Analyst cuts Abercrombie & Fitch rating, target

Friedman, Billings, Ramsey & Co.'s Adrienne Tennant downgraded Abercrombie to "Market Perform" from "Outperform" in a client note. She also lowered her target to $69 from $86.

The new target implies she expects the stock to lose about 3 percent from Monday's close of $70.98.

In the long term, Abercrombie remains an "extremely positive" investment, Tennant said. But share growth is likely to be limited for now due to the weakening U.S. economy, lower mall attendance and the likelihood that the company's same-store sales will continue to lag.

In May, Abercrombie reported its first-quarter sales and earnings rose from the year-ago quarter, but same-store sales--or sales at stores open at least a year--were down 3 percent.

Same-store sales are considered a key indicator of a retailer's strength because it measures performance at existing, rather than newly opened, stores.

Tennant also said the company will continue to face higher costs at its stores, particularly as it continues to expand internationally.

Abercrombie spokesman Tom Lennox said the company has delivered year-over-year quarterly earnings growth for the last 16 years.

"We have the track record in retail that's proven," Lennox said. "Our track record covers the short term, the medium term and the long term."

Abercrombie lost $1.28 to $69.70 in early trading Tuesday.