Important points
CNBC’s Jim Cramer said Thursday that Abercrombie & Fitch is back in the spotlight, but he plans to wait until the stock price settles before buying. “Abercrombie & Fitch may take some time to digest yesterday’s gains, but I think (CEO) Fran Horowitz is doing a great job here. If the stock price falls back, may I suggest a buy?” the “Mad Money” host said. Abercrombie shares rose more than 35% on Wednesday after the company posted strong profits and raised its full-year outlook. Kramer said the move was particularly notable because while comparable sales actually came in below expectations, better-than-expected margins and earnings expectations ended up masking that weakness. “At the midpoint, we raise our earnings estimates by nearly $3. Of course, the stock could rise 35% in a single trade,” Cramer said. Part of that upside was due to $100 million in tariff refunds, he said. But even after that benefit, Kramer said, Abercrombie still earned $2.42 a share, comfortably beating Wall Street’s expectations of $1.99. Mr. Kramer also pointed to Abercrombie’s aggressive share buybacks as a further boost to earnings per share. He said the company canceled about 7% of its outstanding shares in the first half of this year. Abercrombie stock is on a roller coaster ride. As the company’s business performance recovered, its stock price soared to the low $20s in mid-2023. It eventually peaked at around $192 in June 2024, two months before cautious commentary following its earnings put the stock in Wall Street’s penalty box. After that, the stock price plummeted until recovering in the second half of 2025, but then fell into the first half of 2026. The stock bottomed at about $70 in May and has risen steadily since Cramer said Wednesday that the quarter showed fundamental trends remained healthy across most of the business. He highlighted that sales in the Americas increased by 5%, while sales in Asia Pacific increased by 19% and sales in Europe, the Middle East and Africa increased by 2%. Kramer said the Abercrombie brand continues to benefit from efforts such as more full-price sales and a partnership with the NFL. Hollister remains the biggest question mark, Kramer said. While management attributed some of its weakness to difficult year-over-year comparisons, it said back-to-school trends are improving and the brand has already accelerated from the just-reported quarter. “That’s enough for me,” Kramer said. Cramer cautioned that some of Wednesday’s unusual moves likely stemmed from short covering. He said nearly 10% of Abercrombie’s publicly traded shares were sold short ahead of the report, and some bearish investors were forced to buy shares to close out positions as the stock price soared. He also noted that in the past, Abercrombie’s stock has soared after earnings, followed by a sharp decline, and warned that the retail landscape could change quickly. “This industry can change with the slightest change,” Kramer said. “Sure, Abercrombie is printing money now, but that doesn’t mean they’re going to be good in six months.” Still, Kramer sees enough fundamentals to maintain interest. He said that even after Wednesday’s surge, Abercrombie is trading at just 12 times expected 2027 earnings, but that its namesake brand has strong momentum and Hollister may be starting to improve. Subscribe to CNBC Investing Club today to follow Jim Cramer’s every move in the markets. Questions about Cramer’s disclaimer? Call Cramer: 1-800-743-CNBC Want a deeper look into Cramer’s world? Punch him! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Have questions, comments, or suggestions about the Mad Money website? madcap@cnbc.com
