Abercrombie & Fitch July Same-store Sales
(RTTNews) – Apparel retailer Abercrombie & Fitch Co. (ANF: News ) said Thursday that its same-store sales fell 28% in July, as consumers continued to reign in spending amid the recession.
Net sales for the four-week period ended August 1, 2009 fell 22% to $236.0 million from $303.1 million for the four-week period ended August 2, 2008.
Total company direct-to-consumer net sales for the month decreased 11% to $16.2 million.
For July, Abercrombie same-store sales declined 25%, while abercrombie same-store sales fell 27% and Hollister Co. same-store sales dropped 32%. RUEHL same-tore sales dipped 28%.
For the quarter-to-date period, same-store sales fell 30% and net sales decreased 23% to $648.5 million. Analysts polled by Thomson Reuters expected the company to post revenue of $647.98 million for the second quarter. Year-to-date same-store sales fell 30% and net sales decreased 23% to $1.26 billion.
At the end of the quarter, the company operated 350 Abercrombie & Fitch stores, 210 abercrombie stores, 510 Hollister Co. stores, 29 RUEHL stores and 16 Gilly Hicks stores in the United States. The company also operated 3 Abercrombie & Fitch stores, 3 abercrombie stores and 5 Hollister Co. stores in Canada, and 1 Abercrombie & Fitch store and 5 Hollister Co. stores in the United Kingdom.
U.S. retailers reported their eleventh straight monthly sales decline in July. Retailer gave several reasons for weak sales, including rising unemployment, cooler weather and a lack of tax-free holidays.
American Eagle Outfitters Inc. (AEO) said Thursday that its same-store sales fell 11% in July, while its net sales for the month declined 8% to $215.0 million.
Gap Inc. (GPS) on Thursday reported an 8% drop in same-store sales and 7% decline in net sales for the month of July. The company also provided earnings outlook for the second quarter above analysts’ consensus estimate.
Abercrombie and Fitch shares are currently trading at $30.85, up 84 cents or 2.80%. The shares are trading in a 52-week range of $13.66 to $56.42.
Abercrombie and Fitch’s Pessimistic Bets
Trendy retailer Abercrombie and Fitch Co. (ANF: 
) has been the focus of heavy put trading recently, as options players increase their pessimistic bets toward the firm.
During the past 10 trading sessions, 30,031 puts have been bought to open, while just 2,973 calls have been bought to open on the International Securities Exchange (ISE). In other words, 10 puts have been purchased to open on the ISE for every one call purchased to open. This ratio of puts to calls is higher than 97% of all those taken during the past year, indicating that pessimism is on the rise toward the security. In fact, the Schaeffer’s put/call open interest ratio for ANF stands at 1.67, as put open interest easily outnumbers call open interest among options slated to expire in less than three months. This ratio is higher than 81% of all those taken during the past year. In other words, short-term options speculators have been more skeptical of the shares only 19% of the time during the past 12 months. Options players aren’t the only ones with their doubts about the retailer. Short sellers have flocked to this stock. More than 15 million ANF shares have been sold short, accounting for more than 18% of the company’s total float. What’s more, this accumulation of bearish bets is more than four times the stock’s average daily trading volume. Should the bears continue to add to their winning positions, the stock could succumb to increased selling pressure. Wall Street is also giving the security the cold shoulder.
According to Zacks, the equity has earned six “buy” ratings, 12 “holds,” and two “sell” ratings. With the stock poised to resume its long-term downtrend, there is still ample room for additional downgrades from this group. Furthermore, the 12-month price target for ANF stands at $27.63, according to Thomson Reuters. This reading implies that analysts are expecting the shares to rally more than 15% during the next 12 months. Any price-target cuts could also weigh on the shares. Technically speaking, the security is up only 3.7% since the start of the year, which is slightly ahead of the broad market S&P 500 Index’s (SPX) breakeven return. The stock has been guided lower under its declining 10-day moving average since June 4, when the equity gapped lower. At that time, the company reported that May sales fell 22% to $182.1 million, while same-store sales plunged 28%. Analysts were expecting same-store sales to drop only 24.1%. On a year-to-date basis, net sales were down 23% to $794.2 million.
From a longer-term perspective, the equity has dropped back below resistance at its declining 10-month moving average after a brief foray above this trendline. This moving average has guided the shares lower since February 2008.
