Taking a tumble
Abercrombie & Fitch takes itself off the block and shares plunge
Abercrombie & Fitch is no longer up for sale, a development that isn’t sitting well with investors hoping for white knight to rescue the struggling teen retailer.
Shares plunged 21 per cent to an all-time low in midday trading Monday.
Abercrombie said in May, after closing dozens of underperforming stores, that it was it in talks with several parties about a potential deal. The company said Monday that it has ended all such negotiations.
More people are shopping at lower-cost, fast-fashion stores like H&M and Forever 21, and that has wreaked havoc on onetime mall mainstays like Abercrombie. Aeropostale Inc., Wet Seal and others have already sought bankruptcy protection. Sears last week, after years of closing stores and retrenching, said it would close another 35 unprofitable Sears and Kmart locations. It said earlier this year that in was unclear if it had enough cash to stay in business through the end of the year.
Hudson’s Bay Co., which owns Saks Fifth Avenue, Lord and Taylor, said last month that it was cutting thousands of jobs in North America as sales slump.
Abercrombie & Fitch Co., based in New Albany, Ohio, said that sales remain strong at its surf-inspired Hollister brand and is continuing to work on improving the performance at Abercrombie. In the first quarter, sales at established Hollister stores rose 3 per cent, but they slumped 10 per cent at Abercrombie.
The chain has tried to tweak its brand by dumping the suggestive ads that once defined it, and it has updated its look. That has yet to turn its fortunes around.
First-quarter losses were wider and revenue slid.
Shares fell $2.53 to $9.64 Monday. Company shares fetched almost 10 times that amount at their height in 2007, just before the recession altered the retail landscape.
In another reminder of the vast challenges that all retailers face, Amazon.com kicks off its annual “Prime Day” event at 9 p.m. Eastern on Monday.
According to the latest data from Consumer Intelligence Research Partners, 85 million Americans are now paid members of Amazon Prime, up 38 per cent from this time last year. Those members, according to CIRP, spend $1,300 on average each year, almost twice that of non-members.