June 14, 2015

NYSE: ANF

ABERCROMBIE & FITCH

BUY
A+

A-

HOLD

B+

Annual Dividend Rate

$0.80

B-

C+

Annual Dividend Yield

3.53%

SELL
C-

D+

D-

Beta
1.90

ANF BUSINESS DESCRIPTION

Abercrombie & Fitch Co., through its subsidiaries,
operates as a specialty retailer of apparel for men,
women, and kids. The company operates through
three segments: U.S. Stores, International Stores,
and Direct-to-Consumer.

E-

Market Capitalization
$1.6 Billion

Sector: Consumer Goods & Svcs

Weekly Price: (US$)

E+

Sub-Industry: Apparel Retail

SMA (50)

HOLD
52-Week Range
$19.34-$45.50

RATING SINCE

05/13/2014

Price as of 6/11/2015
$22.64

Source: S&P

SMA (100)

1 Year

2 Years
55
50
45
40

STOCK PERFORMANCE (%)

3 Mo.
Price Change
5.74

1 Yr.
-44.88

3 Yr (Ann)
-10.02

Last Qtr
-13.75
-167.18
-184.37

12 Mo.
-11.46
-67.91
-70.22

3 Yr CAGR
-5.06
-51.84
-51.41

RETURN ON EQUITY (%)

ANF
Q1 2015
0.93
Q1 2014
2.45
Q1 2013
14.10

Ind Avg
31.67
24.06
19.78

S&P 500
14.20
14.48
13.11

35
30

GROWTH (%)
Revenues
Net Income
EPS

25
20
Rating History

BUY

HOLD

BUY HOLD

Volume in Millions

60
40
20
2014

2015

COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History

P/E COMPARISON

20.61
161.71

24.82

ANF

Ind Avg

S&P 500

2013

2014

HIGHLIGHTS
ANF's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that
there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the
company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash
problems.
The gross profit margin for ABERCROMBIE & FITCH is rather high; currently it is at 65.52%. Regardless of
ANF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed
results of the gross profit margin, ANF's net profit margin of -8.91% significantly underperformed when
compared to the industry average.

Q1 -0.91

Q4 0.63

Q3 0.25

Q2 0.17
Q1 -0.32

Q4 0.85
Q3 -0.20

Q1 -0.09

Q2 0.14

EPS ANALYSIS ($)

RECOMMENDATION
We rate ABERCROMBIE & FITCH (ANF) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a
positive or negative performance for this stock relative to most other stocks. The company's strengths can
be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most
measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses
including a generally disappointing performance in the stock itself, deteriorating net income and
disappointing return on equity.

Net operating cash flow has significantly decreased to -$93.78 million or 133.63% when compared to the same
quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
2015

NA = not available NM = not meaningful

1 Compustat fiscal year convention is used for all fundamental
data items.

The company's current return on equity has slightly decreased from the same quarter one year prior. This
implies a minor weakness in the organization. Compared to other companies in the Specialty Retail industry
and the overall market, ABERCROMBIE & FITCH's return on equity significantly trails that of both the industry
average and the S&P 500.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.

Report Date: June 14, 2015

PAGE 1

June 14, 2015

NYSE: ANF

ABERCROMBIE & FITCH

Sector: Consumer Goods & Svcs Apparel Retail Source: S&P
Annual Dividend Rate
$0.80

Annual Dividend Yield

3.53%

PEER GROUP ANALYSIS

10%

FINL
V
FA

AB
OR

CATO
LE

EXPR

UN

Companies in this industry are judged based on the metric of same-store sales, a measurement that shows if
stores open for more than one year are increasing top line revenue or shrinking.

LE
AB

-12.5%

Price as of 6/11/2015
$22.64

Some of the larger specialty retail companies also profit from the extension of credit to their customers with
branded credit cards.

GES

R
VO
FA

Revenue Growth (TTM)

PLCE

-10%

52-Week Range
$19.34-$45.50

The variety of product focuses targeted by specialty retail companies is very diverse. These include but are
not limited to home improvement goods, pharmaceutical & beauty, shoes, electronics, and office supplies.
Also included are stores narrowly focused on music, books, wine, games, rentals, vitamins, lumber, sporting
goods, toys, jewelry, and fashion apparel for men, women, and teddy bears.

CHS

ANN

Market Capitalization
$1.6 Billion

INDUSTRY ANALYSIS
The specialty retail industry includes very well-known home improvement, apparel, automotive, and other
narrow-focus stores such as Home Depot (HD), TJX Companies (TJX), Lowes Companies (LOW), Gap (GPS),
Bed Bath & Beyond (BBBY), Ross Stores (ROST), Limited Brands (LTD), OReilly Automotive (ORLY), PetSmart
(PETM), Carmax (KMX), and Build-A-Bear Workshop (BBW).