Looking ahead, the company is estimated to report earnings on Aug. 14, according to data from Thomson Reuters. Analysts are expecting a loss of 3 cents per share, which is down sharply from the company’s year-ago profit of 87 cents per share. Overall, this growing pessimism is to be expected considering the stock’s weakening technical backdrop. Should the bears continue to add to their pessimistic positions, Abercrombie could be hit with additional selling pressure.
Abercrombie and Fitch Should be at Lower prices
Teen clothing retailer Abercrombie and Fitch Co. (ANF
) saw its price target lowered on Friday by analysts at Goldman Sachs.
Goldman cut its price target on ANF to $25 from $27. The shares had closed at $23 on Thursday.
The analyst cited Abercombie’s recent 32% June same-store sales decline for the downgrade, along with market pressures and a negative product cycle. Goldman currently rates the stock as “Neutral.”
Abercrombie shares rose 15 cents, or +0.65%, in afternoon trading Friday.
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- The Bottom Line
We have been avoiding shares of ANF since our early June coverage began, and the stock was trading at $67.37. The company has a dividend yield of 3.04%, based on last night’s closing stock price of $23.00. The stock has technical support in the $17-20 price area. If the shares can rebound from this bad news, we see overhead resistance around the $27-30 price levels. We would remain on the sidelines for now.
- Teen retailers report weak June same-store sales
Many teen apparel retailers on Thursday reported weaker June same-store sales than expected, with Aeropostale Inc. one of the few bright spots.
“June results reaffirm our belief that consumer spending is not getting worse, but there’s no evidence of improvement,” wrote BMO Capital Markets analyst John D. Morris in a note to investors.
As in past months, the weakest performer in the teen space was Abercrombie & Fitch. Same-store sales fell 32 percent, even worse than the 26.6 percent drop analysts expected.
Shares fell $1.10, or 4.6 percent, to $22.90 during afternoon trading. The stock has traded between $13.66 and $65 over the past 52 weeks.
Even the Buckle Inc., usually a bright spot, performed worse than analysts expected. While same-store sales rose 9.6 percent, that was smaller than the 12 percent jump analysts predicted. Shares shed $1.14, or 3.8 percent, to $29.26. The stock has traded between $13.57 and $44.57 over the past year.
One highlight was Aeropostale Inc., which offers trendy jeans and tees at low prices. Its same-store sales increased 12 percent, ahead of the 10.3 percent predicted. The company raised its second-quarter earnings guidance. Still, its stock also dropped, losing 97 cents, or 2.9 percent, to $32.48. The stock has traded between $12.52 and $37.96 over the past year.
Elsewhere in the sector, American Eagle Outfitters Inc., Hot Topic Inc. and Wet Seal Inc. all reported worse declines than analysts expected.
Same-store sales, or sales at stores open at least a year, are a key measure of retailer performance, because they measure growth at existing stores rather than from newly opened ones.
Abercrombie put this latest incident behind them
The Only Color They Want To See Is From A Tanning Salon
Abercrombie and Fitch got slammed with a lawsuit for just that… Their “pretty” salespeople that is, not their poor customer service. Defendant Jennifer Lu, a student at the University of California (Go Bears!) and a former A&F employee had something to say about what she alleged was its discriminatory policies.
Incidentally, if you didn’t figure out the gist of the complaint from her last name, then read on…
“[Abercrombie & Fitch is] dominated by Caucasian , football-looking, blonde-hair, blue-eyed males; skinny, tall,” Lu accurately reported. “You don’t see any African-Americans, Asian-Americans, and that’s the image that they’re portraying and that they’re looking for.”
Being neither Caucasian, football-looking, blonde-haired nor blue-eyed, Lu said that when corporate officials visited, they did everything but blatantly tell management to get rid of her. Pointing to one of their posters, which featured none other than their version of a star employee, the executives said that the store needed “to have more staff that looks like this.”
Result: Lu was shown the door.
Since she wasn’t the only one, former disgruntled employees banded together to sue the establishment, pointing out that “All-American doesn’t mean all-white.” Sure, defenders agreed, but Abercrombie should be allowed to conduct business the way they best see fit one way or the other.
In the end, that class action suit was settled for $50 million, with the famous moose brand agreeing to adhere to a more diverse standard when hiring. So they went around trying to hire as many attractive Asians, Latinos and African-Americans they could find - or at least as many as they thought would appease their critics - and went back to business as usual.
