At the top of the list was Abercrombie
What do trendy, high-priced items and a risqué image add up to in this “great recession”?
A quarterly loss of $26.7 million.
Today we found out just how hard one-time retail star Abercrombie and Fitch (ANF) got hit by the negative confluence of events over the past three months. The much-steeper-than-expected quarterly loss looks horrible when compared to the profit of $77.8 million the company posted in the same quarter a year ago.
But like so many topsy-turvy things on Wall Street these days, the shares gapped up in early trade as investors focused on the company’s valiant cost-cutting efforts, which included the closure of its Ruehl brand stores.
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Other respondents wrote in to take the company to task for its overly suggestive catalog, its lack of moral values and what was perceived to be an over-sexualized image. One respondent put it succinctly by saying they objected to Abercrombie’s “nasty advertising.”
Yes, the recession has hit nearly all retailers hard. But when you combine a general reluctance of consumers to spend money; a further hesitance to spend that money on high-priced items during a recession, and a moral aversion to products with a risqué image, you have a trifecta of reasons why it’s likely to be a tough slog ahead for ANF.
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Now there is no denying that Abercrombie has been a victim of the push toward a new frugality in America. The best measure of this is that the all-important same-store sales metric fell 30% over the past three months. But what we’ve also seen in the case of Abercrombie is a bit of a backlash against the company’s self-portrayal.
Last fall the ChangeWave Alliance Research Network conducted a survey that focused on consumer retail buying habits. Respondents were asked which retail stores they were least likely to shop at, and why.
At the top of the list was Abercrombie. Now, it wasn’t the company’s high prices relative to lower-cost alternatives such as Aeropostale (ARO) and American Eagle Outfitters (AEO) that caused consumers to roil at the prospect of patronage. The problem was, as one respondent wrote, the “immoral advertising and the message it sends to teens.”
Tags: abercrombie, Abercrombie and Fitch, Hollister, Hollister clothing, Ruehl