Abercrombie & Fitch Co. (ANF) will be holding its quarterly earnings conference call for all interested parties on November 21, 2013, at 8:00 a.m. ET. The earnings press release is scheduled to cross the wire shortly after 7:00 a.m. ET.
Wall Street anticipates that the specialty retailer will make a profit of $0.45 per share for the quarter. iStock expects ANF to miss Wall Street's consensus number. The iEstimate is $0.43. While the iEstimate suggests a bearish miss, Brean Capital expects ANF's EPS will be on target and that management will maintain current guidance.
Abercrombie operates as a specialty retailer of casual apparel for men, women, and kids. It operates through three segments: U.S. Stores, International Stores, and Direct-to-Consumer.
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Until recently, Abercrombie had little problem topping Wall Street's consensus estimate as the retailer delivered bullish surprises 13 of the last 16 quarters; however, two of the three misses happened in Q1 and Q2 of 2013; falling short by 42.86% and 80%, from the most recent.
Not surprisingly, ANF shares backslid by 25% and 7.6% in the three days surrounding the last two quarterly checkups.
While the November announcement has typically been kind to ANF's shareholders, the third of the three misses happened in Q3 of 2011, when the risque retailer fell short by 21.92% and the stock dropped 18.20% - ouch!
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The other three November reports were far friendlier. On average, Abercrombie & Fitch bypassed third quarter estimates by 35.75%, driving a typical gain of 16.17% in the three-days surrounding the profit news.
Brean specifically mentioned inventory build as a concern heading into Thursday morning's news. According to the most recent 10-Q, the balance sheet line-item spiked 48.37% while sales dipped by 0.60%. Fo! rtunately, total costs and expenses were relatively in line with sales, rising by only 0.28%.
High inventory levels can be real bad news for margins if deep discounts are required to move old merchandise off of dusty shelves. It could be really bad if foot and web traffic slows, which look likely according to Google Trends.
Year-over-year (YoY), search volume intensity dropped 24.32% for the keyword "Abercrombie" and "Abercrombie Hours" a similar 19.67%. Both numbers indicate that sales could slump more than the 9.2% Wall Street is projecting.
Overall: It could be a sloppy quarter for Abercrombie & Fitch Co. (ANF). If Google Trends are predictive and high inventory leads to substantial mark downs, then lower sales with lower margins could make for a second cold November Rain on shareholders.
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