Abercrombie Stock Hits 52-Week Low: Buy the Dip or Stay Away?

Shares of Abercrombie & Fitch Company ANF hit a new 52-week low of $77.19 yesterday before rising a notch to close at $78.17. The closing price reflects a 60.3% discount from its 52-week high of $196.99.

Additionally, this apparel retailer’s stock has slipped below critical technical thresholds, such as its 50-day and 200-day moving averages, which are important indicators for gauging market trends and momentum. These raise investor concerns regarding ANF’s ability to navigate current market dynamics.

ANF Trades Below 50 & 200-Day Moving Averages

Image Source: Zacks Investment Research

The company’s downtrend comes a week after it reported notable improvements in the top and bottom lines for the fourth quarter of fiscal 2024 on March 5, 2025. Abercrombie’s earnings per share (EPS) for the fiscal fourth quarter jumped 20.2%, with net sales increasing 9% year over year. In fiscal 2024, the company delivered net sales growth of 16% year over year, with EPS rising 72% year over year.

Despite the strong performance, ANF shares have declined 18.7% in the past week. Investors have expressed caution about the company’s prospects due to the continued slowdown in sales, the impacts of higher freight costs, and the potential tariff-related headwinds, which are expected to weigh on its near-term performance.

While Abercrombie has delivered an extraordinary stock return of 676.5% in the past years, its recent one-year performance shows a stark contrast. In the past year, its shares have declined as much as 35.2% against the broader industry’s rise of 2.1% and the Zacks Retail-Wholesale sector’s rally of 16.4%. The company also underperformed the S&P 500’s growth of 12.4% in the past year.

The ANF stock has also underperformed its peers, including Nordstrom Inc. JWN, Urban Outfitters URBN and Boot Barn BOOT, which have recorded gains of 37.2%, 34.4% and 20.1%, respectively, in the past year.

Abercrombie Stock’s One-Year Price Performance

Image Source: Zacks Investment Research

What’s Behind the ANF Stock’s Recent Decline?

The decrease in Abercrombie’s stock price can be attributed to its strong but slowed sales performance. Although net sales increased 9% in the fiscal fourth quarter, supported by double-digit comparable sales growth across regions and strong traffic, the growth rate was significantly below the 21% rise in the prior-year quarter and the 14% rally in third-quarter fiscal 2024. The sales slowdown from prior periods mainly reflects that the company is transitioning out of its high-growth phase of fiscal 2023.

ANF’s fiscal 2025 outlook indicates a further slowdown in sales growth. The company projects year-over-year sales growth of 3-5% for fiscal 2025, indicating a decline from growth of 16% recorded in fiscal 2024. For first-quarter fiscal 2025, the company expects sales to increase 4-6% year over year, suggesting a slowdown from growth of 22% reported in first-quarter fiscal 2024.

The company’s gross margin in the fiscal fourth quarter saw pronounced impacts of higher freight costs, which are expected to continue in the quarters ahead. The gross margin of 61.5% in the fiscal fourth quarter contracted 140 basis points (bps) year over year, as improved average unit retail from reduced discounts was more than offset by increased freight costs stemming from higher freight rates and air usage to aid delivery times.

Abercrombie anticipates margins in the first half of fiscal 2025 to be hurt by increased year-over-year freight costs and more normalized carryover inventory selling. However, margins in the second half are expected to benefit from estimated lower freight from the prior-year period. As a result, the company expects an operating margin of 14-15% for fiscal 2025, whereas it reported 15% in fiscal 2024. For first-quarter fiscal 2025, the company expects the operating margin to be 8-9%, significantly below the 12.7% reported in the prior-year quarter.

ANF provided a bleak EPS view for the first quarter of fiscal 2025. It expects EPS to be $1.25-$1.45 in first-quarter fiscal 2025, suggesting a decline from the $2.14 reported in the year-ago quarter. For fiscal 2025, it predicts EPS to be $10.40-$11.40, whereas it delivered $10.69 in fiscal 2024.

