Abercrombie & Fitch just got its shirt back.
Shares of the tattered preppy clothier spiked 34 percent yesterday — their biggest one-day gain since going public in 1996 — after management raised its profit forecast on better-than-expected sales and margins.
Third-quarter results, which included a 41 percent profit increase as sales rose 8 percent to $1.17 billion, were a relief to CEO Mike Jeffries, who has been taking heat this year from investors about persistently sluggish business.
Jeffries, on a conference call with analysts yesterday, chalked up recent improvements to fresh fashions. He tacitly admitted that the clothes had looked dull in the first half of the year.
“We were on the defense because we had too much inventory and we weren’t flowing newness, so that’s the biggest change,” Jeffries said.
But the flip-flop-wearing exec also has been playing defense with investors, including Ralph Whitworth, whose Relational Advisors fund had amassed a nearly 4 percent stake in the New Albany, Ohio, chain this summer.
In September, Jeffries hired Goldman Sachs to help fend off Whitworth.
The run-up in A&F’s stock price was sparked by an increase in its full-year profit forecast. It expects to earn between $2.85 and $3 a share, up from its summer outlook of $2.50 to $2.75.
Analysts, most of whom had written off 2012 for the mall-based chain after more than a year of disappointing sales, had been expecting the low end of the earlier forecast.
A&F shares closed at $41.92, erasing nearly all of the 36 percent drop they had suffered this year until yesterday.
“After an apparent somber period . . . we believe [A&F] is poised to return to prominence with investors,” said Eric Beder, an analyst at Brean Murray who reiterated his “buy” recommendation.