Why Abercrombie & Fitch Co. Dropped 10% Last Month

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What happened

Shares ofAbercrombie & Fitch Co.(NYSE: ANF) slipped again last month, falling 10% according to data from S&P Global Market Intelligence. Though there was little news on the stock, it continued to drop following a weak earnings report at the end of August and on general negativity in apparel retailers.

So what

The teen apparel retailer fell 20.3% on Aug. 30 after its second-quarter earnings report came out. Comparable sales in the period fell 4% for the second quarter in a row, and adjusted earnings per share tumbled from a $0.12 in the quarter a year ago to a loss of $0.25 per share.

Through the first two sessions in September, the stock slipped another 4%. It briefly recovered as Jefferies reiterated its "buy" rating, but was downgraded from "hold" to "sell" by Zacks on Sept. 9 as the research firm noted it missed earnings expectations and was facing soft traffic trends. On Sept. 26, the stock fell nearly 4% after theS&P 500 announced it would be taken out of its mid-cap index and put in its small-cap index, which has an effect on ETF's and also shows how far the stock has fallen.

Now what

Abercrombie does not report monthly sales, but two struggling apparel retailer surged after reporting their September figures.Gap Inc.andZumiezboth jumped by double digits as Zumiez's comps climbed 6.3% last month and Gap's adjusted comps were flat. That could indicate that the fall season and key back-to-school month have been kinder to mall-based retailers.

I wouldn't assume a turnaround at Abercrombie based on those figures alone, butUBSalso weighed in last month to say that it thought Abercrombie's sales would bounce back by the fourth quarter. Plenty of headwinds remain for the company and its dividend could be slashed, but there should be a bottom somewhere in its same-store sales decline.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.