After three consecutive years of negative like-for-like sales growth, which also included a period of nine consecutive negative quarters, US-based fashion chain Abercrombie & Fitch has reported like-for-like sales increased 7% in fiscal 2010.
After three consecutive years of negative like-for-like sales growth, which also included a period of nine consecutive negative quarters, US-based fashion chain Abercrombie & Fitch has reported like-for-like sales increased 7% in fiscal 2010. It has bounced back thanks to a strong international performance and a streamlining of its domestic business.
Once the epitome of the US prep school image, for the past few years Abercrombie & Fitch has been a victim of its own success and suffered from over exposure in the US and a failure to evolve its range. Its dark stores, with topless models and a strong stench of perfume, were no longer seen as cool by America’s young and the retailer was forced to reinvent its business model.
Sensibly, the retailer looked internationally to markets where its image was still strong and its exposure was far lower. First it entered Canada and then in 2007 it launched its flagship store in London. In 2009 it opened in Japan, Germany and Italy and in 2010 it entered Spain. But rather than make the same mistake internationally as it did in the US, the retailer has attempted to keep exclusivity around its brand.
Typically Abercrombie has opened one flagship store in each of its international markets and then expanded its younger and slightly less expensive brand Hollister more aggressively, with its transactional website boosting sales. This strategy has maintained demand for the core brand while enabling it to reach out to a younger customer.
Such has been the success of this strategy that international sales now account for 18.6% of the company’s total sales, increasing by 61% in 2010 to $210.3m (£124.9m). In fiscal 2011 Abercrombie expects to open international flagships in Paris, Madrid, Düsseldorf, Brussels, Dublin and Singapore. These stores will be complemented by 30 to 40 Hollister stores. Back in the US, a further 50 stores will close in 2011 as it streamlines operations further and shifts its focus abroad.
Abercrombie’s peaks and troughs over the past 10 years have had prolonged periods of negative like-for-like sales followed by prolonged periods of double-digit growth. If anything it has shown resilience and an ability to bounce back, but it also shows signs of greed and over exposure. As other teenage fashion brands expand at mind-blowing pace they could do worse than reflect on Abercrombie’s history and try to avoid some classic mistakes.
Greg Hodge, customer research director, Planet Retail. For more information contact us on:
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