Abercrombie & Fitch is "featuring fleece that is of heavier

hollister clothing attributes its profit increase to a higher price markups than last year. Also, the company noted that it suffered fewer losses from theft than in the past.

This winter, Abercrombie & Fitch is "featuring fleece that is of heavier weight than other teen retailers," said Friedman, Billings, Ramsey analyst Adrienne Tennant, who said she believes sales of these products may disproportionately benefit the company heading into the coldest months of the year. Tennant also noted that abercrombie outlet has done a solid job of managing inventory levels, a key concern in a weakening economy.

According to Thomas Filandro of Susquehanna Financial Group, sales of men's apparel at Abercrombie & Fitch are climbing above those of women's clothing. For the month of October, men's same-store sales climbed 7% to 9% while women's declined 1% to 3%.

Morgan Stanley analyst Michelle Clark "applauds" Abercrombie & Fitch's execution during a difficult selling period. While Clark expects shares of the retailer to rise Wednesday on strong results, she notes that "much of the good news is already priced in."

More on retail stocks

Now there is no denying that abercrombie and fitch has been a victim of the push toward a new frugality in America. The best measure of this is that the all-important same-store sales metric fell 30% over the past three months. But what we’ve also seen in the case of abercrombie is a bit of a backlash against the company’s self-portrayal.

Last fall the ChangeWave Alliance Research Network conducted a survey that focused on consumer retail buying habits. Respondents were asked which retail stores they were least likely to shop at, and why.

At the top of the list was abercrombie outlet . Now, it wasn’t the company’s high prices relative to lower-cost alternatives such as Aeropostale (ARO) and American Eagle Outfitters (AEO) that caused consumers to roil at the prospect of patronage. The problem was, as one respondent wrote, the “immoral advertising and the message it sends to teens.”

Abercrombie's luxury-priced strategy

Some analysts said abercrombie and fitch luxury-priced strategy delivers stronger cash than its rivals -- despite the

sales decline. While cash flow from operations fell 40% last year, to $490.8 million, it far outstripped the

$202.1 million generated by Aeropostale. The company abercrombie outlet ended its fiscal year in January with $522.1 in cash and

just $100 million in debt.

But a year of sharp sales declines could put the company in a precarious position, Stifel Nicolaus's Mr. Jaffe

said. He believes the company is trying to ride out the recession, relying on its cash to support the stance.

"The feeling is: We've got the cash, abercrombie we've got the brand -- the worst thing we could do is act like there's a

fire sale," Mr. Jaffe says. "It's not a question of survivability at this point. It's a question of returning

to historical levels of viabilit