Abercrombie & Fitch was once a teen staple.
But in recent years, the company has faced declining sales as teens turn to cheaper options like H&M and Forever 21.
Abercrombie has responded to the competition by implementing cheaper prices, Eric Beder, an analyst at Wunderlich Securities, Inc. said in a note to clients.
While Abercrombie has had many sales in recent years, the new pricing policy offers cheaper full-priced assortments.
Denim prices are about 30% lower than before, according to Beder.
Beder also noted that large amounts of “clearance” items may indicate the brand is struggling.
“While the new pricing strategy may increase margins for the company, we believe that significant amount of clearance shows that the company is having difficulty clearing inventory, which may cause further discounting for the company,” he explained.
“This is a retailer where back to school will make it or break it for the company, ” Beder said.
Hollister is faring better than parent company Abercrombie.
The brand is selling more products at full price.
The retailer is also attempting to broaden its target audience by appealing to a demographic beyond teens. New creative director
Katia Kuethe, who was previously the creative director of Lucky magazine, will hopefully be the brand’s saving grace.
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