Abercrombie & Fitch could boost earnings with Asia Pacific shake-up: Jefferies

Abercrombie & Fitch (NYSE:ANF) could unlock important net imaginable by reshaping its Asia-Pacific operations, analysts astatine Jefferies said, pointing to the region’s maturation paired with persistent unprofitability.

While APAC income person climbed from $119 cardinal successful 2023 to $157 cardinal successful 2026, the portion remains a resistance connected wide profits, with operating income improving, but inactive antagonistic astatine -$12 cardinal successful 2025, the analysts noted.

Management has acknowledged that returns successful APAC person lagged expectations, prompting a reassessment of the region’s go-to-market approach.

The reappraisal is successful its aboriginal stages, with updates expected implicit time. ANF presently operates done franchise agreements successful respective geographies, and akin transitions person been seen among specialty retail peers.

Jefferies believes that if Abercrombie & Fitch were to exit APAC oregon displacement to a royalty-based structure, “we spot a wide way to higher EBIT and debased single-digit percent EPS tailwind versus our existent estimates, astir $0.40 EPS payment to our fiscal twelvemonth 2028 estimate.”

Under this scenario, consolidated EBIT could emergence to astir $718 cardinal successful fiscal 2028, compared with a basal lawsuit forecast of $694 million, with corresponding EPS of astir $12.34 versus $11.95 successful the basal case.

The steadfast besides cited valuation enactment for the shares. Abercrombie & Fitch presently trades astatine astir 7 times its fiscal twelvemonth 2028 estimated earnings, beneath its five-year humanities mean of astir 12 times.

Jefferies added that absorption is apt to proceed repurchasing shares, with $450 cardinal successful buybacks planned for FY'27, contributing to upside potential.

Jefferies maintains a ‘Buy’ standing connected Abercrombie & Fitch, with a terms people of $130, representing imaginable upside of astir 50% from the existent stock terms of astir $88.