Abercrombie considering takeover bids

Abercrombie & Fitch confirmed late Wednesday that it is in preliminary discussions with several companies regarding a sale.

The news sent shares of the New Albany-based teen apparel retailer soaring up more than 12 percent.

“After receiving expressions of interest, (Abercrombie) is in preliminary discussions with several parties regarding a potential transaction with the company,” the retailer said in a statement. However, “there can be no assurance these discussions will lead to a definitive agreement or that a transaction will be consummated.”

Abercrombie is reportedly working with investment bank Perella Weinberg Partners to field takeover interest from other retailers. Retailers that might be interested in a buyout include Abercrombie rival American Eagle Outfitters and Columbus-based fashion retailer Express.

Express and American Eagle representatives said their companies “do not comment on market rumors.” Perella Weinberg declined to comment.

The report of a possible takeover of Abercrombie was just one more indication of troubled times for teen apparel retailers, said Ken Perkins, president of research firm Retail Metrics.

Even though

unemployment is low and consumer net worth is at record levels, “many retailers are restructuring their businesses,” Perkins said.

Avenues to growth have essentially been blocked off for most chains, and store closings and bankruptcy filings are proceeding “at their fastest pace since the financial crisis,” Perkins said. “A good handful of chains have undergone management changes,” and upcoming quarterly earnings “are expected to be retail’s second-worst quarterly earnings performance since the height of the Great Recession.”

Abercrombie has been hurt by slumping sales in recent years like other mall-based retailers, which are all facing intense competition from other teen players, fastfashion chains, off-price chains and online commerce

sites such as Amazon. In addition, the retailer’s oncehip image took a battering in the past few years as young shoppers grew to dislike the company for its use of partially nude models, making T-shirts with insulting phrases and going for years without selling larger-size clothes.

In response, both of the company’s brands — Hollister and Abercrombie — have been going through yearslong reboots.

Hollister remodeled 64 stores last year, and consumers have responded favorably to the improvements, CEO Fran Horowitz said. In March, Hollister posted the first quarterly rise in comparable-store sales in a year.

However, the relaunch of Abercrombie has lagged. It took until February for the brand to unveil its first store remodel in more than 15

years at the retailer’s Polaris Fashion Place location. In March, the Abercrombie brand reported a 13 percent decline in comparable-store sales.

In addition to rebooting its stores, Abercrombie has redoubled its online efforts. Last month, Abercrombie signed with Asia’s leading e-commerce merchant, Zalora, to sell merchandise through its online stores.

But the efforts have failed to impress Wall Street analysts, who have recently grown impatient with the pace of the turnaround. A few months ago, analysts at Stifel Financial Corp. said in a note to investors that even though Hollister merchandise is “trend right,” the Abercrombie brand still has a long way to go.