Abercrombie & Fitch to Close Another 60 U.S. Stores as Sales Crater
Abercrombie & Fitch (ANF, +13.94%)said on Thursday it is closing 60 more U.S. stores this year as sales at its namesake brand keep collapsing despite a new look for the merchandise and a slick (but ineffective) ad campaign.
These new closings will mean A&F's fleet will shrink to roughly 670 stores this year from 839 only five years ago. Other retailers to have drastically cut their fleets include Macy's, (M, +0.85%), Gap (GPS, +3.29%) and J.C. Penney.
The paring of A&F's footprint comes as its namesake brand reported comparable sales, a measure that excludes failing stores that have been closed in the last year, fell a staggering 13% in the key holiday season quarter. The brand, which is trying to remake itself after facing a consumer backlash over its large logos and sexy ads, blamed a "more promotional activity and a lower gross margin rate than planned" and weak shopper traffic.
Recently appointed CEO Fran Horowitz also faulted a lackluster ad campaign on a call with Wall Street analysts.
Shares rose 12% on a major bright spot: Hollister, A&F's larger sibling brand, reported its first quarter of comparable sales growth in a year.
The retailer has been remodeling Hollister stores, and tapped new designers to better keep pace with "fast fashion" brands like Zara and H&M. Hollister's holiday season merchandise were generally well regarded. Hollister makes up about 57% of Abercrombie's net sales.
Still, as a whole, the company reported its 16th straight quarterly decline. Rivals like American Eagle Outfitters (AGO, -1.18%) and Gap Inc have been hit by similar challenges but are faring much better.
And while executives told the analysts they expect an improvement this year, they declined to say whether that mean growth, or smaller declines, even as they warned of a tough first half of the fiscal year.
Abercrombie shares were up to $13, still well below their 52-week $32.83 high.