Abercrombie & Fitch Stock Slides Despite Strong Sales, Investors May See a Buying Opportunity

Trendy (and trending) fashion retailer Abercrombie & Fitch saw its stock slide precipitously in early trading on Monday, Jan. 13, as investors apparently took a bearish turn on the company’s immediate fortunes — despite the fact that sales remained strong over the holiday season.

As Barron’s reported, the downturn in the stock came even as Abercrombie & Fitch released projections showing annual sales growth of between 7% and 8% for its fiscal quarter ending this January. Those figures were revised upward from earlier estimates showing annual sales growth of between 5% and 7%, as revealed last November.

While Barron’s gestured toward the fact that these revised sales numbers met analyst expectations of around 7%, MarketWatch suggested that investors had already priced in exactly these figures, citing FactSet analyst polls pegging the annual sales growth at 7.5% from Wall Street.

“Through fiscal December, we delivered record quarter-to-date net sales, exceeding the expectations we provided in November,” said CEO Fran Horowitz via a press release.

Some Investors Skeptical That Abercrombie & Fitch Can Maintain Momentum, While at Least One Analyst Sees Stock Slump as Buying Opportunity

Abercrombie & Fitch wasn’t the only fashion retailer to see shares tick downward in spite of somewhat sunny earnings news.

MarketWatch pointed out that competitors American Eagle and Urban Outfitters had shared similar fates. American Eagle stock tumbled by about 4.8% as of 1:10 p.m. ET on Jan. 13, and Urban Outfitters fell by approximately 3.9% concurrently. While American Eagle had raised its quarterly operating profit forecast — and Urban Outfitters had reported a 10% climb in revenue for the two months ending in December 2024 — it was not enough to inspire confidence from the market.

Barron’s indicated that the slide could be tied to the fact that Abercrombie & Fitch hadn’t altered its outlook for operating margin, forecasting a 16% margin in Q4 and a 15% margin for the year as a whole. Analysts had been pushing for the company to revise its sales guidance to an even higher position.

“We are winning in stores and we’re winning in digital and putting those two things together,” Horowitz said during remarks made at the Jan. 13 ICR Conference, per Barron’s. “We’re investing very heavily in both of those things and that’s going to continue into 2025.”

Despite this, at least one analyst is thinking Abercrombie & Fitch presents a buying opportunity for investors looking to score a bargain on the recent dip: Jefferies analyst Corey Tarlowe.

“We continue to believe that ANF has several levers to pull to drive continued robust top-line growth, and improve its productivity levels to help expand [operating margins],” Tarlowe said, as cited by Barron’s.