Abercrombie & Fitch Co. ANF, a specialty retailer of premium, high-quality casual apparel, is slated to report first-quarter fiscal 2015 results on May 28, before the opening bell. In the last quarter, the company delivered a positive earnings surprise of 1.8%. Let’s see how things are shaping up for this announcement.
Factors Influencing the Quarter
Abercrombie & Fitch’s delivered weak performance in the last quarter, with both top and bottom lines declining year over year. Sales decreased owing to store closures, adverse currency headwinds and a fall in comparable-store sales (comps). The company has been posting negative comps for 12 straight quarters, which reflects its continual weakness. One of the primary reasons behind this negative trend is the fading popularity of the brand among teenagers.
Further, the company expects foreign currency headwinds to affect fiscal 2015 results as well and anticipates continued weakness in its top and bottom lines. Considering this soft outlook, we believe the company’s upcoming results will fail to impress and hence, remain cautious about the stock’s future performance.
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 for Abercrombie & Fitch is currently pegged at -8.82%. This is because the Most Accurate estimate stands at a loss of 37 cents, much below the Zacks Consensus Estimate of a loss of 34 cents.
Zacks Rank: Abercrombie & Fitch carries a Zacks Rank #5 (Strong 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:
Casey’s General Stores, Inc. CASY has an Earnings ESP of +14.29% and a Zacks Rank #1 (Strong Buy).
Burlington Stores, Inc. BURL has an Earnings ESP of +5.00% and a Zacks Rank #3 (Hold).
Tiffany & Co. TIF has an Earnings ESP of +7.25% and a Zacks Rank #3.
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