Wal-Mart was one of many retailers that for a second year brought back layaway—where customers pay for a product in installments before being able to take it home—so shoppers reluctant to add to their credit-card debt could budget for gifts throughout the fall. Wal-Mart began layaway a month earlier than last year and said it already had brought in $300 million more in expected sales through the program than it did last year.

Rosalind Brewer, chief executive of Wal-Mart's Sam's Club chain, said she saw customers starting to shop for their Thanksgiving meal in early October, a sign people were trying to stretch their paychecks in order to celebrate the holidays.

Small businesses, which make up about half of the warehouse chain's customers, "continue to experience economic pressure and uncertainty, which led to slow growth in business-member traffic," Ms. Brewer said. "We anticipate this softening could remain a headwind in the fourth quarter."

A cutback by consumers, which have been the driving force behind the U.S. recovery, could be felt even deeper at a time when businesses have restrained their investment and manufacturing has slumped in response to a slowdown across Europe and in countries like China.

Americans' hopes had been buoyed in recent months by the slowly improving job market and climbing home prices. Consumer confidence rose to five-year highs in November, according to the Thomson Reuters/University of Michigan preliminary consumer sentiment index. Meanwhile, U.S. retail and restaurant sales, as measured by the Commerce Department, climbed for three months before pulling back by 0.3% in October, due in part to the effects of super storm Sandy.

But as Americans approach the post-Thanksgiving weekend that kicks off the holiday-shopping season, economists say that worries are seeping in over an election that changed little in Washington and the "fiscal cliff" of billions of dollars in spending cuts and tax increases set to begin in January if a deal isn't reached in Washington. And Sandy's aftermath is still being felt in parts of the Northeast, meaning some consumers may be focused on rebuilding their homes and businesses rather than on putting presents under the tree.

"Consumer confidence is really decoupled from the reality of the hard data," said RBC Capital Markets economist Jacob Oubina. "The idea that holiday shopping will be strong is at odds with a consumer who doesn't have the wherewithal to drive consumption and a backdrop of confidence that's due for retrenchment."

Personal savings as a percentage of disposable income dropped to 3.3% in September, the lowest rate since November 2011. A decline in the personal savings rate, which shot up to as high as 8.3% during the recession, can be a sign that consumers are feeling more financially secure.

But economists worry consumers are dipping into savings out of necessity, rather than confidence, as wage increases remain anemic and food and fuel prices stay high.

"Whatever spending we've seen is coming directly out of savings," said IHS economist Chris Christopher.

Nearly 60% of consumers said they planned to decrease holiday spending ahead of the fiscal cliff, according to a November survey of 1,007 adults conducted by Ipsos for RBC Capital Markets. The number of people following the fiscal cliff drama rose to 61% in November from 45% in June, RBC said. "The more people tune into what's happening and realize they are about to take less home in their paychecks, the more confidence dwindles," Mr. Oubina said.

Still, the American consumer has a history of being resilient—especially during the holidays. Retailers can only hope that history repeats itself.


(5) 5.The 5 Dumbest Things on Wall Street This Week: Nov. 16
The Street
By Gregg Greenberg
Abercrombie's Asinine CEO

Sorry, Michael Jeffries. Just because Abercrombie & Fitch (ANF) announced a Street-beating and short-skewering quarterly earnings report doesn't mean you are piloting the sexy teen retailer with aplomb. Your private jet proclivities still have us convinced that the company's long-suffering shareholders would be better off if you flew off into the sunset.

First, the good news. Abercrombie shares popped 30% Wednesday after the company said it earned $71.5 million in the third quarter, or 87 cents a share, compared with $50.9 million, or 57 cents, last year. Wall Street's analyst community proved to be way off on their Abercrombie estimates, penning in 59 cents on average. Sales rose 9% to $1.17 billion, led by a 37% rise in international markets.

Next, the not-so-good news. While the Q3 results and full-year guidance were admittedly impressive, the surge in the stock had a whole lot more to do with the scrambling of short sellers, a group who at last check held more than 15% of the company's shares in their accounts, than Abercrombie's performance. The company's same-store sales fell 3% in the third quarter, and while that's an improvement over its 10% drop in the second quarter, it's still not particularly heartening for investors seeking a retail name to try on.

Abercrombie's stock certainly has not been fashionable for a long time. It's down almost 30% in the past year even after Wednesday's run-up, while shares of competitors like The Gap (GPS), American Eagle (AEO), Urban Outfitters (URBN) and Buckle (BKE) have risen 68%, 44%, 35% and 10% respectively.

Not that Abercrombie's 14% decline in 2011 kept Jeffries from collecting a league-leading $48 million in total pay of course. Macy's (M) CEO Terry Lundrgen, by comparison, pocketed $17.6 million over the same period for guiding a company almost 5 times Abercrombie's size, and his stock went up 28.5% to boot.

But that's old news. Here's the really disturbing new news.

A judge this Tuesday ordered Jeffries to grant a second deposition in an age-discrimination lawsuit brought by a former corporate jet pilot in April 2010, according to Bloomberg. Instead of sitting in his corner office in New Albany Ohio, Jeffries will be forced to sit through seven hours of questioning in Philadelphia over the next two weeks as a result of what U.S. District Judge Paul Diamond called Abercrombie's "disturbingly belated production of highly damaging evidence."

Jeffries was originally deposed two years ago as part of the lawsuit, which was filed in federal court in Philly by corporate jet pilot Michael Stephen Bustin, who is now 55 and claims he was canned illegally and replaced by a younger man. The suit revealed Jeffries's wacky specifications for the airplane's flight attendants, from the way they address him to the kind of cologne they spritz on.

For example, Jeffries's detailed flight instructions command male staffers to wear Abercrombie polo shirts, flip-flops, a "spritz" of the firm's cologne, sunglasses and boxers. And, according to Bloomberg, when Jeffries or his boyfriend Matthew Smith make a request, the reply must be "No problem" as opposed to "Just a minute" or "Sure." He even has rules for displaying the toilet paper!

What a load of crap. His company is in a veritable free-fall and this joker is making sure that the washcloths are "tri-folded."

Unfortunately, Jeffries most recent contract reportedly nets him an obscene payout of more than $100 million if he loses his job due to a change in ownership. That makes it difficult for shareholders to boot him before his contract ends in late February 2014.

But if they could find a way to jettison the jet-crazy Jeffries before then, we would certainly be on board. Heck, we would even wear flip-flops and fold the washcloths if it would help the cause