Abercrombie & Fitch Co
NYSE:ANF
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Intrinsic Value
The intrinsic value of one ANF stock under the Base Case scenario is 138.49 USD. Compared to the current market price of 139.93 USD, Abercrombie & Fitch Co is Overvalued by 1%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Abercrombie & Fitch Co
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Fundamental Analysis
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Abercrombie & Fitch Co. (A&F) has transformed over its long and storied history from a retailer known primarily for its casual, preppy clothing aimed at youth into a global fashion leader with a more diversified brand portfolio. Founded in 1892, A&F has weathered significant changes in market dynamics and consumer preferences. The company operates several brands, including Abercrombie & Fitch, Hollister Co., and Abercrombie Kids, each targeting different demographics yet unified by a commitment to quality and a distinct lifestyle ethos. This evolution is underpinned by strategic decisions, such as a renewed focus on digital sales channels and sustainability, positioning A&F to compete more e...
Abercrombie & Fitch Co. (A&F) has transformed over its long and storied history from a retailer known primarily for its casual, preppy clothing aimed at youth into a global fashion leader with a more diversified brand portfolio. Founded in 1892, A&F has weathered significant changes in market dynamics and consumer preferences. The company operates several brands, including Abercrombie & Fitch, Hollister Co., and Abercrombie Kids, each targeting different demographics yet unified by a commitment to quality and a distinct lifestyle ethos. This evolution is underpinned by strategic decisions, such as a renewed focus on digital sales channels and sustainability, positioning A&F to compete more effectively in an ever-changing retail landscape.
As an investment opportunity, Abercrombie & Fitch Co. demonstrates promising growth potential fueled by its ongoing initiatives. The company has embraced a data-driven approach to enhance customer engagement, including personalized shopping experiences and well-structured loyalty programs, which have contributed to increased foot traffic and online sales, especially among younger consumers. A&F’s financial metrics show resilience with improving margins driven by operational efficiencies and effectively managing inventory levels. With a commitment to evolving its brand to mirror contemporary consumer values, alongside a focus on international expansion, Abercrombie & Fitch Co. stands as an intriguing prospect for investors looking for a fashion retailer that balances heritage with modern relevance.
Abercrombie & Fitch Co. has a diversified portfolio of brands and operates through several core business segments. The main segments include:
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Abercrombie & Fitch (A&F): This segment focuses on a premium casual clothing line aimed at young adults. A&F is known for its high-quality materials and classic American style, featuring a mix of versatile separates, such as denim, outerwear, and graphic tees.
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Hollister Co.: Targeting a younger demographic, typically teenagers, Hollister Co. offers casual wear with a laid-back California vibe. The brand is characterized by its stylish and trendy clothing, accessories, and swimwear, appealing to a youthful lifestyle.
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Abercrombie Kids: This segment focuses on children's apparel, providing a range of casual clothing designed for kids aged 7-14. It aims to replicate the branding and fashion trends of Abercrombie & Fitch while catering specifically to the younger age group.
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International Operations: Although the A&F and Hollister brands are primarily positioned in North America, the company has been increasingly focused on expanding its international presence. This segment encompasses all sales and marketing strategies targeted at global markets, including Europe and Asia.
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Direct-to-Consumer: This segment includes online sales through e-commerce platforms and mobile apps. Abercrombie & Fitch Co. has emphasized its digital channels to reach customers, catering to changing shopping habits, particularly post-pandemic.
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Licensing: The company also engages in licensing agreements, allowing third parties to produce and sell products under its brand names. This can include beauty products, accessories, and other merchandise.
Overall, Abercrombie & Fitch Co. aims to cater to a diverse customer base while maintaining a strong brand identity across its different segments. The company continues to adapt its offerings to meet consumer preferences and market trends.