In other words, it remained the same vapid cookie-cutter business it had started out as. As evidenced by the latest lawsuit it’s facing.
Another Less-Than Classy Stunt
A women with a prosthetic limb who says she was made to work in the stockroom by trendy clothes retailer Abercrombie & Fitch is bringing a disability discrimination claim, according to the BBC website.
Twenty-two year-old law student Riam Dean was born with a missing left forearm. She claims that Abercrombie & Fitch initially allowed her to wear a cardigan, but she was later moved from the shop floor and made to work in the stockroom when the company’s “visual team” found that her appearance (on the Daily Mail website) did not adhere to its strict “look policy”.
Miss Dean, who says she felt “diminished” and “humiliated”, is seeking around £20,000 for disability discrimination. Abercrombie & Fitch is disputing her version of events.
Did you know that there was a publicly traded company out there that dictates what its employees look like? And I’m not talking about a dress code, although the clothing company in question does that too.
Fingernails have to be kept a certain length and hairstyles have to be maintained to employee handbook perfection. That is, unless you’re working in the back. Then you don’t have to have “the look,” because, who cares? You can’t frighten away the customers with your short brown hair - or God forbid! - size 6 waistline.
At least Abercrombie & Fitch (NYSE: ANF) can say one thing about their hiring tactics… they don’t discriminate against women per se. You won’t find any men less than model perfect there either.
If you have teenaged kids or are young at heart, you’ve probably stepped inside an Abercrombie (sadly, in typical conversation, poor Fitch gets completely left out) store before. And if you have, then you’ve probably met Malibu Barbie and Ken, along with Fun-In-The-Sun Skipper… at every single store.
It’s a very consistent company when it comes to both boring apparel and equally boring models/salespeople. Incidentally, they’re usually not all that friendly either from what I’ve experienced.
This time, it’s a British girl who’s suing, claiming that the company took issue with her prosthetic arm that they knew about when they hired her. 22 year-old University of London law student Riam Dean is seeking as much as £25,000 in damages after she was let go due to not meeting the company’s “look policy.”
She says that upon arrival, new employees are given a thick guidebook that dictates personal appearance down to the most minute detail.
Though Abercrombie issued a recent statement saying that it “has a strong anti-discrimination and anti-harassment policy,” and claims that Dean’s account is incorrect, my guess is that the chain will be shelling out another sum of money to put this latest incident behind them.
The logos included: “R925″
Ruehl No.925 (marketed as “RUEHL No.925″ ), or simply Ruehl , is an upscale American lifestyle brand from Abercrombie and Fitch . It is inspired by the artistic and cultural heritage of New York City’s Greenwich Village. The brand is designed for post-graduate individuals aged 22 through 35, retaining consumer basis past collegiate consumers for the A&F company. RUEHL retails its apparel, leather goods, and lifestyle accessories through its stores.
On June 17, 2009, Abercrombie & Fitch announced that it would close all 29 RUEHL locations by the end of the fiscal year (January 2010).
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Fictional background
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Launch
RUEHL No.925 finally opened on September 24, 2004 with three locations. These were at Garden State Plaza (New Jersey), Woodfield Mall (Illinois), and the International Plaza (Florida). Designed to look and feel like Greenwich Village, RUEHL really presented a new, “more sophisticated” lifestyle than other Abercrombie & Fitch brands. The store prototype of this time was a two-floor prototype measuring at 9,500 sq ft (880 m2). Due to its structural form and size, locations capable of housing the prototype became hard to acquire.
Mike Jeffries did not launch an online store upon the opening of RUEHL. He wanted to attract customers to the stores to experience the RUEHL atmosphere. What was launched was a promotional website which gave store listings, previewed the private online policy, and allowed for email subscription to receive news on RUEHL.
Original prices upon opening were roughly 30% higher than at Abercrombie & Fitch (e.g. destroyed blue jeans $148.00 USD). Many consumers deemed this as too high for young professionals who normally begin their careers at fair incomes.
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The logo: Trubble
The official logo for RUEHL No.925 is the French bulldog Trubble. He is the little “inquisitive” bulldog with a “steadfast demeanor” and “confident attitude” who walked into the Ruehl family shop in the mid-1850s - so states the fictional background to RUEHL. He was, as the fake literature continues, the family’s first customer (to their surprise and delight). Subsequently, Trubble became the logo for the brand.
