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Apparel Retailers’ Past EPS Performance and Future Expectations

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First quarter numbers

In the first quarter of fiscal 2018, Abercrombie & Fitch (ANF) had EPS of -$0.56, much narrower than the -$0.77 analysts had expected. Its reported EPS narrowed YoY (year-over-year) to -$0.62 from -$0.91. Higher sales, operating loss improvement, and lower tax cushioned its bottom line amid rising expenses. Foreign exchange added $0.03 per share to its bottom line.

American Eagle Outfitters’ (AEO) adjusted EPS rose YoY to $0.23 from $0.16, beating analysts’ estimate of $0.22. Its reported EPS rose YoY to $0.22 from $0.14. Higher revenue and share repurchases boosted its bottom line. In the first quarter, AEO repurchased 2.3 million shares worth $45.0 million.

In the first quarter of fiscal 2019, Urban Outfitters (URBN) reported adjusted EPS of $0.38, beating analysts’ projection of $0.31. The EPS growth was driven by higher sales, SG&A (selling, general, and administrative) expense leverage and lower tax. Gap’s (GPS) EPS rose 16.7% YoY to $0.42 but missed analysts’ expectation by 8.4%.

Bottom line expected to increase by double digits

Abercrombie & Fitch’s adjusted EPS are expected to grow 35.4% to $0.88 in fiscal 2018, and American Eagle Outfitters’ are expected to rise 30.2% to $1.51. In fiscal 2019, Urban Outfitters’ adjusted EPS are expected to rise 58% to $2.48.

Gap’s EPS are expected to grow 20.7% to $2.57 in 2018. The company expects EPS of $2.55–$2.70. Analysts are projecting double-digit increases in adjusted EPS for all of these apparel retailers due to expected top-line growth and tax reform.

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