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Abercrombie & Fitch Has Fallen, and It Can’t Get Up

2009-09-08T01:35:06Z

Tees emblazoned with phrases deemed offensive to women have been yanked from Abercrombie & Fitch clothing stores thanks to a group of teen girls who launched a nationwide “girlcott.” Bowing to pressure from the public and supporters of the Allegheny County Girls as Grantmakers (the group of nearly two dozen girls who spearheaded the protest), the retailer announced Friday that it is pulling two shirts off the market: one with the slogan “Gentlemen Prefer Tig Old Bitties” and a second reading, “With These, Who Needs Brains?” across the chest. “We recognize that the shirts in question, while meant to be humorous, might be troubling to some,” the company said in a statement. Several more questionable tees — with expressions like “Blondes Are Adored, Brunettes Are Ignored,” “I Had A Nightmare I Was A Brunette,” “Do I Make You Look Fat” and “No Money, No Car, No Chance” — are still available but could be pulled, pending negotiations with the girls later this month. The group has offered to help A&F come up with more empowering messages to put on its clothing in the future. The idea for the boycott came during a meeting the girls had at a retreat this summer. As they were brainstorming ideas of what they could do to make a difference in their community, discussion soon shifted to the Abercrombie tees, which many of them saw as “nasty and disgusting,” said 13-year-old Jettie Fields, the group’s co-chair. “There’s a certain degree to where those shirts can be funny, but with the one that said, ‘With These, Who Needs Brains?,’ I think that’s really pushing it and takes it too far,” Fields said. “Girls need to know it’s not necessary to wear these shirts, and that if they stop buying them, then Abercrombie will stop selling them.” The group held a press conference and then was blown away by the amount of support and media coverage the boycott received, Fields said. “We had no idea it would get this far, so we’re all just really happy,” she said. “I was like, ‘Wow, people are actually taking us seriously. They don’t just see as a group of little girls.’ The fact that we were able to take down a huge corporation and have them listen to us, that’s an awesome victory.” “We are delighted they won,” said Sarah Gould, president of the Ms. Foundation for Women. “These T-shirts … are potentially dangerous to girls and their health because it reinforces the message that girls are only as good as what their bodies are, and that’s very undermining to a girl’s healthy development. This girlcott just proves that today’s teen girl is much smarter, more aware and very socially active. She won’t blindly follow a trend or wear clothes from a brand just because it is deemed ‘cool.’ “ This isn’t the first time Abercrombie has come under fire for the phrases on its clothing. In 2003 the chain was criticized for a series of tees that featured caricatures of Asians along with phrases like “Two Wongs Can Make It White” (in a mock dry-cleaning business ad) and “Get Your Buddha On The Floor.” Riam Dean has a prosthetic arm that attaches at the elbow, and she typically wears a sweater to cover the prosthetic. While A&F employees are required to wear jeans and a polo shirt, she was given permission to wear a white cardigan while working on the floor. But only a few days after she started work, the store was paid a visit by the “visual team.” This group’s purpose is to sure the shop and its staff look up to code. One of the members of the team demanded she take off the cardigan, but she insisted she had permission to wear it. Nevertheless, she was asked by management to continue her employment in the stockroom, far out of the public eye. Management claimed that she “violated the ‘Look Policy,” which is an imperative