When a company is already struggling to adapt its brand to a changing market environment, the last thing it needs it to be named at the top of a list of “most hated companies.”

Unfortunately, Abercrombie & Fitch Co. ANF 0.71% gained the dubious distinction of Fortune’s most hated retail company in the worldearlier this year.

Argus analyst John Eade sees potential in Abercrombie, but the company needs to start showing signs of life before the stock becomes an appealing investment.

According to Eade, there’s a simple explanation for why Abercrombie’s margins have plummeted from nearly 20 percent in the 2000–2010 era to only 2 percent in fiscal 2016.

“We believe this reflects the company’s failure to adapt its exclusive ‘pricy preppy’ aesthetic to the tastes (and financial constraints) of socially conscious Millennials,” Eade explained.

Argus recently reduced its fiscal 2017 and fiscal 2018 EPS estimates significantly from $0.85 and $1.25 to $0.56 and $0.71, respectively. The firm maintains a Hold rating on the show-me stock. Eage said…

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