Investors seem pleased with Abercrombie & Fitch's (NYSE: ANF) third-quarter results, if the headlines are any indiciation. But is the teen retailer really getting its je ne sais quoi back, or is trouble on the horizon for investors with short memories?

Third-quarter net income increased 28.9%, to $50 million, or $0.56 per share. Total sales jumped 18%, to $885.8 million, and same-store sales surged 7%. However, its third-quarter gross profit rate fell to 63.7%, 40 basis points lower than last year.

While those numbers look good all in all, let's also bear in mind that Abercrombie's still up against easy comparisons. In last year's third quarter, net sales fell 15% and comps plunged a sickening 22%. The implication that this is an "upbeat quarter" sounds highly relative compared to last year's malaise.

Last quarter, Abercrombie's inventory levels haunted investors, and they're still worth worrying about. Abercrombie's third-quarter inventories increased 47% year over year basis, far outpacing revenue growth. I'm not sure investors really want to see big inventory buildups ahead of a holiday season that's sure to be brutally promotional. And if that inventory doesn't sell, January 2011 could be more promotional still.

Plenty of teen retail stocks are stronger contenders than Abercrombie. I'd like to mention Aeropostale (NYSE: ARO), which I recommended for my 11 O'Clock Stock Pick in August, and Urban Outfitters (Nasdaq: URBN), which I highlighted in our "Stock Picks for Chicks" series several weeks ago.

Meanwhile, the retail landscape is crowded with fierce rivals. Other contenders for the dollars of fashionable teens include American Eagle Outfitters (Nasdaq: AEO), Gap (NYSE: GPS), Pacific Sunwear (Nasdaq: PSUN), among many others.

Investing in Abercrombie still seems like a bad idea, especially with the markdown-heavy holiday shopping season approaching. Do you disagree? Let us know whether you think Abercrombie's really sexy again in the comment box below.