Photo: Matthew Lloyd/Getty Images
Abercrombie disappointed analysts this morning when it reported sales missed already lowered expectations.The teen retailer said it earned $0.19 a share on sales of $951.4 million as same-store sales tumbled.
“The second quarter results we are reporting today are disappointing and below our expectations coming into the quarter,” the company’s CEO, Mike Jefferies, said this morning.
Once the darling of the specialty retailer sector, Abercrombie has remained uncompetitive since the recession hit in 2007 and its shares have fallen more than 33 per cent this year.
But the financials aren’t the only thing that disappoint people about the company.
1. Prior to a legal settlement, Abercrombie was allegedly hiring predominantly from white sororities and fraternities
Abercrombie and Fitch has faced a number of lawsuits over discriminatory hiring practices -- including recruiting at predominately white sorority and fraternity houses. In 2004, Eduardo Gonzalez, a lead plaintiff said he was urged to apply for an overnight stock position and that the store manager favoured two white applicants in a group interview. The company settled and said it would change its recruitment practices.
Source: New York Times
But the lawsuits for Abercrombie do not end at the interview process. The teen retailer also shifted mostly non-white employees and those who were less attractive to the stock room, away from customers. Then, in 2009, the company was rocked by a lawsuit in the U.K. when managers forced a 22 year-old employee with a prosthetic arm (Riam Dean) off the selling floor.
3. Instead of calling employees store associates or cashiers, like most retailers do, Abercrombie calls them models
So this is a screwy one, because most of their employees are not models but teenagers ringing up jeans at a register or opening fitting rooms. But Abercrombie refers to its employees who work in front of customers as 'models.' The teen retailer used to call them brand representatives, but made the switch in the 2000s. Those sent to the back to unload shipments and restock the front are called Impact Team members.
Abercrombie grades its store employees based on appearance and dress code -- posting results in its back room for all to see. The grades, which ranged from 1 to 5 (5 being the best), generally were listed above a computer where employees could clock in and out.
Source: Business Insider Sources
Abercrombie also pumps its stores with its men's cologne: Fierce. Front of store employees generally walk the floor every few hours and spray the fragrance. In 2010, Teens Turning Green, a student group fighting to rid toxic chemicals from the environment, protested outside the company's flagship store on 57th Street and Fifth Avenue.
Source: New York Magazine
Abercrombie has suffered from declining same-store sales over the past several quarters, with stores open more than a year recording sales declines of 10 per cent in three months ending July 28, 2012. Part of that reason: the company has relied on similar styles over the past few years -- eschewing fast fashion trends for its stale and overly branded t-shirts and hoodies. Worse, it did not expect its customer to suffer from the recession and was late to cut prices.
Source: Business Insider
Abercrombie has struggled recently to shore up its U.S. business, relying instead on international growth to fuel revenue. The company has marked the same goods sold in its U.S. stores up more than 65 per cent in Europe. But the global slowdown has crimped its expansion, with Abercrombie cutting Hollister's expansion plans by 25 per cent this year.
Bruce Webber, the famed photographer behind Abercrombie's iconic black and white photos, also produced the company's now defunct quarterly magazine, which was called soft core porn by many groups. The National Coalition for the Protection of Children and Families and Focus on the Family both launched boycotts of the company, before Abercrombie discontinued it in 2003.
Abercrombie & Fitch recalled a number of men's t-shirts after a number of Asian American groups boycotted the company. The t-shirts relied on a number of Asian stereotypes to drive sales, including slanted eyes and cone shaped hats. 'Since some customers have been offended by their content, we are pulling these shirts from our stores. . . . They'll be off the Web site as well,' a company spokesman said at the time to San Francisco Chronicle.
Source: San Francisco Chronicle
11. Abercrombie opened a kid's clothing store on one of the classiest fashion districts in the world
Abercrombie and Fitch angered other retailers after it announced plans to open a children's clothing store on London's Saville Row. The street, in central London, is famous for its bespoke tailoring and three-piece suits that ended up on giants like Frank Sinatra and Fred Astaire. In an op-ed in the Guardian, Gustav Temple wrote, 'This is not the place for T-shirts and cargo pants.'
Source: The Guardian