Abercrombie & Fitch (ANF) is reviewing options for its China business, including bringing in local partners or selling a stake in the unit, according to reports of ongoing preliminary deliberations.

The review of Abercrombie & Fitch’s China operations comes after a mixed stretch in the stock, with the latest share price at $108.13, a 30 day share price return of 13.53% but a year to date share price return that is down 12.62%, while the 3 year total shareholder return of 150.30% points to stronger longer term momentum.

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Abercrombie & Fitch now trades near its recent highs while reviewing a China business that contributes only a small slice of revenue. Is the current valuation still skewed clearly to the upside, or is the balance shifting?

Most Popular Narrative: 2.8% Undervalued

The most followed narrative currently places Abercrombie & Fitch's fair value at $111.30, slightly above the last close of $108.13. This frames the current China review against a valuation that, according to that model, still points to some upside.

Consistently high free cash flow and a continued share repurchase program (~$250M already repurchased in the year, targeting $400M for FY25), combined with top-tier operating margins and prudent capital allocation, are set to boost earnings per share and unlock further value for shareholders.

Want to see what sits behind that fair value for Abercrombie & Fitch? The narrative leans on measured revenue growth, steady margins, and shrinking share count. Curious how those pieces are modeled together for the next few years?

Result: Fair Value of $111.30 (UNDERVALUED)

However, risks around rising tariff costs and weaker Abercrombie brand and EMEA sales could pressure margins and challenge the current Abercrombie & Fitch narrative.

Next Steps

With sentiment on Abercrombie & Fitch mixed but focused on potential upside, this is a good moment to review the numbers yourself and pressure test the story. To see why some investors remain optimistic, start by looking at the 2 key rewards

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.