abercrombie and fitch (NYSE: ANF) announced on Thursday that its same-store sales plummeted 29% in August. These results were worse than the expected drop of 23.9%.
Sales in all of its divisions were worse than expected, with sales at the abercrombie and fitch flagship store plunging 26%. Sales dropped 32% at Hollister, 37% at Ruehl (which will close at the year's end), and 26% at the company's children's retail outlet.
ANF is also going to face quite a hurdle with the holiday shopping season approaching. Will parents be willing to drop $85 for a sweater, or nearly $100 for a pair of jeans for their kids? Some will , but I'm guessing that many won't. The same thing with the back-to-school shopping season -- how many parents are willing to pay $35 abercrombie and fitch for a t-shirt because it says Hollister? Again, some will, but I bet many won't. Will the stock be able to withstand further same-store sales disappointments? We could soon find out.
ANF opened at $31.30 this morning, abercrombie and fitch about 2% lower than Wednesday's closing price. The biggest danger for the stock is a technical hurdle that it recently cleared but will now have to face again. Shares of the retailer were relying on the support of their 10-month moving average, but this trendline should now be in a position to act as resistance. This fact doesn't mean that the stock is doomed for failure, but resistance isn't exactly what ANF can use right now. The stock had actually put together abercrombie and fitch a nice little run starting early in the year, but that could now come to an end.