Abercrombie & Fitch Co. possesses several unique competitive advantages that differentiate it from its rivals in the retail and apparel industry:
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Strong Brand Identity: Abercrombie & Fitch has cultivated a distinct brand identity that resonates with its target market, particularly among young adults and teenagers. Its positioning as a premium lifestyle brand, often associated with a specific lifestyle and aesthetic, helps it maintain a loyal customer base.
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Heritage and Legacy: As a brand with a long history dating back to 1892, Abercrombie & Fitch leverages its heritage and legacy, which can provide a sense of authenticity and quality that resonates with consumers.
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Effective Targeting of Youth Culture: The brand has a strong ability to tap into youth culture by designing products that reflect current trends and styles. This ability to quickly adapt its offerings helps it maintain relevance in a fast-changing market.
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Experiential Retail Environment: Abercrombie & Fitch stores are designed to offer a unique shopping experience. This includes strong sensory branding elements, such as music, dim lighting, and fragrance, which create an inviting atmosphere that enhances customer engagement.
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Quality Product Offering: The company emphasizes high-quality materials and construction in its clothing lines. This focus on quality helps build a reputation that attracts consumers willing to pay a premium.
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Digital and Omnichannel Strategy: Abercrombie & Fitch has invested in improving its digital presence and omnichannel experience, allowing for seamless integration between online and offline shopping. This adaptability enhances customer convenience and reach.
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Collaborations and Limited Editions: By engaging in collaborations with influencers and designers or launching limited-edition collections, Abercrombie & Fitch can create buzz and exclusivity around its products, appealing to consumers’ desire for unique items.
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Sustainable Practices: As consumer preferences shift towards sustainability, Abercrombie & Fitch has made strides in implementing environmentally friendly practices. This commitment can set the brand apart in a market where consumers are increasingly value-conscious regarding ethical consumption.
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Global Presence: With a well-established international footprint, Abercrombie & Fitch can leverage brand recognition and market share in various regions, providing opportunities for growth that some smaller rivals may not have.
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Data-Driven Decision Making: The availability and analysis of consumer data allow Abercrombie & Fitch to better understand purchasing habits, preferences, and trends, enabling more effective inventory management and marketing strategies.
These competitive advantages can help Abercrombie & Fitch navigate the challenges within the highly competitive retail landscape and sustain its market position against rivals.
Abercrombie & Fitch Co faces several risks and challenges in the near future, including:
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Changing Consumer Preferences: Younger consumers are rapidly shifting their fashion preferences towards more sustainable, inclusive, and diverse brands. Abercrombie must adapt the brand image and offer products that resonate with this demographic to maintain market relevance.
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Intense Competition: The retail market, especially in the apparel segment, is highly competitive. Brands like Zara, H&M, and newer DTC (Direct-to-Consumer) brands are continuously vying for consumer attention, often providing trendy products at lower price points.
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Supply Chain Disruptions: Global supply chain issues, especially those exacerbated by geopolitical events (like tensions between China and the US), can lead to delays, increased shipping costs, and inventory shortages, impacting sales and profitability.
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Economic Conditions: A downturn in the economy can significantly affect discretionary spending. As consumers tighten their budgets during tough economic times, premium brands like Abercrombie may experience decreased sales.
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E-Commerce Expansion: While e-commerce growth provides an opportunity, it also presents challenges. The company must continuously enhance its online presence, digital marketing strategies, and user experience to compete with both established and emerging online retail brands.
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Brand Image and Reputation: Past controversies surrounding Abercrombie's brand image can linger and affect consumer perception. The company must work diligently to foster a positive and inclusive image while avoiding any potential backlash.
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Sustainability and Ethical Practices: Increasing consumer awareness and demand for sustainability in fashion put pressure on Abercrombie to adopt more ethical production practices and to incorporate sustainable materials into its offerings.
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Regulatory and Compliance Risks: As regulations around labor practices, consumer data protection, and environmental laws become stricter, Abercrombie needs to ensure compliance to avoid potential penalties and reputational damage.
