Bikini Brouhaha Unlikely to Dent Sales for Abercrombie & Fitch

Abercrombie & Fitch (NYSE:ANF) has been known for its advertisements featuring young, attractive adults and often shirtless guys (just check out the company’s home page). Parents love to hate this company, and it seems the company may have gone a little too far for some parents with a recent push-up bikini top for girls. After a media uproar, the company has since renamed and suggested that kids older than 13 years old are best suited for these tops. ^{[1] [2] [3]} While we doubt that this will have any impact on its sales or marketing strategies (it hasn’t in the past), we take the opportunity to look at the sensitivity of the sales forecast on our price estimate.

Our price estimate for Abercrombie & Fitch stock is $60.44, which is slightly ahead of the current market price.

This chart shows our forecast for revenue per square foot, which is the most important metric we follow for Abercrombie. After seeing a dip during the downturn, we estimate that sales per square foot will rise to around $470 this year. In 2012, we forecast a 4.25% rise to around $490.

To show the sensitivity of this metric,  if revenue per square foot for Abercrombie & Fitch stores falls by around 15% from our current estimate for 2011, this implies around 5% downside to our current price estimate.

See our full analysis for Abercrombie & Fitch

1. Abercrombie & Fitch vs. Parents Everywhere [↩]
2. A&F rethinks marketing provocative bikini tops to tweens [↩]
3. Why are parents defending a kids’ push-up bra? [↩]