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Apparel for Anti-Bullies – ANF Stretches to Address Tough Year When Style Isn’t Enough
Posted by: Sally Jones (IP Logged)
Date: November 5, 2013 04:22PM
With weak back-to-school sales and a slow holiday anticipated, Abercrombie & Fitch Company (ANF) is not only turning to sales outside of the US but also kicking off a socially relevant fashion statement here at home. Last month the company unveiled a cause marketing campaign that gets a graphic anti-bullying t-shirt message in front of school students. Teaming up with a bullying expert and a celebrity spokesperson for a wearable cause is an excellent way to reach target youth consumers, increases sales, generate buzz and make a difference. The cross-country campaign features Cali Linstrom, a champion of anti-bullying and current high school senior in Chicago.
But why is all of this extra-curricular activity necessary for an apparel manufacturer? It’s creative marketing, especially when prices remain flat in the face of increasing production costs in an industry that faces increasing uncertainty. The apparel market in the US weighs in for about 28% of the global market, at a value of $331 billion, according to Statista. So it’s understandable that Abercrombie & Fitch, like other major apparel makers, would focus on greener pastures outside the US to offset flat or declining sales at home. Further, Trefis reported that Abercrombie & Fitch had low inventory issues in the first fiscal quarter of 2013, and it hurt their comparable store sales.
Here’s a company update and a look at billionaire and insider activity:
Abercrombie & Fitch Company (ANF)
Down 19% since January, Abercrombie & Fitch Company has a market cap of $2.91 billion; its shares were traded at around $38.04. The P/E ratio is 13.80 and the P/B ratio is 1.70. The dividend yield is 2.00%.
Incorporated in 1996, Abercrombie & Fitch Company is a specialty retailer that operates stores and direct-to-consumer operations. The company sells products, including casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, and outerwear; personal care products; and accessories for men, women and kids. Company brands include Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks. Inside the U.S., the company operates approximately 912 stores; outside the U.S., the company operates around 139 stores.
The company reported financial results for the second quarter of 2013 with a net income of $11.4 million, down from $17.1 million in the same quarter of 2012. Earnings per diluted share were $0.14, down from $0.20 for the same quarter a year ago. The company’s total comparable sales declined 10%. The company’s third quarter earnings will be released on Nov. 22.
Abercrombie & Fitch’s CEO and chairman of the board, Mike Jeffries, commented on his company’s second quarter in a company press release: “…Despite the challenging environment, we are very pleased by strong growth in our direct-to-consumer business and continued strong growth in China. We have also made excellent progress on our profit improvement initiative during the quarter, and we now expect savings from this initiative to exceed $100 million annually. In addition, we are nearing completion of our long-term strategic review, and we are confident that this will provide us with a clear roadmap for sustainable growth in sales, profitability and return on invested capital.”
Historical share pricing, revenue and net income:
Guru Action: As of June 30, 2013, there are eight guru stakeholders and active insider trading.
As of June 30, 2013, three gurus, Chuck Royce, Jim Simons and Paul Tudor Jones, made new buys of ANF and two gurus, Bruce Kovner and Pioneer Investments, sold out.
The top guru stakeholder is Columbia Wanger with current shares of 2,259,543 or 2.88% of shares outstanding after the firmed reduced its position by 35.7%, unloading 1,254,457 shares at an average price of $49.25, taking a loss of 22.8%.
Over five years Columbia Wanger gained 4% on 5,266,422 shares bought at an average price of $36.41 per share. The firm lost 10% on 9,173,879 shares sold at an average price of $42.39 per share.
As of June 30, 2013, another top guru stakeholder is Steven Cohen with current shares of 273,200 or 0.35% of shares outstanding after he reduced his position by 87.98%, unloading 2,000,225 shares at an average price of $49.25, for a loss of 22.2%.
Over five years of trading Cohen averaged a loss of 6% on 6,374,807 shares bought at an average price of $40.73 per share. He lost 14% on 6,101,607 shares sold at an average price of $44.49 per share.
Check out a full GuruFocus analysis of ANF.
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Guru Discussed: Columbia Wanger: Current Portfolio, Stock Picks
Chuck Royce: Current Portfolio, Stock Picks
Stocks Discussed: ANF,