Abercrombie & Fitch loses its cool
The retailer's stock price plummets after it gives disappointing guidance for the year.
Abercrombie & Fitch (ANF) can't get its act together. The stock was down more than 11% Thursday after the company said it whiffed the fourth quarter.
In an earnings preannouncement, the retailer said it expects profit of between $1.10 and $1.15 a share -- far below the $1.55 per share that analysts expected.
Traffic to stores was not where it should be. Same-store sales -- a key measure of a retailer's business -- were flat, which was below the company's expectations. Sales in U.S. stores in particular were disappointing.
Hear why one analyst cut her estimate on Abercrombie in the following video.
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There are some bright spots for the company. Direct-to-consumer sales, which includes website sales, helped bring overall U.S. sales up 4% to $962.2 million in the quarter. And total international sales soared 62% to $366.6 million.
Gross margin is taking a hit, the company said, largely because of low sales and higher markdowns in what it describes as a "more aggressive promotional environment."
This is not the story at other retailers. Target (TGT) blasted through expectations, with same-store sales growing at 4.3% for January. Macy's (M) didn't meet expectations, but it still saw same-store sales rise 2.4%. Nordstrom's (JWN) sales rose 5% and Saks' (SKS) sales nearly hit 11% growth. Limited Brands, which owns Victoria's Secret, said its sales grew 9%.
Gap (GPS) sales fell 4%, but that was better than the 4.9% drop analysts expected, according to The Wall Street Journal. The company was sanguine about the fall, however, saying it was able to clear through holiday inventory with markdowns.
January is a tough time for any retailer. There's a huge lull after the holiday rush, volume is down and the main focus is on clearing out the store to prepare for spring.
So are we seeing a temporary stumble for Abercrombie or are there larger issues here? "It's just not cool anymore," proclaims Business Insider.
I don't think this is a short-term problem. Abercrombie guided down for its full year, saying same-store sales would continue to be flat and estimating earnings at between $3.50 to $3.75 a share. Wall Street expected $4.16.
So how does Abercrombie begin to fix this mess?
I guess folks are weary of wearing popped collars and seeing the "we only hire bitchin' young people" attitude that is prominently flaunted at A&F stores. The image this company portrays is so phony. Hopefully this marks the beginning of a slide back into the septic tank from whence they crawled . BYE BYE!
I used to be a store manager for A&F back in the 90's and I didn't like where they were going with their business model. They told us to stop calling our floor people sales associates and start calling them "brand representatives". The message was that they wanted customers to walk into the store, look at the A&F employee and want to be like them - they could care less if the employee could sell, they just wanted them to look good.
Case in point, I had a guy that worked my stock room and he was more street than wasp, but I moved him out to the floor because the guy could sell his tush off - greeted everyone, smiled, and SOLD - but the district manager told me to put him back in the stock room because he didn't fit the image. I left not too long after... felt it was pretty close to discrimination and was disgusted. Loved the old A&F when it was true hiking, camping gear and it was about quality - not what the gorgeous blonde who just stands there in A&F looks like. Now with Holister, American Eagle, etc... it's all cookie cutter. Blech.
Its simple really. A& F was trendy at the beginning of the zero decade. Kids who were shopping there are imprinted with that style. Some of them will not change it. That group of kids are in their mid 20's now. Mom and Dad no longer purchase their clothing so they buy knock offs of that style at Target. Younger kids would not be caught dead in last generations clothing so they shop elsewhere.
This is the Gap conundrum. The Gap was the go to store in the late 80's. Look at most suburban 40 year olds and they still look like the Gap.
@cr8tr - i was a manager for AF starting in the late 90's. I had the same issues. I had an employee that didn't fit the "look book" but she was great with customers and was the best cashier I had on busy days. My DM walked in and told me to get out from behind the counter - i told him no and got in good bit of hot water. It became more & more discriminatory the longer i worked there... not to mention the catalog had nudity in it and we had to start ID'ing kids who wanted to buy it. I was pretty sure I didn't work at the "quicki-mart" and wasn't up to selling that crap and checking ID's. I still have some good clothes from there, jackets & sweaters mostly. Used to be good stuff and somewhat affordable... not so much anymore. I won't shop there.
- I am tired of buying overpriced clothes which otherwise could have, and should have been made in America.
- I am now an older-twenty-something with a real job (finally) and no longer want to shop in a dance club. Not to mention, the cologne sprayed on everything is a bit overkill.
- Customer service never was a strength with the company in my opinion. Even when I shop at Old Navy associates ask if I need help finding a size or anything.
- Their clothes are tailored to fit a cookie-cutter "type" of person which only reflects a small proportion of the paying consumer base. Maybe they'll realize not all of their customers are going to be 6'3 and have the body of an Olympian, or 5'6 and as thin as a railing?
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The Dow is off slightly on the day, after falling nearly 130 points at the open. Decent reports on jobless claims and new-home sales helped.
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