part of working for such a prestigious clothing outlet. As if she could help the fact that she is, unfortunately, missing an arm. Totally her fault, I suppose. The nerve. Pssh. Riam sucked it up and commenced her stockroom duties, normally reserved for the “underlings” (i.e., ethnic minorities) of Abercrombie & Fitch “society” and received a telephone call at home a few days later, asking if she would continue on board with the company’s stockroom until their winter uniforms came in, which consisted of long-sleeved tops. She quit on the spot. Riam, who was born without a forearm, has utilized a prosthetic appendage for as long as she can remember. However, she never let her physical handicap become just that - a handicap. Dean is currently a student at Queen Mary University, located in London, and is pursuing a barrister’s degree. A&F has never been a stranger to discrimination suits; one was recently settled in the US for discrimination during the hiring process in that they would allegedly only hire “young and beautiful” men and women to work in their stores. I am not one of those sue-crazy citizens. I think that a lot of the lawsuits nowadays are setups. A lot of people abuse the legal system and look for loopholes to sue over practically everything. I have a family member quite like that and it drives me up the frigging wall. Yet, I hope Riam gets every penny. I hope she triple-sues. I hope after the suit goes through, she receives her requested money and additional funds for pain and suffering. The embarrassment at her treatment by A&F must be immense. Starting off with Abercrombie & Fitch (NYSE: ANF), an investor bought the Nov. 30-35 call spread 5,000 times, and simultaneously sold 5,000 Nov. 17.5 puts; the investor paid 20 cents to do this multi-legged trade. ANF has been under pressure for months due in part to declining sales numbers, and the shares are currently trading down 55 cents to $25.46. It’s interesting to note, however, that at least one investor is expressing bullishness on the clothing retailer. The Nov. 30 calls were home to open interest of 982 contracts, while the Nov. 35 calls were home to open interest of 281 contracts. The Nov. 17.5 puts were home to open interest of 577 contracts. ANF shares have climbed more than 70% since Nov. 20 when the shares dipped to a 52-week low of $14.15. However, they are down from the low 30s reached in early June. J.C. Penney Company (NYSE: JCP) shares dropped about 67 cents to $25.93 yesterday, but one investor was expressing bullishness on the retailer and sold 5,000 July 22 puts for around 40 cents. JCP stock was trading at $25.81 at the time of this trade. The in-the-money July 22 puts, which were trading down two cents on the day, were home to open interest of 275 contracts. JCP did not announce significant news yesterday, but at least one investor could be betting that the stock has more room to rally. The investor needs JCP shares to expire higher than $21.60 come July expiration to make money - the stock does not necessarily need to rally, it just needs to hold around its current levels. Abercrombie sale has rallied 85% since reaching a 52-week low of $14.18 on March 9. Looking at the July 29 calls in Coach (NYSE: COH), an investor sold 1,500 of these calls for 45 cents with the stock up 31 cents on the day to $26.55. We also saw call sellers in the July 30 calls, which were trading down five cents. The in-the-money July 30 calls were home to open interest of 1,972 contracts. It’s interesting that COH shares were up on a down market day, but an analyst from Lazard Capital raised his expectation of the company’s new “Poppy” collection because of a boost in media and customer buzz before it launches this Friday. Despite this rally, we saw at least one bearish investor betting that COH shares could drop below $30 in the next month.

