Abercrombie & Fitch Dividend Delusion

Abercrombie & Fitch (ANF) reported Q2 results which of course are terrible. While they saw sales drop they could not reduce expenses quickly enough. They lost money and cash. But they declare a dividend and open some new stores around the world. The dividend speaks volumes. Is the board reckless with this one. Here are a few metrics to worry about. Cash and Equivalents are down approximately $100 million. Receivables are up when sales dropped some 25%. Collectability issues? Inventories still seem high in relation to dropping sales levels. Accounts Payable have increased which means they are becoming slow pay. The only good news is long term debt is down some $63 million.

Given this financial profile the Board still approves a dividend. This one is at risk.