DISCUSSION
Abercrombie & Fitch CEO says ‘stores matter’ – particularly the smaller ones
Written by George Anderson
Photo: Abercrombie & Fitch
Abercrombie & Fitch is expecting big things from small boxes. The specialty clothing retailer is continuing its transition from larger flagship stores to “smaller, more omnichannel spaces in the best locations,” according to the company’s CEO, Fran Horowitz.
The retailer announced plans to shutter three flagships — a Hollister store in New York and two A&F locations in Japan and Italy. These closures, in addition to others that have taken place in recent years, have enabled the retailer to reduce its footprint by 140,000 square feet in locations that “had below company average productivity,” Ms. Horowitz told analysts on A&F’s first quarter earnings call yesterday.
The chain, CNBC reports, will expand the total number of stores it operates while reducing its overall footprint this year. A&F’s new store designs feature brighter spaces and music set at lower volumes than the dark, disco-like cave atmospheres common in its older format.
The retailer’s focus on omnichannel operations and customer data analysis through its loyalty program are benefiting performance, as well, its CEO said.
“Digital grew to 30 percent of revenues, compared to 27 percent last year with broad-based strength across the Hollister and combined Abercrombie brand,” said Ms. Horowitz (via Seeking Alpha). “As we continue to evolve with our customer, we saw ongoing double-digit growth in our purchase online pickup in-store.” The retailer has begun providing associates with hand-held devices to better assist customers in finding the items they want.
A&F is also seeing improvements from its loyalty program first introduced in 2016. The program has enabled A&F to achieve a “customer identification rate” of roughly 80 percent, which is more than double where it stood when the initiative was first rolled out. Critical next steps, according to Ms. Horowitz, require A&F to leverage the data it collects “to better personalize the experience for each of our customers.” She added that the company has made investments in technological “systems and tools” to put it on the path to achieving this objective.
The retailer posted a same-store sales gain of one percent in the first quarter, below the 1.33 percent consensus among analysts. A&F was successful in cutting its loss with earnings per share at 29 cents, well below the 43 cents drop that Wall Street was expecting. Shares of A&F were down 26.91 percent at the close of trading yesterday.