Abercrombie tries for $1 billion in annual online sales
A growing direct-to-consumer business is necessary for the teen-apparel retailer achieve its aggressive goal.
The teen-apparel retailer saw 41% growth in its direct-to-consumer business, which will help it achieve its ambitious goal of $1 billion in annual Internet sales. E-commerce sales have become a major focus area for teen-apparel retailers such as American Eagle Outfitters (AEO), Aeropostale (ARO) and Gap (GPS).
We currently have a price estimate of just about $64 for Abercrombie's stock, which is about 15% ahead of the market price.
Abercrombie looks set to achieve its target
In the second quarter, Abercrombie emphasized growing its direct-to-consumer business as its prime strategy in the near term. The company has reiterated its target to become a $1 billion e-commerce brand in the foreseeable future largely as a result of its global shipping initiatives.
With solid growth of 41% this quarter, Abercrombie is well positioned to achieve its target. Internet sales accounted for 12.4% of total sales this quarter, compared with 11.1% last quarter and 10.6% in the third quarter of 2010.
Additionally the increasing contribution of Internet sales will also help Abercrombie improve margins since the direct-to-consumer business model carries higher margins than the retail business.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Tighter regulations and the end of a lengthy bull market in bonds have changed the landscape forever.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.