Why Abercrombie & Fitch Stock Soared 13% at the Open Today

What happened

Shares of retailer Abercrombie & Fitch (NYSE:ANF) rose a swift 13% as trading got under way on May 26. The company’s pre-market earnings release was the driving force, with investors obviously pleased with what they saw.

So what

The retailer’s top line grew 61% year over year in the first quarter, with digital sales advancing 45%. Digital sales were 52% of total sales in the quarter. While all of that is positive, the really important statistic is that first-quarter 2021 sales were up 6% from first-quarter 2019 sales. Given that the comparison to 2020 is biased by the impact of the coronavirus pandemic, the 2019 comparison provides a better look at the company’s ongoing growth. The retailer is clearly resonating with shoppers right now.  

Image source: Getty Images.

First-quarter 2021 adjusted earnings came in at $0.67 per share, up from a loss of $3.30 per share in 2020. In the first quarter of 2019 the company posted an adjusted loss of $0.29 per share. Management noted that it was able to keep inventories under control, helping to support strong margins. Wall Street was looking for a loss of $0.38 per share, so the company handily beat expectations. Investors reacted to all of this as you might expect, by pushing the shares higher.  

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Now what

Including the early gains today, Abercrombie & Fitch’s stock is up more than 260% over the past year and nearly 150% above where it started out in 2020. There is a lot of good news priced in here, suggesting that investors should be pleased with the first quarter’s results, but perhaps a little cautious about the enthusiasm Mr. Market is showing for the stock.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/05/26/why-abercrombie-fitch-stock-soared-13-at-the-open/

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