Maybe logo covered clothing and half naked male store greeters aren’t such a bad thing after all.
Abercrombie & Fitch (ANF) shares plummeted 10% on Friday after the struggling clothier reported its 15th straight quarter of company wide-comparable sales decline. The biggest culprit was a deepening drop off in sales at its namesake brand, where comparable sales fell 14% in the third quarter in their sharpest decline in many years. Its Hollister brand fared much better, with flat comparable sales.
The company has been trying to find a new place for its flagship brand in a crowded, struggling apparel market. But absent the logo it used to put all over its clothes, and the sleek nightclub-like store presentation it used to favor, it’s hard for A&F to stand out, when shoppers can, and are, shopping at H&M, Forever 21 and Zara.
The result has been a collapse in the A&F brands sales: the company’s profit fell 81% in the third quarter after it had to sell unpopular merchandise at clearances prices. Executive Chairman Arthur Martinez conceded that the brand had had to discount more than it wanted and that such intense promotions harm a brand longer term.
“The challenges of the brand are deep and longstanding,” said Executive Chairman Arthur Martinez. “All of this is complicated by a very challenging environment.”
The company has been without a CEO for two years, since the departure of its legendary but highly controversial former chief Mike Jeffries. On his watch, A&F had cultivated an exclusive image that looked down at people who didn’t have perfect bodies. Last December, it suspended its search.
A&F is looking to court shoppers in their 20s (rather than teens) by tapping into their “inner self rather their outer self,” said Fran Horowitz, the company’s president and chief merchant on a conference call. “The marketing is full of people with character and charisma.”
The company said it would close another 35 A&F stores in the U.S, bringing to 50 the number of shutterings this year. Abercrombie & Fitch has closed more than 200 hundred of stores in the last two years, leaving it with about 730 right now.
Abercrombie & Fitch can take some comfort knowing it’s not alone: Gap Inc (GPS) shares tanked 10% after it reported its seventh straight quarter of declining comparable sales and suggested its ability to draw shoppers would not be coming back quickly. “We understand the fact that traffic is likely to continue to be challenging as we look forward,” finance chief Sabrina Simmons said on a conference call.