Forecasting the Future Performance of Abercrombie & Fitch
Overview
Clothing retailer
Abercrombie & Fitch enjoyed phenomenal success in the late
1990s. Between 1996 and 2000, its sales grew almost four-fold, from
$335 million to over $1.2 billion, and its stock price soared by
more than 500 percent. More recently, however, the growth rate has
begun to slow down, and Abercrombie has had a hard time meeting its
quarterly earnings targets. As a result, the stock price in mid-2002
is about half of what it was three years earlier. Abercrombie's
recent struggles resulted from increased competition, a sluggish
economy, and the challenges of staying ahead of the fashion curve.
Looking at
Abercrombie's Forecasted Earnings
Given the
questions about Abercrombie's future growth rate, analysts have
focused on the company's earnings reports. Thomson Analytics
provides a convenient and detailed summary of the company's recent
earnings history, along with a summary of analysts' earnings
forecasts.
To access this
information, we begin by entering the company's ticker symbol, ANF,
on Thomson Analytics' main screen and then selecting "GO." This
takes us to an overview of the company's recent performance. After
checking out the overview, you should click on the tab labeled
"Earnings/Estimates," near the top of your screen. Here you will
find a wide range of information about the company's past and
projected earnings. If you click on the tab labeled Consensus
Estimates (on the second line) you will find even more information
about past and projected earnings. .
Discussion
Questions
1. What are the mean and median forecasts for
Abercrombie's earnings per share over the next fiscal
year?
2. Based on analysts' forecasts, what is the expected
growth rate in earnings over the next three years?
3. Have
analysts made any significant changes to their forecasted earnings
for Abercrombie & Fitch in the past few months?
4.
Historically, have Abercrombie's reported earnings generally met,
exceeded, or fallen short of analysts' forecasted
earnings?
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