Abercrombie & Fitch Has Fallen, and It Can’t Get Up

2009-09-07T03:22:09Z

Abercrombie Brand Protection Features

2009-09-02T03:25:43Z

Abercrombie & Fitch introduced abercrombie in 1997 with 9 stores. The purpose was to attract a younger audience to the American Abercrombie brand. The name of the concept took the same font of its parent, but with a navy color. The abbreviation from “Abercrombie & Fitch” to “abercrombie” with lowercase letters was intended to provide a children’s image. The store prototype was as the A&F one, but with variations also intended to appeal to the younger audience. Early abercrombie models include Ronnie Smith, Cassie Ventura, Christina Akatsuka, Christian Valentin, and Lindsay Lohan. The company uses trademark Casual Luxury to promote the brand. The brand defines the slogan as using “the finest cashmere, pima cottons, and highest quality leather to create the ultimate in casual, body conscious clothing,” and “implementing and/or incorporating time honored machinery …to produce the most exclusive denim…” The brand carries Men’s fragrances Fierce, Cologne 41, Proof, and Colden. Women’s fragrances include Perfume 8, Classic, Perfume 41, and Wakely. Released at the same time, Fierce and 8 and Cologne41 and Perfume 41 are marketed to compliment one another. High-end fragrances Ezra Fitch (cologne) and Ezra parfum were described as the embodiment of “the Abercrombie and Fitch heritage,” until they were discontinued. Cologne Proof was released in Christmas 2006 to be removed a year later (though some stores still carry Cologne Proof). Perfumes Ready is also among the retired fragrances. Fierce and 8 are the most heavily marketed fragrances as they are the signature scents of the brand overall. As the popularity of Abercrombie & Fitch goods increased, so did the counterfeiting of them. In 2006, the company launched the Abercrombie & Fitch Brand Protection Program to combat the issue worldwide (focusing more in Taiwan, China, Hong Kong, Japan and Korea) by working with legal forces globally.[28] Shane Berry, who joined the company in November 2005, was placed in charge of the program. Berry is a former Supervisory Special Agent from the FBI, and was a part of its Intellectual Property Rights Program. The news release from A&F announcing its initiative stated that the “program will improve current practices and strategies by focusing on eliminating the supply of illicit Abercrombie & Fitch products.” The Brand Protection program covers all A&F brands; mainly A&F, Hollister and RUEHL {shuttered by end of January 2010). Assuring that its consumers are aware of the issue, the Abercrombie & Fitch Brand Protection and abercrombie brand protection features suggest customers to purchase from authentic stores and to report suspected A&F counterfeiting. The company’s Abercrombie and Fitch brand gift cards have been recognized by Consumer Affairs as a “top pick” for not having deceptive features such as expiration dates, dormancy fees, and post-purchase fees. Abercrombie kids stores are designed to give off a “classic cool” effect. They are designed as “canoe stores,” displaying the a similar floor layout as Abercrombie & Fitch’s (the retail space is divided into multiple rooms). However, the kids prototype does bear differences. It has no louvers to cover the windows, has brighter lighting, is smaller in retail space, blasts electronic dance music and pop music from young artists, and displays marketing pictures with young models resembling those at A&F. The signature fragrance, “Phelps”, is sprayed store-wide. However, in late 2008, most new stores have added wooden louvers. As of 2008, abercrombie operates a total of 209 stores in the United States. abercrombie kids opened its first Canadian store on August 21, 2008 at Sherway Gardens in Toronto, Ontario. Another abercrombie kids store opened at Toronto Eaton Centre in Toronto, Ontario around the end of November.As of February 2008, there are stores in every state except for Alaska, Delaware, Hawaii, Maine, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Vermont (Closed in 2005), West Virginia, and Wyoming. Abercrombie kids’ apparel is designed to mimic Abercrombie & Fitch clothing, and the brand carries most the styles that A&F does. Most abercrombie kids clothes that have the labeled moose on them are to resemble their parent company “Abercrombie & Fitch” but the kids signature moose is a smaller to symbolize that they are children. The trademarked term, “classic cool”, is used to promote the clothing on an in-store and website level from abercrombie and it acts as the more juvenile version of A&F’s slogan “Casual Luxury”. The “classic cool” trade mark was retired in 2007 along with Abercrombie and Fitch’s “Casual Luxury”. Jeans bear the same back-pocket-stitching pattern as A&F as well as the same fits respective to sex. The logo moose is prominently displayed on clothing as is the name “abercrombie” as well as the year of establishment, “1892″ (Abercrombie & Fitch was itself established in 1892, but in reality, the children’s’ line “abercrombie” was not started until 1997). Clothing is categorized within the “guys” and “girls” divisions. Price points are on par with those at sister brand Hollister Co. The brand carries the following fragrance collections: “Phelps” cologne, “Chase” cologne and “Cologne 15,” as well as “Emerson,” “Spirit” perfume, and “Perfume 15″. The brand released the “abercrombie” cologne and perfume set previous to 2006; however, it was retired Christmas 2007. Chase and Spirit were released Christmas 2006 and were followed by Cologne 15 and Perfume 15 being released Christmas 2007. Chase is set to retire from stores after the Back to School 2009 season is over, however will be available on the abercrombie website until 2010. New fragrance Phelps and Emerson were released for Christmas 2008.

Abercrombie & Fitch: Worst Recession Brand?

