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Abercrombie’s ‘Business Model Now Appears Fully Broken’

New York's Abercrombie flagship.

Abercrombie and Fitch Co.'s same-store sales declined 19 percent in December, which is, of course, a terrible holiday shopping season return. Though a year ago the decline was greater, at 24 percent, analyst Eric Beder of Brean Murray, Carret & Co. wrote in a research note that the store's "business model now appears fully broken," adding, "The compounded two-year comps decline was a jaw-dropping 40 percent in December." You know any numbers labeled "jaw-dropping" in this economic climate must be bad.

Last month marked the company's 21st consecutive month of declines in same-store sales (sales in stores that have been open a year or more). Analysts say Abercrombie's problem is what we've been harping on for months now: The clothes are too damn expensive. Though Abercrombie long believed in "aspirational" pricing, they claimed last summer they would lower prices. So either they didn't lower prices or didn't lower them enough, because would-be customers are shopping for the same kinds of clothes at other, cheaper stores like American Eagle and Gap. (Example: We got shorts almost identical to these for about half the price at American Eagle last summer and then made another very similar pair from jeans.)

WWD emphasizes that Abercrombie CEO Michael Jeffries will probably have to revisit his pricing strategy if he wants the brand's returns to be less embarrassing going forward. Because though it may set them apart, most ladies wouldn't spend $36 on plain gray running shorts with an A&F logo. Even American Apparel's are $10 cheaper, and that store is absurdly priced itself.

Abercrombie & Fitch: The Year Ahead [WWD]

Photo: Getty Images

Copyright © 2013, New York Media LLC. All Rights Reserved. The Cut® are registered trademarks of New York Media LLC.

Copyright © 2013, New York Media LLC.
All Rights Reserved.

Copyright © 2013, New York Media LLC. All Rights Reserved.

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