Abercrombie & Fitch Co. (NYSE:ANF) shares dropped by almost 7% in early trading today after the firm received an "overweight" rating from a Jefferies analyst. The poor rating was based on a less than positive outlook on the casual clothing retailer's 2013 prospects. The firm released its fourth quarter earnings report this morning before the market opened.
Abercrombie's guidance for 2013 projected earnings of $3.35-$3.45 per share. Analyst consensus form Thompson Reuters suggested that the firm would earn around $3.63 this year. The firm's fourth quarter earnings report was, on the other hand, a positive surprise. The company earned $2.15 per share where analysts had looked for $1.96.
Citadel Advisors were buying stock in the retailer at the end of last year according to the fund's filings. Citadel held 6.3% of Abercrombie & Fitch Co. (NYSE:ANF) as of September 30. The fund no doubt benefited from the surge in shares after a good November earnings report, though those gains have been mitigated by today's trading there have still been strong gains in the stock since September.
Despite the overweight rating issued by Jeffries this morning, the research firm called for a twelve month price target of $56 per share. Shares closed yesterday at $49.05. The stock is currently trading at around $46. That leaves room for 21% growth in price, according to this morning's report. The market has, however, less confidence than the Jeffries analyst.
Abercrombie & Fitch Co. (NYSE:ANF) said it plans to close between 40 and 50 of its US stores in the coming year to reduce its cost base and increase its margins. The firm also announced that it would raise its quarterly dividend to 20 cents, bringing its total annual dividend to 80 cents. Last year, the firm's dividend was 18 cents.
The clothing retailer is faced with a tough economic climate and a business model that can be fickle. In the first three quarters of 2012, investors thought the company might be losing its touch as its fashions were seen as out of favor am0ng teens, its most profitable demographic.
Through yesterday's close Abercrombie & Fitch Co. (NYSE:ANF) saw its shares rise by around 2% in 2013 trading. Investors had been waiting for the release of the firm's fourth quarter earnings report, and had tentatively traded higher along with the general market. The firm's shares are down 4% for the last twelve months. Neglecting this morning's losses the firm is up 1% for the last year.