2009-09-01T02:43:22Z

In this recession, there are struggling apparel retailers all across the country. Then there's Abercrombie and Fitch. The upscale teen retailer has suffered 10 straight months of double-digit same-store-sales declines. In the second quarter of 2009 alone, sales were down an eye-popping 30% across the company's three name outlets: the flagship Abercrombie brand, which has 567 stores; Hollister, a 520-store teen chain; and Ruehl, a 29-store chain for young adults that Abercrombie shut down in June. Abercrombie & Fitch lost $26.7 million, which includes $24.4 million in charges associated with the closing of Ruehl, in the second quarter. During the same period in 2008, Abercrombie scored a $77.8 million profit. "Abercrombie has mismanaged this economic downturn more than any other retailer," says Britt Beemer, CEO of America's Research Group, a retail consulting firm. What lessons can be learned from the Abercrombie experience? The first has to do with pricing. As the economy spiraled downward and competitors like Aéropostale started discounting like crazy, Abercrombie refused to lower prices. The company insisted that price-cutting would cheapen the cachet of the brand. You would figure that discounting would provide goodwill and build customer loyalty, especially in lean times. After all, with more grateful customers in tow, wouldn't the company be in a great position to ride the upswing associated with an economic recovery, raising prices again when times get better? Not necessarily, say consumer experts. "According to various research findings, a company will have a tough time increasing prices once they've lowered them," says C.W. Park, a marketing professor at the University of Southern California and editor of the Journal of Consumer Psychology. "Shoppers start to think the discounts are the base prices, and you risk alienating the shoppers if you raise them. Logically, you'd think that consumers would appreciate the lower prices and be understanding when they go back up. It doesn't always work that way." But even if Abercrombie could justify holding firm on price, it did little else to entice customers. "If you provide interesting incentives, you can minimize losses while maintaining the luxury image," says Park. "Offer milk and cookies in the store. Anything." He points to the Four Seasons hotel chain, which still charges premium prices for its rooms but started offering deals that let you buy a two-night stay and get a third one free. The hotel, in effect, is lowering its prices. But when things improve, it will be easier for consumers to accept the end of the free-room deal than a sudden spike in prices. We know you can't give away rooms, but how can you jack prices up another $30? Although Abercrombie holds seasonal clearance sales, it shuns such regular promotions. Abercrombie is having other problems. "They were the quintessential American prep brand, but the world changed on them," says Edward Yruma, an equity research analyst at KeyBanc Capital Markets. "We're living in the Gossip Girl era, where we're seeing some funkier fashions." Abercrombie's classic look went out of style, and the company is just starting to sell dresses, which have performed well. "I've noticed that my kids aren't open to anything Abercrombie these days," says one mother of two teenage girls. After releasing second-quarter earnings on Aug. 14, Abercrombie CEO Mike Jeffries admitted that the company missed some spring fashion trends. He said he plans to cut prices more aggressively. (The company did not respond to an interview request.) He might also want to change the Abercrombie vibe, which seems pretty tone-deaf to the times. At the New York City Abercrombie and Fitch store, whose neighbors include Prada and Gucci, a shirtless male model greets shoppers at the front and happily snaps pictures with the gawkers. Sales associates dance to hip-hop music in the aisles. There's not one "For Sale" sign in the whole four-story place. A pair of men's ripped jeans go for $90; women's jeans are $80; a hooded sweatshirt with the Abercrombie logo is $60. Meanwhile, at the New York City Aéropostale, whose neighbors include J.C. Penney, no one is shirtless but everything is on sale. No half-nude model greets you at the front door, but a guy barking "Buy one pair of women's jeans, get another free" does. Sales associates don't dance; they tell you deals. Ripped jeans are $30; women's jeans sell for $49.50 (plus the freebie pair); the Aéropostale hoodie is $15, or a quarter of Abercrombie's price. Think it's a coincidence that while Abercrombie's second-quarter profits fell 134%, Aéropostale's are up 83%? When and if the economy heats up again, perhaps shoppers will return to the so-called aspirational brands like Abercrombie. But don't bet on it. "Retailers don't realize that consumers are spending less and doing O.K. with it," says Beemer. According to Beemer's research, only 40% of men and 20% of women say they'll spend at high-end apparel stores again. "Abercrombie keeps working to protect their brand," says Beemer. "But when you keep seeing 30% sales declines, you're going to protect your brand into oblivion."

