Abercrombie (ANF) An Outlier Among Strong Shopping Mall Stocks
Zacks Investment Research | Aug 30, 2016 05:51AM ET
Shares of Abercrombie & Fitch (NYSE:ANF) fell over 20% on Tuesday after the specialty retailer reported lackluster second-quarter financial results. Interestingly enough, Abercrombie’s performance is in direct contrast to some of its biggest competitors throughout the shopping mall retail landscape, which has seen a resurgence this earnings season.
In the second quarter, Abercrombie’s adjusted loss per share of 25 cents was wider than the Zacks Consensus Estimate of a loss of 23 cents. Revenues of $783 million were down nearly 4% year-over-year and missed the Zacks Consensus Estimate of $789 million. The company also saw comparable store stores decline by 4% (also read: Abercrombie Stock Down on Wider Loss & Soft Sales ).
In comparison, other retailers with a focus on young adults and storefronts primarily located in shopping walls performed well this quarter. One noteworthy competitor is American Eagle (NYSE:AEO) , which posted earnings of 23 cents per share on revenues of $823 million, beating the Zacks Consensus Estimates of 21 cents per share and $819 million, respectively.
American Eagle saw comparable-store sales growth of 3%, marking its sixth consecutive quarter of comps growth, and the company now holds a Zacks Rank #2 (Buy) after a wave of positive estimate adjustments rolled in following the release of its report.
Urban Outfitters (NASDAQ:URBN) is another example of a mall-based retailer that competes with Abercrombie. In its latest earnings report, Urban Outfitters posted earnings of 66 cents per share, beating the Zacks Consensus Estimate of 56 cents per share. The company also beat on revenues, with sales of $891 million edging out our consensus estimate of $889 million.
Urban Outfitters jumped to a Zacks Rank #1 (Strong Buy) based on the estimate adjustments that followed its earnings announcement, and the stock has now gained over 20% over the last four weeks. Also in the urban clothing sphere is Tilly’s (NYSE:TLYS) which beat on both earnings and revenue and is currently a Zacks Rank #1 (Strong Buy).
It’s also worth taking a look at Foot Locker (NYSE:FL) , which might appeal to a different demographic of shoppers than Abercrombie, but is still a retailer with storefronts mainly in malls. Foot Locker recently posted a double-beat with comparable store sales growth of 4.7%.
The overall point here is that much has been said about the death of the American shopping mall recently. Heck, even our own Dave Bartosiak made that proclamation after the sector’s sluggish Q1 earnings season:
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However, recent performance suggests that the retail sector has bounced back, especially with millennial-focused, mall-based stores. As for Abercrombie, the company is in the middle of an identity crisis caused by changing management and strategy. These things take time, and the company was careful to note that its disappointing sales were caused by slow acitivity in its flagship and tourism stores, not in mall locations.
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