Abercrombie Options Hot as Stock Sinks on Slashed Forecast

The retailer blamed slowing sales in its Hollister and international units

by Lillian Currens

Published on Nov 26, 2019 at 12:08 PM
Updated on Jun 24, 2020 at 10:16 AM

Abercrombie & Fitch Co. (NYSE:ANF) joined the slew of retailers reporting earnings today, unveiling a third-quarter adjusted profit of 23 cents per share and revenue of $863.5 million -- both of which missed analysts' estimates. The company also trimmed its full-year sales growth forecast, blaming declining same-store sales at its Hollister unit and slowing revenue overseas, especially in Hong Kong after months of protests forced some stores to close. The stock hit a new one-month low of $15.02 earlier today, and is now down 3.5% to trade at $15.76. 

Options traders have flocked to the stock today, with a total of 7,209 calls and 5,699 puts across the tape so far today -- four times the intraday average. There appears to be quite a bit of sell-to-open action surrounding the December 16 call, suggesting these players expect the stock to remain below the $16 level through front-month expiration at the close on Friday, Dec. 20. Contracts are also being opened at the weekly 11/29 16-strike call, though it is unclear whether these are being bought or sold. 

Analysts have been relatively quiet today, but it looks as if the brokerage bunch has already taken a bearish stance on the apparel name. All 12 brokerages in coverage call it a "hold" or worse.

Short sellers are likely cheering ANF's post-earnings stumble. Despite short interest beginning to slide in the past reporting period, the 11.69 million shares sold short still represent a solid 18.8% of the stock's available float -- approximately 4.4 days of trading, at the equity's average pace.

All this pessimism surrounding the shares of Abercrombie & Fitch isn't surprising. Since a same-store sales miss caused the shares to plummet in late May, ANF has struggled to pop back past this bear gap, forced lower by its 60-day moving average and pressure at the $18 level. And while the shares appear to have found a floor right around the $13.50 region, they are now off 21.4% for the year.

ANF Nov 26



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