Earnings Preview: Abercrombie & Fitch

2009-08-31T03:30:24Z

Teen apparel retailer Abercrombie & Fitch Co. reports earnings for the fiscal second-quarter quarter on Friday. The following is a summary of key developments and analyst opinion related to the period. OVERVIEW: Abercrombie & Fitch Co. has seen sinking sales amid the recession, as it kept its price points among the highest in the teen sector and waited for a rebound. Over the past few months it has planned more sales and offered lower entry-level prices, but sales are still expected to sink during the quarter ended Aug. 2. Meanwhile, competitors such as Aeropostale Inc. and American Eagle Outfitters Inc., with their emphasis on low prices and basics, have fared better. Sales in stores open at least on year, or so-called same-store sales, fell 28 percent in July, 32 percent in June and 28 percent in May. The company said it was shuttering its high-priced Ruehl line of handbags and apparel in a move expected to be complete in January 2010. New Albany, Ohio-based Abercrombie also operates surf-themed Hollister, abercrombie, its store for children, and Gilly Hicks, an intimate apparel line. BY THE NUMBERS: Analysts polled by Thomson Reuters, on average, predict a loss of 7 cents per share on revenue of $647.9 million. The company said, according to a preliminary tally, sales fell 23 percent to $648.5 during the quarter. ANALYST TAKE: In a note to investors, RBC Capital Markets analyst Howard Tubin said in a client note Tuesday lowering price points and offering more "current-season" fashion in stores are encouraging acts, but he said it will take more of an effort for results to improve. "We remain on the sidelines with respect to the shares until we see significant newness offered within the assortments across all concepts," wrote Tubin, who rates the company "Average Risk." Stifel Nicolaus analyst Richard Jaffe wrote in a note to investors that he expects a loss of 3 cents per share, with weak women's apparel offerings and the recession holding back results. "On a positive note we believe management has demonstrated better inventory management, which bodes well for the second half and we believe that the markdown cadence will likely be more effective going forward (shallower markdowns taken throughout the quarter instead of deep clearance activity at the end of the quarter)," he wrote. WHATS AHEAD: Analysts will be looking for any indication about how back-to-school sales are doing, an update on closing Ruehl stores and any indications about how the company is planning for the upcoming holiday season. STOCK PERFORMANCE: Shares rose 13 percent during the three months ended Aug. 1.

Skimpy Profits Pressure Abercrombie's Pricing Attitude

2009-08-26T08:33:57Z

The clock is ticking on Abercrombie and Fitch Co.'s strategy of selling high-priced teen clothing as the recession erodes sales and profit margins, and competitors outrun it. The New Albany, Ohio, company, which is expected Friday to report a quarterly loss of seven cents a share excluding charges, has refused to offer deep discounts, allowing lower-priced rivals such as Aeropostale Inc. and American Eagle Outfitters Inc. to build sales and finance attacks on Abercrombie's children's and young adults' sales. Aeropostale has posted increases in sales at stores open at least a year of 11% and 12% for the first and second quarters of this year. In June, it opened its first P.S. from Aeropostale children's brand store taking aim at Abercrombie's children's clothing. AbercrombieIn contrast, Abercrombie's high prices have produced 30% sales declines at stores open at least a year in each of the first two quarters. High prices and a reputation for scantily clad models for years generated some of the best profits in the teen business. But that is no longer the case, said Richard Jaffe, a managing director at brokers Stifel Nicolaus & Co. From 2002 to 2007, Abercrombie's operating margins hovered slightly below 20%. But last year, Abercrombie's operating margin fell to 13.3% and should fall to just 3.9% this year, said Mr. Jaffe. Abercrombie Chief Executive Mike Jeffries declined to comment ahead of quarterly earnings. Abercrombie has been reluctant to alter its pricing strategy in part because it believes it is the key to international growth, embodied by its large store in London. The strategy overseas is to sell Hollister clothing as a luxury American brand. To preserve that air of exclusivity, the London outpost, a tourist magnet, doesn't offer discounts or promotions of any kind. A men's polo shirt that retails for $60 in New York sells for £60 ($99) in the London store, which continues to post year-over-year increases in monthly sales. The company plans to open a large store in Milan in October and in Tokyo in December. Even so, it has several times embarked on price cuts to move unsold inventories. Abercrombie has insisted the markdowns are highly selective. They are noted subtly by small signs on tables, not the large red signage in store windows deployed by competitors. Even on sale, a typical Abercrombie item often remains pricier than offerings from its peers.

