Shares of Abercrombie & Fitch Co. (NYSE: ANF) declined 20.9% in the month of July, according to data provided by S&P Global Market Intelligence, after the clothing retailer announced it has terminated discussions regarding a potential sale of the business.
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Abercrombie shares popped in May after the company revealed it had received "expressions of interest" from several prospective acquirers. The company then commenced early discussions on the topic with those suitors with the caveat that there was no guarantee they would result in a transaction.
On July 10, 2017, however, Abercrombie executive board chairman Arthur Martinez insisted that the company believes the best way to create shareholder value is through the "rigorous execution of our business plan."
To be fair, Martinez also noted the decision came with the help of the company's financial advisor after a "comprehensive review of all relevant factors." Abercrombie also stated while it continues to implement its strategies for improving the performance of its namesake stores, its Hollister concept is simultaneously enjoying strong momentum with comparable-store sales. Combined with ongoing operational efficiency initiatives, Abercrombie believes it should see trends improve starting with the second half of this year.
As it stands, investors will need to wait until Abercrombie releases second-quarter results on Aug. 24, 2017, for fresh color on whether that expectation still holds true. But with the prospect of a juicy acquisition premium now off the table, it's no surprise to see Abercrombie's share price under pressure in the meantime.
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