Tuesday, 18 August 2009

abercrombie & fitch reported net loss of US$86m for past 6 months trading

now that the billboard got your attention, here's the headline news: american fashion retailer, abercrombie & fitch, reported net loss of US$86mil for the past 6 months of trading, as compared to profit of US$140mil in the same period in 2008. of the losses, -US$24mil was attributable to charges and write-offs relating to the closure of "ruehl", the 'post-graduate' branch/look of the A&F family. sales were down 23% in the second quarter too.

i wouldn't class A&F as high street, they're much more expensive than that. but i wouldn't say they belong to the luxury end either. as a consumer, i am rather frustrated by mid-tier labels, as it should appeal to the aspirational customer from the luxury end but most often i feel reluctant to part with my money for something wishy washy.

"sunday creek" & "wallface mountain" polos, £60 each.

A&F appeals to the 18 to 25 age group, but with prices high enough for the aspirational consumers looking to achieve that healthy wholesome college prep look. i feel the problem is that the aspirational consumer would go to the gym in economic times like these, than to fork out £60 for a polo tee. when i was a student, i spent less than £60 a week on food and going out, just how did i get by?

have you seen the A&F store at savile row in london? that's the typical scene, even on weekdays. what recession you might think? but their sales figures proofed that most were there to experience the atmosphere rather than to spend some money. for tourists, it's well worth a visit.

their dim lit stores, loud music and prancing staff might make you forget that you're in a store. and then there's the wholesome beautiful and genetically impossible models/sales assistants. truth is, i always feel miserable when i am there. the staff/models are all so good looking it's just difficult to pick something up and think i can look just like them. and there's the £60 a polo tee factor.

long queues to get in for the "club atmosphere" experience, yes. sales? hmm.

their financial statements also revealed that cost of goods sold were about 35% of sales. if that polo tee retails for £60, materials and direct labour in manufacturing should costs about £21. i thought a great deal more would be spent on marketing but that accounts for 14% of sales price. quite astoundingly, 60% of the sales price go towards "stores & distribution", which i assume is rent.

so if i did buy that £60 polo tee, cost of making is £21 but £36 go towards the upkeep of the trendy and hip club-like atmosphere.

their CEO did cite increasing rent and decreasing sales as one of the contributing factor to the unsatisfactory result.

"ragged lake" & "plains trail" classic shirts, £70 each.

what does A&F plan to do to turn things around? they announced a series of price cuts to take effect from next quarter. but they also plan to introduce more of the club-like stores globally: 2 flagships in milan and 1 in tokyo. and then there's another 10 mall-based stores in canada and 7 'hollister' (if ruehl is post grad, then hollister is high school!) stores planned for the UK, and 1 'hollister' mall-based store in germany and 1 in italy.

what recession?


source


16 comments:

  1. I understand your opinion and I agree. I tend to buy more expensive things and cheaper things. I feel the design is better at both ends of the spectrum. I have never understood the middle of the road or market.

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  2. From the American side of things, guys who wear Abercrombie and Fitch here are usually regarded as... well... douchebags. It's so interesting to see the scene in other places is one such as that picture. It's like they're trying to get into Butter NYC. Still, some of their pieces are nice; but easily found in other brands like Rugby where the image is much more respected as a global brand.

    I had way much more to say about this than I thought!

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  3. I was so amazed by that picture of people lining up in Savile Row, Rococo is right, Abercrombie is usually worn by douchebags, in America. Anyone with any real fashion sense would know that. Abercrombie& Fitch are so slow on trends, that they just now came out with a leather bomber jacket.

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  4. Isn't it the brand of choice for the pink brigade too?

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  5. I'm wondering is that mark up greater or less than the one on 'luxury' brands?

    This news article kind of sums up Abercrombie & Fitch for me:

    http://www.telegraph.co.uk/fashion/fashionnews/6023754/Disabled-student-wins-employment-tribunal-against-Abercrombie-and-Fitch.html

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  6. I wouldnt and never could be bothered with A&F. Not even when they are thrown out in factory rejects outlet stores. It's a neither here or there brand.

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  7. oy, I've seen that line too at Savile Row when I was there. it was about 3 pm on a Saturday. crazy.

    one is opening here in Copenhagen. good luck to them.

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  8. interesting post. A&F isn't my kind of brand at all really, i give labels on the outside brands a wide birth. saying that i actually do quite like the atmo in the shops, just becasue it's very different to any other shops on the hi-street (other than hollister i guess, and i prefer the smell in that one too). and saying that i think i'd prefer to go into their shops in america to have a snoop around, i'd feel like a "douchbag" going into the one in london.

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  9. Love your blog! Please keep blogging. Nice post.

    Oh and btw, are you on twitter?

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  10. anon: am on twitter (000o000)

    :D

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  11. Yep, that is indeed the state of the line up at A&F and I know, because I work up the street from it. I've lost count of the amount of times I've given directions to young girls looking for the store, wandering around lost somewhere between Saville Row and Regent Street! And yeah, thius brand is summed up perfectly to me by what someone up above said, 'neither here nor there'... !

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  12. Fascinating post - thanks! I had NO idea that A&F was so popular overseas; I thought it was just a U.S. brand. The sight of the line at Savile Row is too funny! I'm not sure if they've put up stores in Ireland yet, but I do rememeber a co-worker from our office in Dublin visiting our headquarters last year (I'm in California) and I was apalled when I offered to take her shopping and the first place she wanted to visit was A&F! She told me it was one of the most popular brands and that she simply HAD to return home with stuff from there.

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  13. OOoOO, you might enjoy this review of A&F's sister store, Hollister, from the NY Times: http://www.nytimes.com/2009/08/20/fashion/20CRITIC.html?_r=1&ref=fashion

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  14. Interestingly, I think I read somewhere that A&F was reluctant to put garments on sale. I would imagine, as a result, there must be a lot of inventory remaining

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what's he wearing?