Why Abercrombie & Fitch Stock Was Slammed Thursday

What happened

Shares of apparel retailer Abercrombie & Fitch (NYSE: ANF) tumbled on Thursday, falling as much as 17.3%. As of 1:34 p.m. EDT, shares are down 16.1%. The stock's decline followed Abercrombie's second-quarter earnings release.

Pessimism toward the stock on Thursday was likely triggered by Abercrombie's worse-than-expected sales during the period.

So what

Abercrombie's net sales increased 8% year over year to $842.4 million -- below a consensus analyst estimate for sales of $845.2 million. The top-line disappointment was primarily due to Abercrombie's lower-than-expected comparable sales growth. Consolidated comparable sales climbed 3% year over year, driven by 4% comparable sales growth from Hollister and 2% growth from Abercrombie. Not only were these figures lower than what analysts were expecting, but they marked a deceleration from 6% and 3% first-quarter comparable-store sales growth for Hollister and Abercrombie, respectively.

Despite the Street's disappointment with the results, CEO Fran Horowitz said in the company's earnings release she was "pleased" with the quarter, citing top- and bottom-line improvements an adjusted profit, gross margin expansion, expense leverage, a third consecutive quarter of positive comparable sales for its Abercrombie brand, and more.

Now what

Management's guidance for full-year fiscal 2018 net sales to rise 2% to 4% and comparable sales for the period to increase by the same amount remained unchanged.

"Our customers remain at the center of all we do, and that singular focus continues to improve brand health metrics and drive our brands forward," said Horowitz. "We continue to make tangible progress in our transformation efforts, and after a strong first half of the year, we remain on track to achieve our full-year 2018 expectations and our longer-term 2020 targets."

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