Why Abercrombie & Fitch Co. Stock Skyrocketed Today

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What happened

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Shares of Abercrombie & Fitch (NYSE: ANF) were up 15.2% as of 1:30 p.m. EDT Thursday after the clothing retailer announced better-than-expected second-quarter 2017 results.

More specifically, Abercrombie's quarterly revenue declined 0.5% year over year to $779.3 million, including a 1% comparable-sales decline. On the bottom line, that translated to an adjusted (non-GAAP) net loss of $0.16 per share, narrowed from an adjusted loss of $0.25 per share in the corresponding year-ago period.

To be fair, this might not look like great news at first glance. But analysts, on average, were expecting a significantly larger adjusted loss, of $0.33 per share, on lower revenue, of $758.6 million.

So what

"We are encouraged by the clear progress across all brands," explained Abercrombie CEO Fran Horowitz. "Through aggressive execution of our strategic plan, we delivered our third consecutive quarter of sequential comparable sales improvement."

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To be sure, comparable sales at Abercrombie's namesake stores were down 7%, improving from a 10% comps decline in the first quarter. Meanwhile, comparable sales at Hollister stores grew 5%, accelerating from a 3% increase in Q1.

Now what

In addition, Abercrombie now expects consolidated comparable sales to be roughly flat for the full year, including a flat to slightly positive performance in the second half. This marks a more specific positive prediction compared to Abercrombie's outlook three months ago, when management warned that comparable sales would "remain challenging in the second quarter, with trend improvement in the second half of the year."

This improvement also explains why Abercrombie's board announced in July that it had decided not to pursue a sale of the company. Instead, board chairman Arthur Martinez revealed that they believed the best way forward would be to create shareholder value through the "rigorous execution of our business plan."

It seems the fruits of that business plan are beginning to take shape. And with shares still down around 50% over the past year as of this writing, it's hard to blame investors for aggressively bidding up Abercrombie stock today.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.