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.
Increasing competition for garment sourcing contracts is seeing China not only being challenged by other countries in Asia, but by sub-Saharan African and even Russian suppliers too. And it is pushing...
The monthly minimum wage for workers in Cambodia's textile, garment and footwear sector is set to rise to $153 from January next year, following a vote on the issue last week. The increase marks a ris...
The results of two highly-anticipated initiatives in the sportswear sphere were revealed last week: the launch of Under Armour’s new UAS lifestyle brand and the first pair of running shoes created at ...
The recent bankruptcy of South Korea's Hanjin Shipping, the world's seventh-largest container shipper, at the end of August, has left billions of dollars worth of merchandise in limbo, leaving the fal...
- Under Armour Lighthouse will disrupt production
- Will new Vietnam wage hinder competitiveness?
- How TAL Apparel is staying ahead of the game
- Ethiopia violence undermines sourcing strategies
- Where next for retailers in a saturated market?
- Marks & Spencer top for modern slavery reporting
- Bangladesh garment workers rally for higher wages
- MAS Holdings shares commitment to sustainability
- H&M CEO named sustainability leader
- Gap to shutter all UK Banana Republic stores
- Africa-Med strategic sourcing review – comparing East Africa, North Africa and Turkey
- REPORT BUNDLE: Africa-Med, Southeast Asia and Central America strategic sourcing pack
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Apparel (GLOBAL) - Industry Report
- Global Sports and Fitness Wear Market 2016-2020