Abercrombie & Fitch successfully lures in wider audience, lands on J.P. Morgan’s catalyst watch

Abercrombie & Fitch’s (NYSE:ANF) Hollister brand is in the “early innings” of its brand building, and the parent company has already done an impressive job luring in a wider demographic with 18-40 year olds, leading J.P. Morgan to add the company to its positive catalyst watch ahead of Q3 results on November 27.

Based on fieldwork and access to management, J.P. Morgan analyst Matthew Boss anticipates an upside to the consensus Q3 and FY24 topline EPS estimates and has raised his same store sales growth for Hollister to +9%, above the street’s estimate of +8%.

For Q3, Boss hikes his EPS estimate by $2.40 versus the Street’s estimate of $2.36 based on 13%+ revenue growth, and gross margin by +10 basis points.

The stock is higher on J.P. Morgan’s endorsement, snapping back above its 200-day moving average and breaking free from a sideways range over the last two weeks. Shares have struggled to regain momentum since the company reported disappointing Q2 gross margin and as Wall Street’s outsized expectations for the quarter were not met.

The retailer has another chance to impress investors on Nov 27 and J.P. Morgan’s Boss sees brand momentum building internationally, with ~$400M revenue recapture opportunity remaining relative to pre-pandemic levels.

ANF is up more than 8% Friday adding to its 61% advance since the beginning of the year.