Missing JCPenney Shoppers Found At Abercrombie

$ANF $JCP $AAPL  Teen retail giant Abercrombie & Fitch surprised Wall Street Wednesday by posting a blowout 28-cent-a-share earnings beat on a 9% rise in revenues, earnings which finally answered the question, "where have all those JCPenney shoppers gone?" Shares of Abercrombie responded by surging nearly 28%, back to levels the company has not seen since mid-September.

About half of Abercrombie's robust earnings stemmed from higher sales, with the other half coming from aggressive cost-cutting efforts.  Same store sales declined by 3%, but that was far better than the 10% loss the company suffered in the year ago period.

Abercrombie's management cited strong sales both domestically and abroad, indicating that lagging sales in Europe may finally be stabilizing. The company also boosted its full-year outlook, further delighting the Wall Street analyst community.

Abercrombie's earnings contrast sharply to those at JCPenney, which saw its revenues decline by a mind-boggling 26.6% as that company continues to struggle in its turnaround efforts under the direction of former Apple retail exec, Ron Johnson.

It remains to be seen whether the third quarter at Abercrombie is a flash in the pan or the beginning of something more meaningful for the company.  Teen apparel has notoriously been a very difficult business to manage as fashions and preferences can change on a dime.  Even with the company's stellar performance today, shares are still down over 19% for the year and a full 47% over the past five years. Teen apparel is certainly not the place for risk-adverse investors.

Abercrombie seems to be in a good position going into the holiday quarter with positive momentum.  Time will tell if the company can maintain that momentum and keep its inventory under control while at the same time managing the ailing U.S. and global economies.