This Chart Tells The Story Of Abercrombie & Fitch (ANF)

Posted by jbrumley on November 18, 2016 3:49 PM

One Chart Tells the Entire Abercrombie & Fitch (ANF) Story

Abercrombie & Fitch (ANF) reported its fiscal third quarter results on Friday. Not surprisingly, they were bad. What was surprising was how bad they were relative to last year's comparable figures, and expectations.  Perhaps worst of all, Abercrombie just logged its fifteenth consecutive quarter of year-over-year declining revenue.

It may be time for even the most patient of shareholders to start acknowledging the retailer may be beyond repair, and that it may have less to do with Michael Jeffries' presence or absence than most care to believe.

The revenue and per-share earnings chart below tells the tale.

111816-anf-results

The specifics: Last quarter, A&F posted quarterly operating earnings of 2 cents per share on revenue of $821.7 million... a 6% drop. Stripping out the impact of currency fluctuations, Abercrombie & Fitch still only mustered a profit of 11 cents per share, versus 48 cents for the same period a year earlier. Both the top and bottom lines fell short of expectations of $830.6 million and 21 cents per share, respectively, and same-store sales were down 6%.

Clearly whatever chemistry the company is employing isn't working.

One possible reason for the ongoing demise of the retailer is a lack of centralized leadership. After Jeffries stepped down as CEO in late-2014, rather than replacing him, the bulk of the leadership comes from a committee. Executive Chairman Arthur Martinez is more or less responsible for that committee's oversight.

It's a novel approach, but isn't working any better than things were working under Jeffries.

Perhaps the ongoing implosion of Abercrombie & Fitch has more to do with the perils of branding that has more to do with ideas and people than the clothes. For a long while the "image" factor drew teens to the uppity brand, but the exclusionary attitude became offensive more recently, at the same time a cultural movement devalued goods and put more value on experiences. Brand names became a bit gauche, with Abercrombie & Fitch becoming an easy target for that rebellion.

(There's also a bit of a consensus that A&F simply wasn't built to alter its fashion looks; some claim it's stuck in the 90's.)

If indeed that's the impasse Abercrombie & Fitch -- years of selling the importance of looking cooler than everyone -- is facing now, a handful of tweaks isn't going to fix the problem. It's going to take more time than anything else to move back into consumers' favor. Time, however, is the one luxury Abercrombie doesn't have.

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