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

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

A Schaeffer's exclusive


Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Former Hedge Fund Manager Makes $25,000 "Trading Breakthrough"
Click to continue to advertiser's site.
Dow Cools as Coronavirus Outbreak Takes Grasp of Markets
The Nasdaq is about to snap a six-week win streak
Copper Stock Picks Up Bear Notes After Earnings
FCX gapped lower yesterday after earnings
Former Hedge Fund Manager Makes $25,000 "Trading Breakthrough"
Click to continue to advertiser's site.