Abercrombie & Fitch Company ANF stock has rolled down 25% in the year-to-date period, marking a significant underperformance from the broader industry’s 5.7% decline. The stock’s dismal performance has also underperformed the Retail-Wholesale sector’s rally of 3.9% and the S&P 500’s growth of 9.2%.

The ANF stock also shows a remarkable downside against its industry peers like Genesco GCO, American Eagle AEO and Boot Barn’s BOOT growth of 4.3%, 13.8%, and 9.6%, respectively, in the year-to-date period.

ANF’s Stock Performance

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At the current price of $112.07, the ANF stock trades at a discount of 43.1% to its 52-week high of $196.99. The current stock price reflects a 5.6% premium from its 52-week low mark. ANF trades below its 50 and 200-day moving averages, indicating a bearish sentiment.

Abercrombie Stock Trades Below 50-Day & 200-Day Moving Averages

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What’s Hindering ANF’s Stock Performance?

Abercrombie has been experiencing strong sales growth across each of its brands. The company has seen customers responding to its product and experiencing growth across regions and brands. Management has been making investments in the Abercrombie digital experience as well. The Hollister team remains committed to expanding its reach within the teen market.

Abercrombie is working toward rationalizing its store base by reducing its dependence on underperforming tourist-driven locations. As part of its store-optimization plans, the company intends to reposition larger-format flagship locations as smaller omnichannel-enabled ones.

ANF’s Upbeat Forward Outlook Reflects Strength

In January 2025, Abercrombie provided a positive business update, thanks to a robust performance in the holiday season. The company noted that its fiscal fourth-quarter through holiday season performance was ahead of management’s expectations issued in November.

Net sales growth for the period was driven by comparable sales (comps) across regions and brands in the holiday selling period. This is backed by the positive response to its exciting product assortments and engaging marketing.

Driven by a stellar holiday performance, management hiked the sales view for the fourth quarter and fiscal 2024 while reiterating the outlook for the other metrics. Robust customer-driven brands, relevant brand playbooks, major global growth opportunities leveraging capabilities in owned and operated channels, and a solid omnichannel base, coupled with a healthy balance sheet and a consistent free cash flow, are likely to boost growth.

Management expects fiscal fourth-quarter net sales growth of 7-8%, an uptick from the previously mentioned 5-7%. The operating margin for the fiscal fourth quarter is projected to be 16%. This guidance does not include the impacts of 550 basis points from the 53rd week and about 50 basis points from foreign currency. The company retained its operating margin view of 16% and the effective tax rate guidance in the high 20s for the fourth quarter of fiscal 2024.

For fiscal 2024, Abercrombie anticipates net sales growth of 15% compared with the previously mentioned 14-15%. Management expects an operating margin of 15% and an effective tax rate in the mid-20s in fiscal 2024. The sales outlook excludes the impacts of 120 basis points from the 53rd week.

Abercrombie’s Estimates Indicate Downtrend

Despite the raised sales guidance and a robust holiday period, the company’s sales projection still falls short year over year. This has been hurting investors’ sentiments. The Zacks Consensus Estimate for Abercrombie’s fiscal 2024 has been unchanged in the past 30 days. The consensus estimate for fiscal 2025 EPS decreased 0.3% in the past 30 days.

For fiscal 2024, the Zacks Consensus Estimate for ANF’s sales and EPS implies 15.1% and 69.4% year-over-year growth, respectively. The consensus mark for fiscal 2025 sales and earnings indicates 5.8% and 5.5% year-over-year growth, respectively.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

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Undervalued Stock: Is It an Opportune Time to Buy?

From a valuation perspective, ANF shares present an attractive opportunity, trading at a discount than historical and industry benchmarks. The recent pullback has brought Abercrombie's stock valuation to a more affordable and appealing level.

The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 9.98X, reflecting a discount to the broader industry’s 19.24X multiple and its three-year high of 121.44X. It stands below the S&P 500’s average of 22.67X.

Trading much below its three-year high and industry peers, the current valuation appears more affordable and appealing, presenting an opportunity to accumulate shares. The stock’s current Value Score of A further validates its appeal.

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Is It Wise to Buy ANF Stock on This Dip?

Abercrombie's growth is bolstered by its ability to capitalize on favorable fashion trends, digital initiatives and strong strategies like store optimization. The company’s solid fundamentals highlight its financial strength and operational efficiency. Its transformation efforts, including rebranding, digital expansion and store enhancements, position it for sustained long-term growth. These factors make the ANF stock an attractive investment option.

Despite the recent surge in its share price, this profitable apparel retailer remains a bargain due to its relatively low valuation compared with peers. Abercrombie currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

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