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Why Abercrombie & Fitch is struggling

By Korea Herald
Published : Sept. 4, 2012 - 10:53
 

(AFP)



Abercrombie & Fitch was a brand that was hugely popular in the 2000s, with its skin-baring ads appealing to teenagers while infuriating parents. Now, however, Abercrombie is not attracting the crowds like it used to, according to news reports.

The retailer has lost one-third of its market value in the past fiscal year with sales falling in the U.S. and Europe and has closed down 71 U.S. stores. It is expecting to close another 180 by 2015.

Even while the brand remains relatively popular overseas, sales at non-U.S. stores have also fallen -- a whopping 26 percent in the second quarter.

When CEO Mike Jeffries took over the brand in 1992, he moved the brand from making quality outdoor gear to quality teen-wear, where sexy met preppy. The formula worked phenomenally as the company increased its net income more than 56-fold from 1995 through 2008. However, the economic downturn made it hard for the brand to attract customers with $70 jeans when similar styles could be purchased for much less.

Brand consultants blame the company’s failure to respond with the changing times for its struggle to stay relevant in today’s society. Today’s teens are developing a more individual style inspired by fashion on the Internet and social media, leading them to turn to fashion-forward stores like Forever 21 and Hennes & Mauritz’s H&M. However, while Abercrombie’s uniform of a T-shirt and jeans has not changed, people are moving on.

Marcie Merriman, founder of retail and brand strategy consulting firm PrimalGrowth, said that Abercrombie is “positioned well to take advantage of this group’s (teenagers’) desire to be rebellious and indie and different, because that’s what the brand is about. But right now the product mix doesn’t communicate that or facilitate it.”

From news reports
(khnews@heraldcorp.com)

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