REVENUE GROWTH AND EBITDA MARGIN*

GCO

Beta
1.90

ANF

20%

EBITDA Margin (TTM)

Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $993.8 Million and $2.4
Billion. Companies with NA or NM values do not
appear.
*EBITDA Earnings Before Interest, Taxes, Depreciation and
Amortization.

10%

REVENUE GROWTH AND EARNINGS YIELD

FINL

GCO
V
FA

Ticker
ANF
CATO
CHS
ANN
BKE
GES
GCO
EXPR
CAL
PLCE
FINL

Company Name
ABERCROMBIE & FITCH
CATO CORP
CHICOS FAS INC
ANN INC
BUCKLE INC
GUESS INC
GENESCO INC
EXPRESS INC
CALERES INC
CHILDRENS PLACE INC
FINISH LINE INC

Recent
Price ($)
22.64
37.76
16.54
47.57
45.00
20.17
66.85
18.37
32.14
65.28
26.38

Market
Cap ($M)
1,575
994
2,371
2,188
2,184
1,728
1,607
1,555
1,406
1,346
1,204

Price/
Earnings
161.71
17.16
43.53
28.83
13.64
17.24
16.67
20.64
16.31
23.91
15.43

Net Sales
TTM ($M)
3,631.02
986.08
2,686.95
2,540.59
1,152.81
2,262.57
2,891.62
2,207.21
2,582.83
1,756.04
1,820.59

Net Income
TTM ($M)
12.25
61.58
57.28
76.35
158.79
100.01
93.63
76.30
86.68
58.90
81.99

The peer group comparison is based on Major Apparel Retail companies of comparable size.

CATO
CAL
EXPR BKE
AB
OR

LE

CHS

PEER GROUP: Specialty Retail

ANN

UN

GES

LE
AB

-12.5%

R
VO
FA

Revenue Growth (TTM)

PLCE

0%ANF

8%

Earnings Yield (TTM)

Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -11.5% and
9%. Companies with NA or NM values do not
appear.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.

Report Date: June 14, 2015

PAGE 2

June 14, 2015

NYSE: ANF

ABERCROMBIE & FITCH

Sector: Consumer Goods & Svcs Apparel Retail Source: S&P
Annual Dividend Rate
$0.80

Annual Dividend Yield

3.53%

COMPANY DESCRIPTION
Abercrombie & Fitch Co., through its subsidiaries,
operates as a specialty retailer of apparel for men,
women, and kids. The company operates through three
segments: U.S. Stores, International Stores, and
Direct-to-Consumer. It sells various products, such as
casual sportswear apparel comprising knit and woven
shirts, graphic T-shirts, fleece, jeans and woven pants,
shorts, sweaters, and outerwear; personal care products;
and accessories for men, women, and kids under the
Abercrombie & Fitch, abercrombie kids, and Hollister
brand names. The company also offers bras, underwear,
personal care products, sleepwear, and at-home
products for girls under the Gilly Hicks brand. As of
January 31, 2015, it operated through 799 stores in the
United States and Puerto Rico; and 170 stores in Canada,
Europe, Asia, Australia, and the Middle East. The
company sells its products through its stores and
direct-to-consumer sales. Abercrombie & Fitch Co. was
founded in 1892 and is headquartered in New Albany,
Ohio.
ABERCROMBIE & FITCH
6301 Fitch Path
New Albany, OH 43054
USA
Phone: 614-283-6500
http://www.abercrombie.com

Beta
1.90

Market Capitalization
$1.6 Billion

52-Week Range
$19.34-$45.50

Price as of 6/11/2015
$22.64

STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of ANF shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stocks
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR

SCORE

0.5

Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, ANF has a growth score better than virtually
none of the stocks we rate

strong

0.5

Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company ranks at the bottom of the companies we
cover.

strong

2.0

Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 30% of the companies we review.

strong

1.0

Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 10% of the stocks we monitor.

strong

4.5

Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 80% of the companies we analyze.

strong

4.5

Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 80% of the companies we track.

strong

THESTREET RATINGS RESEARCH METHODOLOGY

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.

Report Date: June 14, 2015

PAGE 3

June 14, 2015

NYSE: ANF

ABERCROMBIE & FITCH

Sector: Consumer Goods & Svcs Apparel Retail Source: S&P
Annual Dividend Rate
$0.80

Annual Dividend Yield

3.53%

Consensus EPS Estimates ($)

IBES consensus estimates are provided by Thomson Financial

-0.04

0.70 E

0.98 E

Q2 FY15

2016(E)

2017(E)

Market Capitalization
$1.6 Billion

52-Week Range
$19.34-$45.50

Price as of 6/11/2015
$22.64

FINANCIAL ANALYSIS
ABERCROMBIE & FITCH's gross profit margin for the first quarter of its fiscal year 2015 has decreased when
compared to the same period a year ago. Sales and net income have dropped, although the growth in
revenues underperformed the average competitor within the industry, the net income growth did not.
ABERCROMBIE & FITCH has average liquidity. Currently, the Quick Ratio is 1.01 which shows that technically
this company has the ability to cover short-term cash needs. The company's liquidity has increased from the
same period last year.
During the same period, stockholders' equity ("net worth") has decreased by 15.79% from the same quarter
last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will
face financial difficulties in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.

INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)

Beta
1.90

Q1 FY15
709.42
-38.86
-92.16
-63.25

Q1 FY14
822.43
39.40
-19.49
-23.67

Q1 FY15
383.22
2,364.59
342.12
1,307.30

Q1 FY14
357.12
2,566.39
192.94
1,552.60

Q1 FY15
65.52%
-5.47%
-12.99%
1.54
0.51%
0.93%

Q1 FY14
69.37%
4.79%
-2.37%
1.60
1.48%
2.45%

Q1 FY15
2.39
0.21
5.67
-16.26

Q1 FY14
2.24
0.11
3.00
-6.50

Q1 FY15
70
0.20
-0.91
18.79
NA
2,647,730

Q1 FY14
73
0.20
-0.32
21.33
NA
2,858,738

BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume

2 Sum of quarterly figures may not match annual estimates due to

use of median consensus estimates.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.

Report Date: June 14, 2015

PAGE 4

June 14, 2015

NYSE: ANF

ABERCROMBIE & FITCH

Sector: Consumer Goods & Svcs Apparel Retail Source: S&P
Annual Dividend Rate
$0.80

Annual Dividend Yield

3.53%

Beta
1.90

Market Capitalization
$1.6 Billion

52-Week Range
$19.34-$45.50

Price as of 6/11/2015
$22.64

$60

Price/Earnings

$50

ANF 161.71
Peers 24.82
Premium. A higher P/E ratio than its peers can
signify a more expensive stock or higher growth
expectations.
ANF is trading at a significant premium to its peers.

BUY: $39.21
HOLD: $38.64

2 Year Chart

HOLD: $33.19

VALUATION
HOLD. ABERCROMBIE & FITCH's P/E ratio indicates a significant premium compared to an average of 24.82
for the Specialty Retail industry and a significant premium compared to the S&P 500 average of 20.61. For
additional comparison, its price-to-book ratio of 1.20 indicates a significant discount versus the S&P 500
average of 2.85 and a significant discount versus the industry average of 8.47. The price-to-sales ratio is well
below both the S&P 500 average and the industry average, indicating a discount.

BUY: $50.27

RATINGS HISTORY
Our rating for ABERCROMBIE & FITCH has not
changed since 5/13/2014. As of 6/11/2015, the stock
was trading at a price of $22.64 which is 50.3%
below its 52-week high of $45.50 and 17.1% above
its 52-week low of $19.34.

$40
$30

2013

2014

premium

Price/Projected Earnings

From
Buy
Hold
Buy
Buy

To
Hold
Buy
Hold
Buy

Price reflects the closing price as of the date listed, if available

(as of 6/11/2015)

45.92% Buy - We believe that this stock has the

opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.

23.86% Sell - We believe that this stock is likely to

decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.

TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726

Price/Sales

discount

ANF 6.10
Peers 15.43
Discount. The P/CF ratio, a stocks price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
ANF is trading at a significant discount to its peers.
Price to Earnings/Growth

premium

discount

ANF NM
Peers 1.99
Neutral. The PEG ratio is the stocks P/E divided by
the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
ANF's negative PEG ratio makes this valuation
measure meaningless.
Earnings Growth

lower

5
higher

ANF -70.22
Peers 24.00
Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
However, ANF is expected to significantly trail its
peers on the basis of its earnings growth rate.
Sales Growth

discount

ANF 0.43
Peers 1.48
Discount. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
ANF is trading at a significant discount to its
industry on this measurement.

premium

discount

ANF 1.20
Peers 8.47
Discount. A lower price-to-book ratio makes a
stock more attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
ANF is trading at a significant discount to its peers.
premium

30.22% Hold - We do not believe this stock offers

conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.

ANF 23.10
Peers 20.74
Premium. A higher price-to-projected earnings ratio
than its peers can signify a more expensive stock
or higher future growth expectations.
ANF is trading at a significant premium to its peers.

Price/Book

Price/CashFlow

discount

premium

RATINGS DEFINITIONS &

DISTRIBUTION OF THESTREET RATINGS

discount

premium

MOST RECENT RATINGS CHANGES

Date
Price
Action
5/13/14
$38.64 Downgrade
4/3/14
$39.21
Upgrade
10/8/13
$33.19 Downgrade
6/11/13
$50.27 No Change

lower

5
higher

ANF -11.46
Peers 9.09
Lower. A sales growth rate that trails the industry
implies that a company is losing market share.
ANF significantly trails its peers on the basis of
sales growth

DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.

Report Date: June 14, 2015

PAGE 5