trends-analysis
trends-analysis

Abercrombie & Fitch: The Year Ahead

Despite ramping up its discounts and a generous gift card-with-purchase program, the holidays were not kind to the flailing retailer.

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.

load comments

ADD A COMMENT

Sign in using your Facebook or Twitter account, or simply type your comment below as a guest by entering your email and name. Your email address will not be shared. Please note that WWD reserves the right to remove profane, distasteful or otherwise inappropriate language.
News from WWD
Newsletters

Sign upSign up for WWD and FN newsletters to receive daily headlines, breaking news alerts and weekly industry wrap-ups.

LatestPublications
getIsArchiveOnly= hasAccess=false hasArchiveAccess=false