By Senad Karaahmetovic
Shares of Abercrombie & Fitch (NYSE:ANF) are down 26% today after the company posted an unexpected Q1 loss.
ANF reported an adjusted loss per share of 27c, compared to EPS of 67c in the year-ago period, missing the consensus estimates of EPS of 6.4c. Net sales totaled $812.8 million, up 4% YoY and above the analyst consensus of $793.9 million. The gross margin stood at 55.3%, compared to the analyst consensus of 59.4%.
Looking ahead, Abercrombie expects FY 2023 net sales growth in the range of 0% to 2%, down from its previous forecast of 2% to 4%. The company said it expects higher costs-related headwinds to last through at least the end of 2022, and anticipates Q2 net sales down low single digits.
ANF expects an FY operating margin in the range of 5% to 6%, down from the previous outlook of 7% to 8%. Q2 operating margin is expected in the range of 3% to 4% with the YoY drop due to a surge in freight and raw material costs.
Q2 net sales are expected to be down low-single digits to the Q1 2021 level of $865 million, due to negative effects of about 300 bps from foreign currency and China lockdowns.
“We expect freight relief in the fourth quarter as we anniversary increased air usage last year due to the Vietnam shutdown,” ANF said.
Citi analyst Paul Lejuez maintained a Neutral rating and a price target of $30.00 per share.
“We expect shares to face significant downward pressure today given the reduced guidance outlook,” the analyst said in a client note