Abercrombie witnessed an increase in rents

The year-over-year decline in results was primarily due to the continued economic downturn plaguing the industry that has resulted in reduced consumer discretionary income and a cut in non-essential spending.

abercrombie and fitch Co. (ANF), a leading international specialty retailer, reported disappointing second quarter results with a net loss of $26.7 million or -30 cents per share compared to a net income of $77.8 million or 87 cents per share in the year-earlier quarter.
Overall net sales of the company during the quarter decreased 23% to $648.5 million from $845.8 million in the year-ago quarter. Total company direct-to-consumer net sales decreased 13% year-over-year to $48.7 million, while overall comparable store sales decreased 30%.
Gross profit rate during the quarter decreased 360 basis points year-over-year due to a higher markdown rate. abercrombie outlet was able to reduce its stores and distribution expense (as a percentage of sales) through savings in store payroll, and reduction in direct-to-consumer and other variable expenses. The marketing, general and administrative expenses also decreased during the quarter from $109.0 million to $88.7 million due to savings related to employee compensation and benefits, and cut in travel and outside services.
However, the rate of sales decline of the company was much higher than the reduction in expenses. Furthermore, Abercrombie witnessed an increase in rents, depreciation and lease termination costs related to the exit of RUEHL branded stores.
During the quarter, the management approved the closure of 29 RUEHL branded stores and associated direct-to-consumer operations. hollister clothing incurred $23.6 million of pre-tax charges during the quarter to exit RUEHL, along with an impairment charge of $0.8 million. The company expects to complete the closure by the end of fiscal 2009.

Abercrombie & Fitch is a terrific store

Abercrombie & Fitch is an AMAZING store!! I really don't understand everyone's little stupid comments about how expensive or useless it is. If you really think about it, there are a million other stores that are WAY MORE EXPENSIVE than A&F. And all that talk about Abercrombie being racist is a lie, because I shop there almost every weekend and I've seen all types of different skin colored people. I myself am a hispanic girl and I love to wear abercrombie outlet and I know black, asian or any other non-white girls that wear it too.
Also, all that talk about the only models on the posters in the store being white is pathetic. You guys have to understand that the MAJORITY of customers that shop at Abercrombie & Fitch ARE WHITE!! So of course their going to have white models on their posters, to attract their majority shoppers. That's like going to an ECKO or a BABY PHAT store and expecting to see white models on their ads rather than blacks!! Come on, use common sense.
All I know is that abercrombie outlet is a terrific store, with good prices for their clothing. Saying that a pair of jeans cost 200 dollars is an outrage!! STOP STRECHING THE TRUTH!! Besides they have beautiful stylish clothes, that most of the people that criticize it would never be able to wear =]
"I once passed by a store called Ruehl No.925, I fell in love with it and I shop there all the time, now ignorant people make fun of me because I'm preppy. What losers."

How Long Can Abercrombie and Fitch Buck the Retail Trend?

One company, abercrombie and fitch (ANF), believes so and has chosen to stay away from running promotions in addition to their annual clearance in hopes of maintaining its brand image and, more importantly, pricing power.

Six months ago, I wrote an article highlighting the dangers of seeing a retailer running sales called, “Discounts - Good or Bad?” Little did I know that in the six months following the article, we’d see almost all consumer discretionary retailers discounting more aggressively than we’ve seen at any time in the last decade.hollister clothing
Just to summarize the aforementioned article, promotional markdowns are typically used in an attempt to entice a higher volume of purchases to juice declining revenues and clear inventory. The main pitfalls to such a strategy include:
1. Increased volumes at lower margins are not translating into higher revenues. Few buyers will buy a poor product even at a discounted price.
2. Reliance on discounting is often a result of structural weakness in a company’s merchandising decisions.
3. The repeated use of voluntary discounts runs the risk of turning into a permanent loss of pricing power through what I call, “the sale spiral.” Customers become accustomed to bargain basement prices and lower their reservation price for the company’s products altogether.Ruehl No.925
In my previous article, I assumed discounting was the direct result of difficulty enticing customers to buy product. But, what about discounting in the face of a recession and overall tightening of wallets? If the industry as a whole begins discounting, do the same principles of loss of pricing power, profitability, and brand image apply?

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