Abercrombie & Fitch Co. rose the most in more than a month after posting fourth-quarter profit that topped analysts’ estimates and saying it would buy back $150 million in shares in the current quarter.
The stock climbed 11 percent to $40.04 at the close in New York. Shares of the New Albany, Ohio-based company have gained 22 percent this year, compared with a 0.2 percent drop for the Standard & Poor’s 500 Index.
Profit excluding restructuring and asset-impairment charges was $1.34 a share in the quarter ended Feb. 1, the company said today in a statement. The average of 29 analysts’ estimates compiled by Bloomberg was $1.04.
“It’s certainly encouraging,” Stephanie Wissink, a Minneapolis-based analyst at Piper Jaffray Cos., said in a phone interview. The company is “strikingly profitable, even with a U.S. business that’s severely depressed.”
The company also announced the accelerated share-repurchase program that will be executed in the current quarter as part of its existing authorization to buy back 16.3 million shares.
Engaged Capital LLC, an investment company that specializes in small- and mid-cap stocks, prodded Abercrombie to consider selling itself to a private-equity firm last year. It also urged the company to search for a new chief executive officer to replace Michael Jeffries amid falling sales.
The buyback signals that the company is willing to use its capital to reward investors and that the retailer’s formerly rapid pace of growth may be over, said Wissink, who has the equivalent of a buy rating on the shares.
“It also satisfies the speculation that there’s some lack of shareholder awareness,” she said.