Photo credit: Abercrombie & Fitch
Sluggish sales are set to blight Abercrombie & Fitch’s full-year profits as the retailer warns that it may miss Wall Street’s expectations.
Third quarter revenue dipped 12 per cent to USD 1.03 billion, shy of the USD 1.07 billion predicted. As a result, A&F’s share price also took a beating – down 6 per cent to USD 35.90.
In response, the lifestyle fashion brand said it will close its 28 free-standing Gilly Hicks stores. However, according to the New York Post, some investors believe the root-problem lies in Abercrombie’s defecting clientele and want more Abercrombie stores to close.
Mike Jeffries, CEO of Abercrombie & Fitch, shrugged off these claims, however, blaming weak sales on a decrease in the “overall spending among younger customers”.
According to some analysts, lower-priced competitors like H&M and Forever 21 are attracting its customers and eating away at its market share.
The retailer will continue to sell its subsidiary lingerie brand online and in Hollister stores.
Third quarter sales at stores open at least a year fell 14 per cent.
Jeffries remained coy about the company’s outlook heading into the crucial holiday season, stating: “Until we have seen a clear trend improvement, we are continuing to take a cautious approach into the fourth quarter,” he said in a statement.