This One Decision By Abercrombie & Fitch Could Save Hollister

A woman takes a picture with models posing outside the Hollister Co. store in Beijing, China. AP

Abercrombie & Fitch is planning to transform its struggling Hollister brand into a fast fashion retailer to compete with the likes of Zara, H&M and Forever21.

The transformation will mean lower prices and more styles for Hollister shoppers.

The company is planning to make the transition by beefing up its U.S.-based supply vendors and finding a new president with fast fashion experience, the Wall Street Journal reports.

Fast fashion retailers get their name for rapidly turning runway styles into ready-to-wear fashions at cheap prices. Most fast fashion outlets also tend to produce a limited quantity of each style, but with a much larger selection than traditional retailers.

The move by Abercrombie comes as teens are increasingly turning away from traditional retailers in favour of fast fashion.

Abercrombie’s same-store sales fell 10% in the fiscal year ending Feb. 1, while Hollister’s plunged 14%. Hollister accounts for about half of the company’s sales.

The company’s poor performance has led activist investor Engaged Capital LLC to press for the resignation of CEO Mike Jeffries.

Engaged Capital Chief Investment Officer Glenn Welling says the transformation of Hollister won’t solve the company’s problems, however.

“This board doesn’t have the credibility to make the determination that Hollister should be a fast-fashion retailer or that Mike Jeffries should be leading the turnaround,” Welling told the Journal.