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Seasonality and Inventory Management: Effective inventory management is crucial, especially in a seasonal business. Overstocks can lead to markdowns, while understocks can result in lost sales opportunities.
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Global Expansion Risks: If Abercrombie decides to expand into new international markets, it will face challenges such as understanding local consumer behavior, navigating foreign regulations, and establishing a strong supply chain.
To navigate these challenges, Abercrombie will need to focus on strategic planning, consumer insights, and operational excellence.
Revenue & Expenses Breakdown
Abercrombie & Fitch Co
Balance Sheet Decomposition
Abercrombie & Fitch Co
Current Assets | 1.5B |
Cash & Short-Term Investments | 738.4m |
Receivables | 115.1m |
Other Current Assets | 663.2m |
Non-Current Assets | 1.5B |
PP&E | 1.3B |
Other Non-Current Assets | 233.7m |
Current Liabilities | 1.1B |
Accounts Payable | 406.8m |
Accrued Liabilities | 625.3m |
Other Current Liabilities | 19.6m |
Non-Current Liabilities | 791.4m |
Other Non-Current Liabilities | 791.4m |
Earnings Waterfall
Abercrombie & Fitch Co
Revenue
|
4.7B
USD
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Cost of Revenue
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-1.7B
USD
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Gross Profit
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3B
USD
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Operating Expenses
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-2.3B
USD
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Operating Income
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671.7m
USD
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Other Expenses
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-170m
USD
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Net Income
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501.7m
USD
|
Free Cash Flow Analysis
Abercrombie & Fitch Co
USD | |
Free Cash Flow | USD |
In the second quarter, Abercrombie & Fitch achieved record net sales of $1.1 billion, a 21% increase, driven by balanced growth across regions and brands. Operating margin improved to 15.5%, nearly double the previous year’s figures. The Americas saw a 23% sales increase, EMEA grew by 16%, and APAC by 3%. Guided by higher product costs and strong customer engagement, the company has raised its full-year sales growth expectations to 12-13% and operating margin to 14-15%. They plan to prioritize share repurchases and expand with 120 new store experiences this year.
What is Earnings Call?
ANF Profitability Score
Profitability Due Diligence
Abercrombie & Fitch Co's profitability score is 65/100. The higher the profitability score, the more profitable the company is.
Score
Abercrombie & Fitch Co's profitability score is 65/100. The higher the profitability score, the more profitable the company is.
ANF Solvency Score
Solvency Due Diligence
Abercrombie & Fitch Co's solvency score is 81/100. The higher the solvency score, the more solvent the company is.
Score
Abercrombie & Fitch Co's solvency score is 81/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
ANF Price Targets Summary
Abercrombie & Fitch Co
According to Wall Street analysts, the average 1-year price target for ANF is 188.19 USD with a low forecast of 148.47 USD and a high forecast of 231 USD.
Dividends
Current shareholder yield for ANF is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
ANF Insider Trading
Buy and sell transactions by insiders
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Profile
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Description
Abercrombie & Fitch Co. engages in the retail of apparel, personal care products, and accessories. The company is headquartered in New Albany, Ohio and currently employs 7,000 full-time employees. The firm offers an assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its digital channels and Company-owned stores, as well as through various third-party arrangements. The firm's two brand-based segments include Hollister, which includes the Company's Hollister, Gilly Hicks and Social Tourist brands, and Abercrombie, which includes the Company's Abercrombie & Fitch and Abercrombie kids brands. The firm operates primarily in North America, Europe and Asia. The company operates approximately 720 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce sites, such as www.abercrombie.com, www.abercrombiekids.com, www.hollisterco.com, www.gillyhicks.com and www.socialtourist.com.
Contact
IPO
Employees
Officers
The intrinsic value of one ANF stock under the Base Case scenario is 138.49 USD.
Compared to the current market price of 139.93 USD, Abercrombie & Fitch Co is Overvalued by 1%.