Blog: Teen dream falters
Leonie Barrie | 19 May 2008
International sales and strong demand from its teen audience have helped Abercrombie & Fitch to a 3.4% rise in first quarter profit amid a 7.8% hike in sales. But there are fears that behind this surface gloss all is not as good as it seems.
The retailer has undoubtedly been boosted by a “recession-proof” core customer – teens who are less affected than other demographics by the housing downturn, credit crunch, job uncertainty and rising food and fuel costs.
Of its five formats, this is borne out by the fact that the Abercrombie & Fitch teen apparel chain was the only unit to see a sales gain in stores open at least a year.
But while comps at A&F rose 3% in the quarter, the story wasn’t as positive at the group’s other formats. Same-store sales fell 8% at surfwear chain Hollister, 7% at the Abercrombie children's nameplate and 17% at Ruehl, which is geared toward young adults – suggesting they are failing to resonate with customers who are choosing to spend their money elsewhere.
Individually, these chains are small compared to the A&F flagship. But in aggregate, they account for more than half of the group’s total sales. And as it is relying on an aggressive – and expensive – roll-out of its Abercrombie & Fitch chain, especially overseas, to offset slowing sales at home, a same-store slowdown is not good news.
Last year an Abercrombie & Fitch flagship was opened in London, and there are now plans to add new locations in Denmark, Japan and the UK this year. In fact, 50% of the company’s business could come from international sales in the next 7 to 10 years.
There are also fears that while teen spending holds up longer, it too can eventually fold. If the economy continues to falter, not only are teens likely to get less money from their parents, but their earning capacity will go down as hiring drops.
Confirmation that digital supply chains are top of mind for apparel industry executives came last week with the latest plans from global sourcing specialist Li & Fung....
As a barometer of the issues top of mind for apparel sourcing executives, it is hard to beat the annual Prime Source Forum in Hong Kong. ...
Over the past month, Donald Trump and his team failed to offer any clear plan to ensure Americans would "Buy American, Hire American" - while the British government's attempts to clarify the specifics...
The Bangladesh government was forced to respond late last week to pressure over its crackdown on labour activists after a number of global brands and retailers, including H&M and Inditex announced pla...
- Rana Plaza four years on – Timeline of change
- Trump and Brexit get a dose of pragmatism
- Using worker surveys to drive supply chain change
- Industry groups reaffirm commitment to Bangladesh
- Where does VF supply chain sit in growth strategy?
- Nike filed patent for "reinforced denim"
- US textile industry applauds Trump executive order
- Gap unveils five-year sustainable fibres pledge
- Pentland Brands reveals Berghaus factory list
- Adidas and Reebok top transparency index
- Global market review of denim and jeanswear – forecasts to 2022
- When Things Go Wrong - A Practical Guide to Managing Common Problems in Apparel Sourcing
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Clothing Market in the Top 5 American Countries to 2021 - Market Size, Development, and Forecasts
- Myanmar - ISA Country Report