Clothing Retailer Jumps 37% in One Day!
I feel like we’ve been focusing on retail a lot recently.
But it’s not on purpose!
Retailers are making a bunch of news.
And we’re right at the start of the holiday shopping season, which is incredibly important for retailers.
Last week, despite the short week because of Thanksgiving, a retailer jumped 37% in one day.
Abercrombie & Fitch (ticker: ANF) reported earnings on Tuesday and shocked the market.
Abercrombie & Fitch reported a 3rd quarter EPS of $2.36 vs. an expected $2.20.
The earnings surprise was only 7%, so what else made the stock jump?
Abercrombie & Fitch management raised earnings projections for the rest of 2025.
Wall Street was expecting an EPS of around $10 for 2025.
But Abercrombie & Fitch management forecasts its EPS could be as high as $10.50.
Buying Abercrombie & Fitch a few weeks ago would’ve been a great investing decision.
Is it too late to buy in now?
When I think of Abercrombie & Fitch, I think of dark stores and loud music.
But Abercrombie & Fitch has completely redesigned its stores.
Now its stores are brighter and more welcoming.
You no longer need to bring a flashlight to see what you’re buying!
The rebrand has really taken off for Abercrombie & Fitch, which made the stock one of the top performers in 2023.
And its growth has been amazing.
In 2022, Abercrombie & Fitch’s EPS was only $0.05 for the entire fiscal year.
But just two years later, Abercrombie & Fitch’s EPS was $10.70.
Abercrombie & Fitch has been able to grow traffic and revenue while keeping its costs in check.
And compared to other retailers, Abercrombie & Fitch is simply outstanding.
Its 10.6% net margin is one of the highest in an industry known for tight margins.
And Abercrombie & Fitch’s Return on Equity (ROE) of 43% is almost 4x the average for the apparel retail industry.
Despite the recent jump in price, Abercrombie & Fitch is still relatively cheap.
Abercrombie & Fitch’s price-to-earnings ratio is only 8.5x, which is a lot lower than the 25x average in apparel retail.
The main reason for the cheap price is concerns about tariffs.
Abercrombie & Fitch’s stock price fell over 50% in the first 5 months of 2025.
While it’s true that Abercrombie & Fitch’s margins are shrinking a bit compared to last year, the company’s growth is more than making up for the difference.
And since Abercrombie & Fitch’s margins are so much higher than its competitors, the company has a lot more room to weather any sudden rise in costs.
Many legal scholars think the tariffs are going away, which will be a major bump to Abercrombie & Fitch’s margins and stock price.
Now is a great time to buy some shares in Abercrombie & Fitch.
What other retailers are you looking to buy during the holiday season?
