Abercrombie Analysis Finance

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FINANCIAL MANAGEMENT PROJECT

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Summary

A.
  INDUSTRY ANALYSIS
  B.
  RATIO ANALYSIS
  1.
  LIQUIDITY
 RATIOS
  2.
  ASSET
 MANAGEMENT
 RATIOS
  3.
  DEBT
 MANAGEMENT
 RATIOS
  4.
  PROFITABILITY
 RATIOS
  5.
  MARKET
 VALUATION
 RATIOS
  C.
  CONCLUSION
  APPENDICES AND SOURCES:
 

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de JAHAM Charles

04/18/2012

Abercrombie & Fitch Co., «A&F», is an American public company founded in 1892. The Company is an international retailer that provides casual sportswear under various subsidiaries such as Abercrombie and Fitch, and Abercrombie kids but also under Hollister brands. The Company A&F operates stores, but also direct-to-consumer operations under another brand: Gilly Hicks. In 2011, A&F expanded itself up to 1,073 stores all around the world: in North America, in Europe and Asia. The different brands still keep the same spirit with a common policy. They all embody the company’s heritage through classic, confident and casual images. In this way they manage to evolve coordinated with each other. The products are all standardized and this allows each brand to expand efficiently through new stores’ opening. Mission Statement: Abercrombie & Fitch has the strong mission to encourage a high level of performance to serve in the best way the Company and also its stockholders. The plan plan can be attained by offering associates the possibility of acquiring stock ownership interests in order to provide them with incentives by putting more efforts for Abercrombie & Fitch’s success. This A&F company is more relevant and authentic than ever as it has been proving its growth then stability over the last few years. The brand focuses on a high quality merchandising, promotes innovation, and expansion around the world.

A. Industry Analysis
a) Defining an industry

The industry in which Abercrombie & Fitch evolves in is the specific retail industry. The sale of clothes, personal care and decoration products is extremely competitive. As it is expanding internationally, the competitors become more and more significant. In direct-toconsumer sales and in retail stores, the main factors are brand recognition, price, point of sale location and quality. b) Sensitivity The apparel industry is considered as «moderate to high» concerning rivalry. There are three main competitors: American Eagle Outfitters Inc. Gap Inc. (GAP) J. Crew Group Inc. The largest one is GAP with $14.5 billion revenue in 2010. The intense rivalry between the competitors makes the efficiency and inventory control essential; as well as a continuous innovation in order to differentiate its products from the rest of the industry.

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c)

Industry Ratios
 

 
 
  Industry
 
  Valuation
 Ratios
 
 
  P/E
 Ratio
 (TTM)
  20.10
 
  Price
 to
 Sales
 (TTM)
  1.07
 
  Price
 to
 Book
 (MRQ)
  3.57
 
  Price
 to
 Cash
 Flow
 (TTM)
  12.50
 
  Price
 to
 Free
 Cash
 Flow
 (TTM)
  33.60
 
  Dividends
 
 
  Dividend
 Yield
 (%)
  1.40
 
  Dividend
 5
 Yr
 Growth
 Rate
 (%)
  22.27
 
  Sales
 (TTM)
 vs
 TTM
 1
 Yr
 Ago
 (%)
  8.80
 
  Growth
 Rates
 (%)
 
 
  EPS
 (TTM)
 vs
 TTM
 1
 Yr
 Ago
 (%)
  14.20
 
  Financial
 Strength
 
 
  Quick
 Ratio
 (MRQ)
  1.10
 
  Current
 Ratio
 (MRQ)
  2.30
 
  LT
 Debt
 to
 Equity
 (MRQ)
  0.48
 
  Total
 Debt
 to
 Equity
 (MRQ)
  0.51
 
  Interest
 Coverage
 (TTM)
  13.60
 
  Profitability
 Ratios
 (%)
 
 
  Gross
 Margin
 (TTM)
  41.60
 
  EBITD
 Margin
 (TTM)
  12.70...
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