Photo: Abercrombie & Fitch
Following the flagship’s 14th straight quarter of negative comps, Abercrombie & Fitch is forging ahead on a plan announced earlier this year to go after a slightly older customer: 18-to-25-year olds.
Yesterday on the company’s second-quarter conference call with analysts, Fran Horowitz, chief merchandising officer, said Abercrombie’s brand positioning will be “the iconic American casual luxury brand for the 20-something consumer.”
“Today [the] majority of our customers are over 20,” added Mr. Horowitz. “So we are targeting that particular consumer.”
Shares nonetheless tumbled 20 percent on the day as the company showed a wider loss in the quarter, predicted sales would “remain challenging” through the second half, and revealed it would close another 60 doors, or around eight percent of its store base. While the company blamed its problems on weakness at flagships largely due to dismal tourist traffic, the shift to focus on a slightly-older crowd didn’t excite investors.
"We see limited reasons for older customers to shift back to a 'teen' brand and, frankly, there are better brands and lifestyles for the 20+ customer to focus on," Wunderlich Securities’ Eric Bederv wrote in a research note. "All in all, we believe the company faces a multi-year process before any material operating turn."
On the other hand, the bankruptcies of American Apparel, Aeropostale, Quiksilver and Pacific Sunwear have underscored the challenges teen chains have faced from newer competitors such as H&M and Zara, weak mall traffic, and changing spending priorities by teens.
While Abercrombie began de-emphasizing logo looks in 2014, moves this year to relax its dress code for associates and remove bare-chested male greeters show the chain is committed to targeting a more mature consumer. A new branding strategy focusing on “confidence” and “character” also marks a shift away from the sex-driven status ads used in the past.
“Research into today's young adult consumer demonstrates a shift in what confidence means,” said Mr. Horowitz. “It is no longer outer directed but center directed. Image is less important than character and it is more important to feel confident than to appear confident.”
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