What Happened?
Shares of young adult apparel retailer Abercrombie & Fitch (NYSE: ANF) fell 19% in the afternoon session after the company lowered its annual sales growth forecast and flagged pressure from increased tariffs.
The revised outlook overshadowed a report of record holiday sales. The company tightened its full-year net sales growth forecast to "at least 6%," a reduction from its previous range of 6% to 7%. This guidance fell short of Wall Street's high expectations. Adding to investor concerns, the company projected about $90 million in tariff-related costs. The operating margin forecast was also narrowed to 13%, the lower end of the prior range. Furthermore, Abercrombie & Fitch increased its planned capital spending for the year to approximately $245 million. The combination of a weaker sales outlook and rising costs prompted a sharp negative reaction from investors.
The shares closed the day at $102.94, down 17.6% from previous close.
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What Is The Market Telling Us
Abercrombie and Fitch’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. But moves this big are rare even for Abercrombie and Fitch and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 4.6% on the news that analysts at Barclays raised their price target on the company's shares, contributing to the positive sentiment.
The firm increased its target to $115 from $94, citing broad strength in the specialty retail sector due to disciplined inventory management and helpful economic factors. This move followed a similar price target increase from Jefferies on the previous day, which raised its target to $145 while maintaining a Buy rating. Analysts at Jefferies pointed to encouraging signs in the retailer's value perception and growth in customer interest. Adding to the bullish sentiment, trading data showed that investors with significant capital had taken bullish positions through options markets, suggesting confidence in the company's direction.
Abercrombie and Fitch is down 17% since the beginning of the year, and at $102.68 per share, it is trading 24.3% below its 52-week high of $135.72 from January 2025. Investors who bought $1,000 worth of Abercrombie and Fitch’s shares 5 years ago would now be looking at an investment worth $4,414.
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