What happened
Is the retail apocalypse really upon us? If Abercrombie & Fitch's (ANF -2.38%) latest big piece of news is any indication, fears of brick-and-mortar retail's death might be vastly exaggerated. The veteran clothier's stock was up a roaring 25% week to date as of Thursday's market close, according to data compiled by S&P Global Market Intelligence. Encouraging quarterly results and analyst price target lifts -- plus one upgrade -- were the main catalysts.
So what
On Wednesday, Abercrombie & Fitch stepped out of the dressing room to show the world its first-quarter results. The retailer posted net sales of $836 million, representing 3% year-over-year growth and topping both the company's guidance and the average analyst estimate. Non-GAAP (adjusted) net income came in at $19.8 million, or $0.39 per share -- miles above those prognosticators' $0.01 projection.
Sweeting that big earnings beat, Abercrombie also raised its 2023 guidance. For the full year, it now believes its net sales will rise by 2% to 4% over the 2022 result of $3.7 billion; previously, it was guiding for improvement of 1% to 3%. It also upped its forecast for operating margin -- this is now expected to shake out to 5% to 6%, as opposed to the original estimate of 4% to 5%.
Now what
Abercrombie set numerous sales records during the quarter, notching highs in several categories and demographics.
Following the blowout results, several analysts cranked their price targets higher. One was Citigroup's Paul Lejeuz, who now pegs the stock as worth $33 per share, well up from his preceding $24 target. His peer Zachary Warring at CFRA went a step further, upgrading his recommendation to sell from the previous strong sell. He also raised his price target to $23 per share from $16.
