Tough day for Abercrombie & Fitch (ANF, $50.51, down $5.22). The stock is shedding 9% after reporting same-store sales were down 7% in July. Same-store sales are sales at stores open at least a year. Wall Street was expecting a decrease of 1.4%.

The company also owns the Hollister and RUEHL chains and the sell-off has pushed the stock to a fresh 52-week low. Although total sales for the month rose to $303 million, up 2% from a year earlier, the strength is coming from their London and New York City locations.

There were some who thought Abercrombie was a screaming buy in the $60’s but the stock was down nearly 30% before the recent downturn. Now it’s off 40% from it’s 52-week high of $85. Abercrombie & Fitch has been controlling its inventories to avoid excessive markdowns and the earnings outlook is actually pretty good for the company.

Here’s a case where it is so mouth-watering to go long the stock by buying some call options. Then again there’s the sour taste that you can feel if the stock continues lower from here. There are too many factors that can affect this trade. The stock dropped 10% on July 25 when its CEO left and consumers seem to be cutting back on those mall trips and buying nicer clothing.

Amercrombie could be a good longer-term investment but it appears the stock could be headed lower before it returns to glory. The September 50 puts (ANFUJ, $3.90, up $2.20) are up 129% on today’s news.

Rick Rouse