Abercrombie & Fitch (NYSE:ANF) could unlock significant earnings potential by reshaping its Asia-Pacific operations, analysts at Jefferies said, pointing to the region’s growth paired with persistent unprofitability.
While APAC sales have climbed from $119 million in 2023 to $157 million in 2026, the region remains a drag on overall profits, with operating income improving, but still negative at -$12 million in 2025, the analysts noted.
Management has acknowledged that returns in APAC have lagged expectations, prompting a reassessment of the region’s go-to-market approach.
The review is in its early stages, with updates expected over time. ANF currently operates through franchise agreements in several geographies, and similar transitions have been seen among specialty retail peers.
Jefferies believes that if Abercrombie & Fitch were to exit APAC or shift to a royalty-based structure, “we see a clear path to higher EBIT and low single-digit percentage EPS tailwind versus our current estimates, approximately $0.40 EPS benefit to our fiscal year 2028 estimate.”
Under this scenario, consolidated EBIT could rise to about $718 million in fiscal 2028, compared with a base case forecast of $694 million, with corresponding EPS of approximately $12.34 versus $11.95 in the base case.
The firm also cited valuation support for the shares. Abercrombie & Fitch currently trades at around 7 times its fiscal year 2028 estimated earnings, below its five-year historical average of roughly 12 times.
Jefferies added that management is likely to continue repurchasing shares, with $450 million in buybacks planned for FY'27, contributing to upside potential.
Jefferies maintains a ‘Buy’ rating on Abercrombie & Fitch, with a price target of $130, representing potential upside of nearly 50% from the current share price of about $88.