News of Abercrombie & Fitch failing to reach a deal to sell itself on the eve of Amazon Prime day was a pretty potent combination for retail apparel stocks yesterday. A handful of companies — including American Eagle Outfitters and Express, rumored to have been bidding on Abercrombie — took a hit.
As the news broke yesterday morning, Abercrombie plummeted 10% in premarket trading, bringing its market value down to about $740 million. It ended the day trading at $9.49 per share, down 21%.
Meanwhile, Amazon was preparing for its third annual Prime Day, a July sales holiday it started on its 20th anniversary in 2015, to boost sales of Amazon Prime memberships. While the concept has been compared to Black Friday, the deals tend to be much better.
Why it's important
Chairman and CEO Arthur Martinez, now in the third year of his tenure at A&F, after being widely lauded earlier in his career as the person who saved Sears, said he thinks it's best for shareholders if A&F does not sell.
"We believe in the prospects for our business and the opportunities for our brands. We are generating solid comp store sales momentum at Hollister and continue to refine and implement strategies to position the Abercrombie brand for revitalized performance," he said in a statement yesterday.
While A&F investors wait to see if Martinez can make good on his promise that not selling was a good call, Fortune writer Lucinda Shen points out that the best deal of all on Prime Day could be its stock. The company has gained 113% in value since it introduced the sales event in 2015.