S&P MAINTAINS HOLD OPINION ON SHARES OF ABERCROMBIE & FITCH CO.
Apr-Q EPS of $0.03, vs. $0.27, beats our $0.03 loss per share estimate as gross margin narrowed a less-than-expected 240 bps, to 62.6%, on modest growth in average unit retail and an improved promotional environment. Given ongoing challenges in Europe, we now see comps decreasing 5% in FY 13 (Jan.), vs. our prior flat projection. However, we continue to expect product cost reductions to drive significant operating margin expansion in the second half of the year. We trim our FY 13 EPS estimate by $0.05 to $3.55, and lower our target price by $10 to $43 on historical P/E analysis.