Abercrombie & Fitch doesn’t announce earnings until Wednesday, but its already looking like the retailer is in big trouble.
After U.S. teens stopped lining up to buy its signature cologne and $40 tank tops, Abercrombie looked to an international expansion for salvation.
But the international stores are failing, and Abercrombie is doing some major backpedaling, according to a note from Sterne Agee analysts Margaret Whitfield and Tom Nikic.
Following consistently bad sales numbers (international is down 26 per cent from last year), Abercrombie has slowed growth rate overseas and “postponed” the much-publicized openings of flagship stores.
This is bad news because international markets were considered Abercrombie’s only hope for growth.
Perhaps Abercrombie could learn a thing or two from Gap. Both retailers once reigned the world of the young and hip, and both looked to expand internationally when things stopped going great in the U.S.
But Gap CEO Glenn Murphy learned the hard way that location doesn’t mean success. With his domestic and international businesses flailing, Murphy decided to bring in top-notch designers to reinvent Gap’s product.
With the right product, sales at the retailer soared, and Gap is now considered the retail success story of the year. Maybe Abercrombie’s clothes, and not its market presence, led to the current predicament.
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