Abercrombie & Fitch Takes Its Togs Abroad

2009-08-24T02:44:36Z

After getting its first taste of Europe with a new store in London, Abercrombie & Fitch(ANF Quote) is looking to expand on the continent in a big way. The Ohio-based teen retailer said Friday it has hired a New York commercial real estate company to scout sites in Italy, France, Germany, Spain, Denmark and Sweden for new stores. The expansion follows the March opening of the first Abercrombie & Fitch store in Europe, at Burlington Gardens in London. "We have been evaluating the European markets for some time and it is clear that the demand for the Abercrombie & Fitch brand is very strong," said Mike Jeffries, Abercrombie's chief executive, in a statement. "We believe that now is the ideal time for us to execute our international growth strategy with expansion throughout Europe." Christine Chen, an analyst for Needham & Co., says the time is right for the retailer to move overseas, since the Abercrombie & Fitch brand is reaching a point at which it may need to look elsewhere for growth. For the fiscal year to date, the company's same-store sales have slid 3%, brought down primarily by declines at the flagship brand in the U.S. As of the end of June, the company operated 355 Abercrombie & Fitch stores, 182 abercrombie kids-clothing stores, 409 Hollisters and 17 Ruehl accessories stores. Besides the London store, the company operates six others outside of the U.S.: three Abercrombie & Fitch stores and three Hollisters in Canada. Chen says the brand seems to have resonance in London and likely will translate well in other parts of Europe. "Maybe Europeans hate our politics, but they still like our products," says Chen, who points to Nike (NKE Quote) as an example of an American brand that has flourished overseas. Abercrombie also has plans to open a store in Tokyo by 2009. Other retailers have tried their hand internationally, but with mixed results. Chen says Urban Outfitters(URBN Quote) may even be more popular in Europe than it is here. But Gap(GPS Quote) has had some difficulty. Its international same-store sales, or sales at stores open at least a year, fell by 3% in its most recent quarter. Like many retailers, Gap now establishes stores overseas through franchise agreements with licensees in countries including Indonesia, Malaysia, Saudi Arabia and Turkey. Franchise agreements are considered less risky than retailers' going out on their own to establish their name abroad because the agreements allow retailers to designate licensees that are more familiar with the turf, as well as with the competition. The flip side is that a retailer may have to cede control over how its brand image is being presented. Chen says Abercrombie is intent on controlling its image, one reason why it may have decided to take on Europe by itself.

