Abercrombie & Fitch is coming off a great month. The teen retailer's stock climbed 50 percent in November, fueled in large part by news of a 41 percent increase in third-quarter net income and management raising its full-year earnings guidance.
So is it time to invest? A closer look shows that the stock is still down 7 percent this year compared with the 32 percent return of the S&P apparel retailers index. It's also down 39 percent from October 2011.
Abercrombie & Fitch has been struggling to sell preppy fashions in a weak global economy that has restricted the budgets of teenagers worldwide. It cut prices and is working hard to fix its merchandise. In particular, it's reacting more quickly to runway trends and that is resonating with shoppers.
Management also said in August that the company will slow its international expansion plans. This year, nearly 31 percent of revenue has been generated outside of the U.S.
Financial analysts are almost evenly split in their opinions, although slightly more rate the stock a "hold" than a "buy." Credit Suisse analyst Christian Buss has a "hold" rating, but says the company's strong third-quarter report "provided increased confidence in the likelihood of a longer-term earnings turnaround."Associated Press