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Items Of Interest Heading Into Abercrombie & Fitch's Q2 Earnings Report

Abercrombie & Fitch Co ANF 1.46% is expected to announce results for its second quarter Tuesday before the bell. Consensus estimates are for a loss of $0.20 per share on revenue of $782.1 million.

Last Quarter

  • In Q1, Abercrombie & Fitch reported both a top and bottom line miss, with a loss $0.12 wider than the street expected.
  • The company guided for a "challenging" Q2 as far comps go, with some improvement expected in the second half of the year.

Sell-Side Sentiment

  • Sell-side analysts are not overly fond of the stock.
  • While analysts at Suntrust and KeyBanc maintained a Buy rating following the Q1 miss, Credit Suisse and Morgan Stanley have the retailer at Underperform and Underweight, respectively.
  • Deutsche analysts, in June, believed that at around $19 per share, Abercrombie's struggles were priced in, and upgraded it to Hold.
  • The stock, however, opened at $22.62 Monday. This is above the average analyst price target, according to Tip Ranks, of $20.83.

Tale of the Technicals

  • Abercrombie shares are trading above their 50 and 20 day simple moving averages, but still below the 200-day SMA.

Company News

  • Abercrombie's attempts at rebranding - adjusting the product mix and turning away from the headline-grabbing promotional activities of the past - still leave some questioning the shift of focus from teen shoppers to young adults. The company also faces another lawsuit from a former employee regarding its dress code policy, creating the potential for headline risk.

Peers

Q2 has been something of a mixed bag for retail.

  • Express Inc EXPR 4.98% reported earnings per share and revenue lower than street estimates, and its stock is down nearly 29 percent since the Q2 report was released.
  • Like most retailers, comps and guidance seem to be the point of focus for traders and investors looking at this space.

Interestingly, Abercrombie followed a miss of $0.19 in Q1 of 2015 with a beat of $0.16 in Q2 a year ago, while the street forecasted a loss, much as it does now. Shares closed 9.5 percent higher the next day.

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