His name, “Trubble”, is a play on the word “trouble.” It signifies the trouble that Mike Jeffries and his development team underwent to create an appealing logo for RUEHL. Before deciding on Trubble, the company experimented with different designs on RNY polos. The logos included: “R925″; an artistically cursive “R”; and “RUEHL / No.925″. The bulldog from the RUEHL background was finally selected and christened “Trubble” - a sort of counterpart to the Abercrombie moose, the flying Hollister Co. seagull, and the Gilly Hicks Koala. Trubble is today embroidered on Polos and silk-screened on other merchandise. Trubble also occasionally has a series of tees dedicated to his iconic image.
RUEHL released the marketing slogan “Get into Trubble at RUEHL” in August 2008.
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Closure of Ruehl
On June 17, 2009, Abercrombie & Fitch announced it would close all 29 RUEHL stores.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
It has been a difficult decision to close RUEHL, a brand we continue to believe could have been successful in different circumstances. However, given the current economic environment, we believe it is in the best interests of the Company to focus its efforts and resources on the growth opportunities afforded by our other brands, particularly internationally. While I am disappointed with the ultimate outcome, I am grateful for the effort and commitment the RUEHL team has shown in developing and positioning that brand in the marketplace. In particular, the recent strides made in differentiating and elevating the RUEHL assortment make this an especially difficult decision. However, all of our brands will benefit from our experience and lessons learned with RUEHL.
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According to Abercrombie & Fitch’s publicity material, RUEHL came to be as so:
In the 1850s, the German Ruehl family immigrated to West Village (a division of Greenwich Village). There, they moved into 925 Greenwich Street and opened up a leathergoods shop. Their first customer was a little “inquisitive” bulldog who walked in with a “steadfast demeanor” and a “confident attitude”. The shop then on became popular, providing the Ruehls with a decent living. The Ruehl’s son later moved next door into No.923 and took over the business. Being inspired by the fashion of James Dean and his work, he introduced RUEHL jeans. Afterwards, the grandson, moved into the present 925 Greenwich Street, bringing together all the previous elements of the business with his interests in the finer aspects of life; books, music, and art. In 2002, Abercrombie & Fitch bought the rights to the family’s name.
The above story is intentionally fictional. The background is not readily made available to customers, but was created to help tie in all the elements of the RUEHL brand. There exist no building numbers past the 800s on Greenwich Street and there are no records of an established Ruehl family in the Village either. There is nothing very German about the name, in the same sense that sister brand Gilly Hicks is not Australian, although both claim to have roots to those cultures. The store structure consists of three walkways and the logo for the brand is the bulldog. The family’s name “Ruehl” is in fact a variation of the German last name “Ruhl.” Furthermore, the name “RUEHL No.925″ signifies the title of an occupied residence (by the fictitious Ruehl family).
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Breaking: Abercrombie & Fitch to Close Ruehl
In a move that surprises no one, Abercrombie and Fitch announced that it will be closing Ruehl by the end of the year. Ruehl, which had pretax losses of $58 million last year, wasn’t exactly helping A&F’s bottom line, which itself wasn’t looking all that rosy. Last month the company finally decided to cut prices after refusing to do so for months, even though competitors had already slashed away. And its stock prices had plunged. But the powers that be felt that marking down merch would make the brand seem cheap.
Adding to the company’s woes are lawsuits filed by employees who claimed they were discriminated against, including a British woman with a prosthetic arm who was, she says, forced to work in the stockroom for not fitting in with the store’s image. Well, at least there’s that new children’s store to keep the company afloat.
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Abercrombie & Fitch goes live with Oracle Retail Suite
As part of its strategic relationship with Oracle, Abercrombie & Fitch has implemented Oracle Retail merchandising and stores applications to support its international expansion plans and long-term growth strategy. The Oracle Retail merchandising and stores applications are being rolled out across all of the leading fashion retailer’s brands including Abercrombie & Fitch, abercrombie, Hollister, RUEHL and Gilly Hicks.
RUEHL No.925 (shuttered by end of January 2010)
Post-grad by Abercrombie & Fitch Themed after Greenwich Village, this brand aims for post-collegiate 25 through 35 aged consumers. It has the highest price range among the A&F brands. This is the first brand to offer genuine leather purses and bags for women.