Abercrombie & Fitch tries to keep its shirt on as sales slacken

2009-08-19T04:04:49Z

Abercrombie and Fitch Co. raised eyebrows last Christmas when the teen retailer insisted it would ride out the recession without resorting to widespread price-slashing. Then came months of massive double-digit sales declines and dwindling store traffic as shoppers defected to competitors that sold similar clothes at more affordable prices. Industry experts wondered whether the company was risking its business in its attempt to uphold its brand image. At the same time, Abercrombie was criticized for missing several fashion trends, for instance, waiting too long to offer casual dresses and relying too heavily on its graphic T-shirts. "It's fair to say they've lost a good chunk of customers," said Howard Tubin, a retail analyst with RBC Capital Markets. In May, Abercrombie acknowledged that it had underestimated the financial pressures that consumers were facing. Since then, the retailer, which has cultivated a sexy-and-trendy image through shirtless store greeters (male) and ads featuring scantily clad models (male and female), has quietly been reducing prices and putting more items on its clearance racks. "The learning is that we are in very tough economic times, where price has become more of an object for us than it ever has been, and we are using this strategy to drive traffic during this time," Abercrombie Chief Executive Mike Jeffries said during a conference call with analysts Friday. But shoppers say they haven't noticed a change. At the Glendale Galleria this week, Lindsey Ochinero and daughter Macaella, 12, were back-to-school shopping at Abercrombie, where nearly everything was full price. Unlike rivals American Eagle Outfitters and Aeropostale nearby, Abercrombie didn't feature sale signs or special offers, and its clearance items were in the back. The pair soon left empty-handed. "Ridiculous -- $60 for a pair of shorts? It's not even a designer brand," said Ochinero, a medical and legal transcriptionist from Fresno. "They're sabotaging themselves. In the most desperate of times, what makes them so exclusive?" Despite Abercrombie's efforts to lower prices, "average unit retail price was down only 5% year over year in the second quarter -- that's not enough for the customer to even notice or get excited about," RBC's Tubin said. "There needs to be further movement." Abercrombie executives say they never promised huge discounts. Despite being more mindful of consumers' budgets, the company still needs to maintain its status, especially as it looks to expand internationally, said Eric Cerny, manager of investor relations. "If we go in and do a short-term fire sale and cut prices and fight the economy that way, we'd end up doing damage to the long-term aspirational appeal of the brand," Cerny said in an interview. "We know price is a component, but it's not going to be the component that drives our model. It never has been." Instead, the firm is tackling the recession modestly from the price end and aggressively from a fashion standpoint. After many of its styles last year missed the mark, Abercrombie has worked to correct its merchandise mix by bringing new fashions front and center, a shift away from its usual trendy-but-simple apparel. The brand has begun to offer an expanded selection of dresses and print tops for women and fewer basics such as logo T-shirts, which were among the weakest performers in the second quarter that ended Aug. 1. The fresh offerings have helped entice customers back to the stores, and several items, including plaid shirts and casual dresses, have sold well, said Christine Chen, a retail analyst with Needham & Co. "The price points have certainly hurt them, but I think last year that was particularly exacerbated by the fact that Abercrombie didn't offer much fashion newness," she said. "Now they're actually offering fashion and have brought ticket prices down in some key categories. I realize that's not reflected in their sales numbers, but that doesn't happen overnight." On Friday, Abercrombie -- which has about 350 namesake stores nationwide and is the parent company to other brands including Hollister Co. -- reported a net loss of $26.7 million for the second quarter and said sales at stores open at least a year plummeted 30% compared with the same period last year. In the year-earlier quarter, the retailer posted a profit of $77.8 million. In June, the company said it would close its "post-grad" Ruehl division because of the recession and its negative effects on the chain's business. Abercrombie will continue adjusting its merchandise mix and cutting costs, executives said. They also hinted that the company might close some underperforming stores when their leases expire. Although Abercrombie has been one of the teen sector's poorest performers this year, it is still considered the elite youth brand and has no long-term debt, Chen said. That positions it to weather the downturn better than many. "Once things turn around with the economy, provided Abercrombie continues to offer good-looking product at high quality, they're not going to have a difficult time getting the customer to pay full price," she said. "The brand is not dead." Brands that engaged in the markdown frenzy that has dominated the mall scene during the economic crisis won't rebound as well, because discounting "trains the customer to wait for the sale," she said. But shoppers say that at a time when even luxury chains are discounting, Abercrombie should give its loyal customers a break. Johnny Hernandez, 23, said he prefers Abercrombie to other brands but can't afford to shop at the trendy retailer nearly as much lately because of a tighter budget. At the Glendale Galleria this week, Hernandez first went to Abercrombie for polo shirts but ended up buying two from Aeropostale, which was holding a buy-one-get-one-free deal, for a total of $24.50. At Abercrombie, a full-priced polo would have cost him $60. "I've shopped more at Aeropostale than at Abercrombie lately because of the price," he said. Narine Malkhasyan, 25, said she would "most definitely" shop at Abercrombie, where she was buying $50 sweat pants this week, more frequently if prices were lower. "I can't relate to that," the Burbank resident said of the company's pricing strategy. "A sale is always a good thing."

