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Abercrombie & Fitch Doesn't Even Look Cool To Its Investors as Brand Hits Low Point

Posted by Dale Buss on May 27, 2013 05:08 PM

The beautiful people haven't been coming through very well lately for Abercrombie & Fitch. Or maybe it's just the inventory and supply problems the company cited or the European economy. In any event, the Columbus-based retailer that tries to live on the edge of teen fashion reported a 13 percent drop in same-stores sales at its namesake stores during the first quarter and an 18 percent drop at its Hollister chain.

At the same time, Saturday brought the latest chapter of the renewal of the firestorm from several years ago over Abercrombie & Fitch's exclusionary merchandising and marketing practices—exclusive, that is, of the vast swaths of even the Millennial population who don't fit the rib-rocked, often-headless icons in the brand's none-too-subtle advertising.

Benjamin O'Keefe, an 18-year-old eating-disorder survivor who protested at company headquarters last week and ended up meeting with company executives (but not CEO Michael Jeffries), wrote on Saturday that he was "cautiously optimistic" that the company might take a different attitude than the one displayed by Jeffries several years ago—in a quote recently dug up by Business Insider—about how the brand is only interested in outfitting cool, hip, skinny, "All-American kid(s) with a great attitude and a lot of friends."

"I left Abercrombie with a challenge: redefine what is 'cool,'" O'Keefe wrote on The Guardian website. "Right now their brand is not cool; it represents discrimination. Abercrombie did that to themselves by insisting on a dangerous ideal of beauty. But this controversy represents an opportunity for them to rescue their brand's image by redefining cool to include the diversity that teens represent and value."

In the meantime, Abercrombie & Fitch also has to worry about mollifying the investors who can't be too happy about its quarterly performance. Jeffries told them on a conference call on Friday that "inventory" accounted for "approximately 10 percent of the comp-sales decline due to both lower levels of fall carryover and delays in spring deliveries." He said that the "environment in Europe became more difficult again and first-quarter weather issues have been well documented." The embattled CEO however made no mention of the ongoing ridicule the brand has been facing. 

What is the company doing about all of that? Jeffries cited a major initiative "focused on profit improvement through a detailed review of our existing operational processes." Beyond that, he and CFO Jonathan Ramsden told investors and analysts on the call that Abercrombie & Fitch is trying to turn around its acknowledged recent weakness in the women's knit-wear business, focusing on opening new Hollister stores in China and Japan, rolling out more categories of accessories, boosting its Gilly Hicks intimate-wear brand, shortening its development cycle and de-emphasizing the traditional "A&F" logo wear.

And one more thing. Jeffries just brought aboard a new senior vice president of marketing, Craig Brommers, who came from Calvin Klein. Welcome to the crucible, Craig.

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