1. The Move
Abercrombie & Fitch (ANF) rose 13 bags in the ten years between 1997 and 2007:
It wasn’t a smooth ride since there was an 84% drawdown from 1999 high to the 2000 low.
2. Business Description
Abercrombie & Fitch Co. (NYSE: ANF) is a leading, global specialty retailer of apparel and accessories for Men, Women, and Kids through three renowned brands. For more than 125 years, the iconic Abercrombie & Fitch brand has outfitted innovators, explorers, and entrepreneurs. Today, the brand reflects the updated attitude of the modern customer, while remaining true to its heritage of creating expertly crafted products with an effortless, American style. The Hollister brand epitomizes liberating the carefree spirit of an endless California summer for the teen market. Abercrombie kids creates smart, playful apparel for children ages 5-14, celebrating the wide-eyed wonder of childhood.
The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers around the world to express their individuality and style. The company operates over 850 stores under these brands across North America, Europe, Asia, and the Middle East, as well as the e-commerce sites www.abercrombie.com and www.hollisterco.com.
3. Fundamental Situation at the Bottom
4. Fundamental Situation at the Top
5. Brief Story
It’s quite interesting to see that valuation multiples were higher at the bottom than they were at the top. EV/EBITDA was 11.6 at the bottom and 9 at the top, PER was 25 versus 16, and PBV was 55 at the bottom and 5 at the top. This situation suggests that investors saw Abercrombie & Fitch as a cyclical stock, with fundamental trends highly dependent on consumer confidence.
It looks like Abercrombie & Fitch is pro-cyclical, and investors know it: the stock went down 71% in the 2008 economic recession:
After a lot of volatility, the stock is about where it was at the time of the IPO in 1996.