Turnaround still elusive
As the holiday shopping season begins, teen retailer Abercrombie & Fitch is wrestling with the blues.
The retailer’s shares tumbled this month after it reported a key sales figure for its main brand dropped 14 percent, and that overall profits plummeted 81 percent in the third quarter. Now the question is: When will a turnaround come?
A&F, which used to be a hot destination for teens, has struggled to lure young shoppers who are opting for more affordable options like H&M. Many found the company’s sexualized marketing – once a big attraction – too alienating. Last year, A&F ditched its shirtless models and is reworking its advertising to be more inclusive. It’s been sprucing up its merchandise too. But it still faces challenges getting shoppers to its stores. Shares of Abercrombie are trading at around $15, down 42 percent this year. Analysts have an overall “hold” rating. But 26 percent of analysts now have a “sell” on the stock, says FactSet. “We believe it will take time for the customer to acknowledge the changes,” writes RBC’s Brian Tunick.