Abercrombie & Fitch is bleeding money.
The company on Thursday reported a net loss of $US63 million, or 91 cents a share, for the quarter ended May 2, compared with a loss of $US23.7 million, or 32 cents a share, a year earlier.
Same-store sales fell 8% and total sales dropped 14%.
Abercrombie is trying to revive business by redesigning stores, toning down the heavy use of logos on its clothes, and dropping its sex-charged advertising.
But a review of the company’s inventory shows it still has some problems.
1. Abercrombie is trying to become more like a fast fashion company with cheap, trendy styles like those found like Forever 21 and H&M. But Abercrombie’s clothes cost more than its fast fashion competitors. Here’s an example:
2. Customers aren’t willing to pay up for the Abercrombie brand. Most of the items advertised on the site are marked down from their original prices by discounts of up to 70%.
The clearance section contains an endless variety of see-through crop tops, patterned leggings and t-shirts stamped with the Abercrombie logo.
3. As part of its turnaround, Abercrombie said it would stop selling so many clothes printed with its logo.
Teens are no longer interested in advertising the brands they are wearing, and the Abercrombie brand in particular is no longer perceived as cool, according to analysts.
But the company still has a massive amount of inventory stamped with its name.
4. Abercrombie now has a section on its site devoted to activewear with styles that look similar to those offered by the popular sportswear brand Lululemon.
Overall, the company seems confused about what it wants to be: A trendy fast fashion company, an athleisure brand, or a preppy street-wear retailer, according to Neil Saunders, the CEO of Conlumino, a retail consulting firm.
“A&F now needs to be much more decisive about what it stands for and who it wants to serve: in essence it needs a much clearer and more relevant brand identity,” Saunders wrote in a research note. “This is far from an easy task… and A&F has to tread a careful line between toning down the brasher elements of its image and becoming too generic — which will pitch it more firmly against cheaper competitors like H&M and Forever 21.”
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