Most Recent Articles In Trends and Analysis
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Despite ramping up its discounts and a generous gift card-with-purchase program, the holidays were not kind to flailing Abercrombie & Fitch Co., as comps declined 19 percent in December (including Hollister). "The business model now appears fully broken," wrote analyst Eric Beder of Brean Murray, Carret & Co. in a Jan. 7 research note, pointing out the December comparison came against a 24 percent drop a year ago.
"The compounded two-year comps decline was a jaw-dropping 40 percent in December," he noted.
December was A&F's 21st consecutive month of comp declines, and analysts have pointed the finger at the company's "aspirational" pricing for the unenviable streak, with shoppers defecting to more affordably priced chains like Gap, American Eagle Outfitters and Aéropostale.
Will chief executive officer Michael Jeffries manage to revive the fortunes of A&F this year? He's insisted on keeping A&F's prices high to set it apart from competitors, but may have to revisit that strategy if his losing streak continues.
The company shuttered its failed Ruehl chain last year, but plans to accelerate A&F and Hollister store openings overseas this year, particularly in Europe. The stores have been enthusiastically received in places like Milan and Tokyo, but they also require a heavy investment of capital — which there will be less of, if U.S. sales continue to plummet.