Apart from these, investors are highly skeptical about the impacts of the incremental tariffs, which are expected to have hurt its quarterly performance. As for the current tariffs, the company’s outlook includes the impacts of the recently imposed U.S. tariffs on China, Canada and Mexico. It expects effects of $5 million from these tariffs in fiscal 2025. The outlook, however, excludes the impacts of other potential incremental tariffs that may be imposed as retaliatory tariffs.

Abercrombie’s Estimate Revision Trend

ANF’s EPS estimates for the first quarter and fiscal 2025 reflect downward revisions following the soft outlook. The Zacks Consensus Estimate for its first-quarter and fiscal 2025 EPS declined 16% and 0.1%, respectively, in the last seven days. The downward revision in earnings estimates indicates that analysts have been losing faith in the company’s growth potential. However, the consensus estimate for fiscal 2026 has moved up 2.6% in the past seven days.

The Zacks Consensus Estimate for ANF’s first-quarter fiscal 2025 sales suggests year-over-year growth of 5.3%, while the consensus mark for EPS indicates a decline of 23.8%. For fiscal 2025, the Zacks Consensus Estimate for ANF’s sales and EPS implies 4.5% and 3.7% year-over-year growth, respectively. The consensus mark for fiscal 2025 sales and earnings indicates 3.9% and 4.8% year-over-year growth, respectively.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Image Source: Zacks Investment Research

After the stock’s downside, what should your next move be? Should you accumulate shares, hold positions or book profits? Before arriving at any decision, let us explore the company's underlying fundamentals.

Analyzing ANF's Core Strengths & Long-Term Growth Potential

Despite slowing growth rates, Abercrombie's long-term outlook remains strong. The company continues to benefit from solid brand performances, driven by its focus on high-quality, trend-forward assortments that appeal to both new and loyal customers. Management’s commitment to product innovation and quality has been a key factor in sustaining its success.

Investments in stores, digital initiatives and technology are set to strengthen the company’s long-term position. Abercrombie has increased store traffic by leveraging favorable fashion trends and store optimization. Its store modernization efforts have created inviting spaces that enhance the shopping experience, while e-commerce enhancements, such as personalized recommendations and seamless navigation, support a frictionless omnichannel journey.

By repositioning flagship locations into smaller, omnichannel-enabled stores, Abercrombie is aligning its footprint with evolving consumer preferences. This transformation positions the company for sustainable, profitable growth, ensuring long-term value creation for shareholders.

Undervalued Stock: Is it Opportune Time to Buy?

From a valuation perspective, ANF shares present an attractive opportunity, trading at a discount than historical and industry benchmarks. The recent pullback has brought Abercrombie's stock valuation to a level that appears more affordable and appealing.

The stock trades at a forward 12-month price-to-sales (P/S) ratio of 0.76X, reflecting a discount to the broader industry’s 1.43X multiple and the S&P 500’s ratio of 4.87X. Moreover, the company’s current valuation is below its five-year high of 2.10X, suggesting that shares are cheap on a relative basis. The stock’s current Value Score of A validates its appeal.

Image Source: Zacks Investment Research

How to Play the Abercrombie Stock?

ANF’s drop to a 52-week low and slowing sales growth have understandably raised investor concerns. Ongoing and potential tariffs, along with disappointing sales and EPS guidance, weigh on sentiment. These near-term challenges, coupled with rising freight costs, create headwinds that warrant caution.

However, the stock’s undervaluation relative to peers, combined with Abercrombie’s long-term growth potential, transformation strategies and financial resilience, offer reasons for optimism. The company’s focus on brand strength, digital enhancements and store optimization positions it well for future success.

For investors seeking exposure to the apparel industry, Abercrombie’s recent stock decline presents a buying opportunity. However, given the near-term pressures, a careful assessment of risks and rewards is essential. The stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research