Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of teen clothing retailer Abercrombie & Fitch
So what: At an investor day, the company told analysts that it expected earnings per share of $4.75 in fiscal 2012, showing that the $3.97 analysts were expecting is so outdated. It also said it expected sales in 2016 to be $7.5 billion evenly distributed between the U.S. and international markets.
Now what: The 2012 forecast is what I would focus on -- unless you really think the retail crystal ball can see five years into the future…? Management is particularly excited about growth abroad, where it will open flagship stores in China, Paris, and other major markets after seeing strong sales in Europe. For the long term this is great news, although I will take the 2016 forecast with a grain of salt. The company's prime customers in 2016 aren't even teenagers yet, and Abercrombie may not be as cool to them as it is today. That's the risk betting on teen shopping trends.
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