Abercrombie & Fitch Co. (ANF) is slated to report its third-quarter fiscal 2014 results on Dec 3, before the opening bell. In the last quarter, the company had delivered a positive earnings surprise of 90%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Abercrombie & Fitch recently provided an update on its third-quarter sales results and earnings guidance. The quarter was battered by sluggish consumer traffic, especially in European stores, which led to a fall in sales. Also, a fall in heavy logo products’ sales, due to the changing consumer trends, accounted for the sales decline during the quarter. Further, considering the intense promotional retail environment, Abercrombie & Fitch envisions adjusted earnings per share for the third quarter in the 40–42 cents range.
Though management was not very pleased with its third-quarter sales results, it continues to undertake strategic initiatives to bring about improvements in the future. These initiatives include being focused on developing a branded structure, shutting down underperforming stores, investing in direct-to-consumer and Asian operations, enhancing marketing efforts, curtailing costs and realigning products, parallel to consumer preference.
Earnings Whispers?
Our proven model does not conclusively show that Abercrombie & Fitch is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 41 cents.
Zacks Rank: Abercrombie & Fitch carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
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 this quarter:
DSW Inc. (DSW) has an Earnings ESP of +7.69% and a Zacks Rank #2 Buy).
Best Buy Co., Inc. (BBY) has an Earnings ESP of +4.17% and a Zacks Rank #2.
Zumiez, Inc. (ZUMZ) has an Earnings ESP of +3.85% and a Zacks Rank #2.
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