What happened

Shares of retailer Abercrombie & Fitch (ANF 2.89%) 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.  

Two people with shopping bags standing in a mall.

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.  

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.