Fictional background
According to Abercrombie & Fitch’s publicity material, RUEHL came to be as so:
In the 1850s, the German Ruehl family immigrated to West Village (a division of Greenwich Village). There, they moved into 925 Greenwich Street and opened up a leathergoods shop. Their first customer was a little “inquisitive” bulldog who walked in with a “steadfast demeanor” and a “confident attitude”. The shop then on became popular, providing the Ruehls with a decent living. The Ruehl’s son later moved next door into No.923 and took over the business. Being inspired by the fashion of James Dean and his work, he introduced RUEHL jeans. Afterwards, the grandson, moved into the present 925 Greenwich Street, bringing together all the previous elements of the business with his interests in the finer aspects of life; books, music, and art. In 2002, Abercrombie & Fitch bought the rights to the family’s name.
The above story is intentionally fictional. The background is not readily made available to customers, but was created to help tie in all the elements of the RUEHL brand. There exist no building numbers past the 800s on Greenwich Street and there are no records of an established Ruehl family in the Village either. There is nothing very German about the name, in the same sense that sister brand Gilly Hicks is not Australian, although both claim to have roots to those cultures. The store structure consists of three walkways and the logo for the brand is the bulldog. The family’s name “Ruehl” is in fact a variation of the German last name “Ruhl.” Furthermore, the name “RUEHL No.925″ signifies the title of an occupied residence (by the fictitious Ruehl family).
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Development
CEO and Chairman of Abercrombie & Fitch, Mike Jeffries, stated that RUEHL took years of planning, mainly for the store’s atmosphere and image. From the start, the Company (A&F) was determined to keep the fourth concept veiled from public eyes. Retail analysts viewed this as peculiar. Not even retail landlords approached for space were told about the concept. John C. Shroder (COO of Westfield San Francisco Centre’s U.S. operations) confessed that it was A&F’s reputation which gave him the confidence to “sign up RUEHL sight-unseen.”
Despite the secretive nature, rumors circulated about a “distinct departure” from the A&F style. It was evident that A&F sought to maintain consumers past ages 18 through 22. The concept was to venture out as more mature and sophisticated, all the while keeping it youthful. Encouraging studies revealed that 35-to-40-year-olds shop to look 25. The brand was privately unveiled to investors-only on “Investor Day” September 7, 2004. The presentation was at Garden State Plaza in New Jersey.[11] At the introduction and press tour of the Westfield Garden State Plaza location, Jeffries noted that RUEHL is “the fantasy of what it’s like to graduate from college and go to New York and make it. It’s the New York fantasy.” He also repeatedly referred to RUEHL as “the movie” because of its elaborate, flowing background.
Launch
RUEHL No.925 finally opened on September 24, 2004 with three locations. These were at Garden State Plaza (New Jersey), Woodfield Mall (Illinois), and the International Plaza (Florida). Designed to look and feel like Greenwich Village, RUEHL really presented a new, “more sophisticated” lifestyle than other Abercrombie & Fitch brands. The store prototype of this time was a two-floor prototype measuring at 9,500 sq ft (880 m2). Due to its structural form and size, locations capable of housing the prototype became hard to acquire.
Mike Jeffries did not launch an online store upon the opening of RUEHL. He wanted to attract customers to the stores to experience the RUEHL atmosphere. What was launched was a promotional website which gave store listings, previewed the private online policy, and allowed for email subscription to receive news on RUEHL.
Original prices upon opening were roughly 30% higher than at Abercrombie & Fitch (e.g. destroyed blue jeans $148.00 USD[6]). Many consumers deemed this as too high for young professionals who normally begin their careers at fair incomes.
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Closure of Ruehl
On June 17, 2009, Abercrombie & Fitch announced it would close all 29 RUEHL stores.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
It has been a difficult decision to close RUEHL, a brand we continue to believe could have been successful in different circumstances. However, given the current economic environment, we believe it is in the best interests of the Company to focus its efforts and resources on the growth opportunities afforded by our other brands, particularly internationally. While I am disappointed with the ultimate outcome, I am grateful for the effort and commitment the RUEHL team has shown in developing and positioning that brand in the marketplace. In particular, the recent strides made in differentiating and elevating the RUEHL assortment make this an especially difficult decision. However, all of our brands will benefit from our experience and lessons learned with RUEHL.
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