Citi Downgrades Abercrombie & Fitch (ANF) to Sell

September 5, 2008 9:24 AM EDT

Citi downgrades Abercrombie & Fitch Co (NYSE: ANF) from Buy to Sell. Price target slashed from $73 to $45.

Citi analyst says, "We are downgrading ANF to Sell as we believe ANF’s multiple could compress to its 5-year low of ~9x on our expectation for 2H EPS to fall short of guidance and consensus expectations...We acknowledge our upgrade to Buy on 11/21/07 at $72.79 has been wrong as we had expected accelerating EPS growth on accelerating international growth (driving upside to 2008E sales and margins), and better inventory control; however, we believe the deteriorating European economy poses risk to future top line growth while aggressive 3Q inventory guidance (+10-15% psf) is concerning given our expectation for comps –HSD & deteriorating direct sales, likely contributing to increased markdowns in 2H."

Abercrombie & Fitch Co. (A&F, through its subsidiaries, is a specialty retailer that operates stores and Websites selling casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories.

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