Whatever Happened To Ed Hardy

2009-08-17T02:58:09Z

Totally unexpected, it contained the first Ed Hardy helmet I'd ever seen, with a bitchin' flaming-tiger graphic on each side. It wasn't until I spun it around to the front that I got indignant. "By Christian Audigier," it read in large letters below the Ed Hardy logo. What the fcuk?! (Cue cryptic design house reference.) Why would a biker want some French fashion designer's name scrawled across his forehead? How do you say "douche" in French anyway? Oh wait, that is a French word... Ironically, not long thereafter the Ed Hardy folks paid a visit to our offices to show us their new line of motorcycle accessories--helmets, jackets, gloves, boots, billet parts, graphics, tie-downs, the works--all embossed with the work of famed California tattoo artist Don Ed Hardy. They then bussed us cross-town to their headquarters, where we had a meet-and-greet with Christian Audigier himself. Their offices were the kind of creative space I wish we had here at the magazine, and the boss' digs ... let's just say the word "opulent" doesn't do them justice. Everything was painted white except the walls, covered in alligator skin. And everywhere you looked were vintage and custom motorcycles, most with the Christian Audigier logo painted on their gas tanks. As one attendee put it, "Clearly the guy doesn't have any self-esteem issues." Be that as it may, it turns out the guy is a bike guy. "I grew up in France, so of course I rode motorcycles as transportation," Audigier reveals. And now, on the heels of his success hawking Von Dutch and Ed HardyEd Hardy shirts--and, coming soon, Evel Knievel!--he's delved into the bike business, offering the aforementioned gear and partnering with various bike builders. First came a Yamaha quad, then a Suzuki Hayabusa, and now the Ducati Monster shown here, offered as part of a 25-unit run of customs that will also include Hypermotards, Streetfighters and 1198s. Maybe the guy's not a douche after all?As for the real Don Ed Hardy, like the Dread Pirate Roberts he's been retired for years, overseeing and mentoring the artists at his San Francisco studio, Tattoo City. Von Dutch wasn't as fortunate: He died of a stomach abscess caused by alcoholism in 1992.

Abercrombie & Fitch's brands are a "little more susceptible"

2009-08-10T07:57:15Z

On January 21, 2008, the first Gilly Hicks store opened (measuring 10,000 sq ft (930 m2)) in the upscale wing of Natick Collection with high anticipation. Abercrombie & Fitch analysts were exclusively invited to the event, where Mike Jeffries introduced the brand. He called GH "the Cheeky cousin of Abercrombie & Fitch". Afterwards, the analysts were encouraged to interact with the company's senior management team. After the event, analysts came out very impressed with the brand's image and merchandise. Analyst Kimberly C. Greenberger enjoyed the "warm and inviting store entrance," the GH bras collection, and called Gilly Hicks's image "cute and sweetly sexy." She further said that Gilly Hicks is a more "wholesome" alternative to Victoria's Secret and that "mothers would not mind taking their 15 year-olds to Gilly Hicks to shop." After the event, the store became the target of interest for many shoppers. Anticipation that was built before the opening was displayed as the store became full of customers. Center officials of Natick reported an extensive line of customers outside the GH doors that went well into the afternoon. Michael McNaughton, vice president of General Growth (in charge of the expansion of the Natick upscale level and who expressed interest in the GH store at Natick), said that "the opening certainly created a buzz that was so huge on the internet. People from California all the way to Australia were talking about this concept and contemplating coming out to see it." A retail analyst named Chris Boring warns that Abercrombie & Fitch's brands are a "little more susceptible" should recession hit, because their specialties are premium-priced goods rather than necessities. "But a great brand can overcome that," he said. Boring later commented that the image is smart nevertheless, as Americans are intrigued by the Australian culture. Overall, Gilly hicks has considerable prospects for the future. Victoria's Secret and Aerie sales has increased significantly. Post-opening Four days after the opening, the Australian newspaper, The Sydney Morning Herald published that GH coincidentally opened three months before the opening of Just Group's Peter Alexander (an underwear store). However, its CEO stated that GH will not be a competition, as both brands offer underwear to a completely different consumer group. The CEO was also curious on abercrombie and fitch's interpretation of Australia as a theme for an underwear store. Gillyhicks.com next became more informative with store locations and email subscriptions. A total of 5 locations were open by the end of February. In months Gilly Hicks proved to very successful, gaining a great follow-up of customers from the Northeast and Midwest of the United States. The brand began expansion in the West coast on July 19, 2008, with the opening of an 11,000sqft store in Glendale, California's Americana at Brand.[4] Chairman and CEO of Caruso Affiliated and developer of Americana at Brand mentioned, "The Gilly Hicks brand has already created a tremendous buzz ...So we are excited to give West coast consumers the first opportunity to shop in this one-of-a-kind store with its unique ambience and trendy merchandise." In July 2008, a second promotional film was launched. A teenager was arrested for attepting to shoplift $100-worth of GH merchandise in the Natick store on December 29, 2008. Although 16 stores were planed to open in 2008, only 13 did.