Underperformance in Abercrombie (ANF) Could Have PE Firms Circling

For 2012, Abercrombie & Fitch (NYSE: ANF) has seen share prices dip over 21 percent, as macro pressure has affected sales in both the U.S. and Europe. The higher-end teen clothing retailer has had to shutter about 71 U.S. locations as it looks to keep costs in line and plans include closing about 180 U.S. stores through 2015.

The 21 percent dip in 2012 has erased about $1 billion of market cap from Abercrombie. By comparison, the S&P's 500 Retailing index has advanced 27 percent so far in 2012, a vast difference to Abercrombie's performance.

Not helping things out is Ralph Whitworth, who's Relational Investors holds 3.8 percent of Abercrombie shares. Recently, Whitworth AEO).

Another overhang is CEO and Chair Mike Jeffries, who transformed the company from an outdoors enthusiast retailer to one of Ivy League-meets-fashion retailer. Since 1995, Abercrombie sales have grown 23 times while net income rose 58-fold through 2008. In his current contract, Jefferies, who is 68, is set to get $105.6 million should control of the company change hands and he loses his job, notes Bloomberg. He'll probably be opposed to a takeover where his leadership position comes into question, anyway.

So, analysts think Abercrombie could grab $55 per share, which is 10 percent higher than Whitworth was expecting in his recent letter. Private equity firms that might be interested could include RidgeWorth Capital Management Inc. and Alpine Woods Capital Investors LLC, among others, according to Bloomberg.

Ahead of the bell Tuesday, Abercrombie is indicated higher.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Lowe's (LOW) PT Lowered to $275 at Guggenheim
• Nscale targets up to $3B in US IPO as soon as September - Bloomberg
• BofA's Hartnett sees dollar slump, risk selloff if bond intervention fails