From Standard & Poor's Equity ResearchAs the leader
abercrombie Equity ResearchAs the leader in casual luxury apparel for the 7- to 22-year-old demographic, Abercrombie & Fitch Co. (ANF) is well positioned to benefit from the trend we see of aspirational luxury brands outperforming their more moderate peers based on perceived brand differentiation and the value/price equation. Our favorable outlook for luxury brands is also supported by strong consumer spending trends, a favorable employment outlook, and continued moderate growth in consumer income. We look favorably on ANF's diverse retail-brand portfolio and believe incremental opportunities exist internationally. Based on our projected five-year compounded average annual earnings growth of 18%, we expect ANF shares to maintain and potentially exceed their peer-group multiple. Our recommendation for the stock is 5-STARS, or strong buy.