Chapter 16 Financial Planning and Forecasting 533Access the Thomson ONE problems through the CengageNOW™ web site. Use the Thomson ONE—Business School Edition online
database to work this chapter’s questions.
Forecasting the Future Performance of Abercrombie & Fitch
Clothing retailer Abercrombie & Fitch enjoyed phenomenal success in the late 1990s. Between 1996 and
2000, its sales grew almost fourfold—from $335 million to more than $1.2 billion—and its stock price
soared by more than 500%. However, in 2002, its growth rate had begun to slow down and Abercrombie
had a hard time meeting its quarterly earnings targets. As a result, the stock price in late 2002 was about
half of what it was 3 years earlier. Abercrombie’s struggles resulted from increased competition, a slug-
gish economy, and the challenges of staying ahead of the fashion curve. Since 2002, the company’s stock
has rebounded strongly, but questions remain about the! rm’s long-term growth prospects.
Given the questions about Abercrombie’s future growth rate, analysts have focused on the company’s
earnings reports. Thomson ONE provides a convenient and detailed summary of the company’s recent
earnings history along with a summary of analysts’ earnings forecasts.
To access this information, we begin by entering the company’s ticker symbol, ANF, on Thomson
ONE’s main screen and then selecting “GO.” This takes us to an overview of the company’s recent per-
formance. After checking out the overview, you should click on “Estimates.” Click on “View Forecasts”
(in the middle of your screen) to see details of the EPS summary report. On both of these screens, you
will! nd a wide range of information about the company’s past and projected earnings.
Discussion Questions
- What are the mean and median forecasts for Abercrombie’s earnings per share over the next fiscal year?
- Based on analysts’ forecasts, what is the expected long-term growth rate in earnings?
- Have analysts made any significant changes to their forecasted earnings for Abercrombie & Fitch in the past
few months? Explain. - Historically, have Abercrombie’s reported earnings generally met, exceeded, or fallen short of analysts’ fore-
casted earnings? - How has Abercrombie’s stock performed this year relative to the S&P 500?
Discussion Questions
- What are the mean and median forecasts for Abercrombie’s earnings per share over the next fiscal year?
- Based on analysts’ forecasts, what is the expected long-term growth rate in earnings?
- Have analysts made any significant changes to their forecasted earnings for Abercrombie & Fitch in the past
few months? Explain. - Historically, have Abercrombie’s reported earnings generally met, exceeded, or fallen short of analysts’ fore-
casted earnings? - How has Abercrombie’s stock performed this year relative to the S&P 500?