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Abercrombie & Fitch shares tumble after JPMorgan downgrades retailer

Analyst Matthew Boss cited operating profit pressures as the company continued its efforts to rebrand away from its sexy reputation

Abercrombie & Fitch shop
JPMorgan also cut its target price to US$10 from US$12.

Abercrombie & Fitch Co. (NYSE:ANF) saw its shares take a tumble in early trade after JP Morgan cut its rating on the retailer following a meeting with the company’s executives.

The analysts, led by Matthew Boss, slashed their recommendation on the retailer to 'underweight' from 'neutral'.

READ: Abercrombie in fashion after smaller-than-expected second half loss

They also cut its price target to US$10 from US$12.

Boss cited operating profit pressures as the company continued its efforts to rebrand away from its sexy reputation.

Analysts say there are "no silver bullets to sustainable operating profit expansion" with revenue growth as the primary factor going forward.

They believe the stabilsation across the retail industry is a prerequisite for reversing gross margin headwinds in recent years.

Shares were down over 11% at US$11.90 in New York

Quick facts: Abercrombie & Fitch

Price: 17.34 USD

NYSE:ANF
Market: NYSE
Market Cap: $1.09 billion
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