When it published its latest financial results, American fashion company Abercrombie & Fitch revealed it will shut down another sixty stores in the United States as the company’s turnover keeps slipping.
Turnover drop
Over the past five years, Abercrombie & Fitch already shut down hundreds of stores and it will close another sixty in the current fiscal year, following the 54 it shut down in 2016. The rental agreement for most of these stores is coming to an end and the company is using the opportunity to get rid of several loss-making stores.
Its fourth quarter total turnover reached 1.036 billion dollars (nearly 1 billion euro), which is a 7 % slump compared to the year before. American turnover was even worse off, – 8 %, but international turnover also dipped 5 %. For its full fiscal year, turnover dropped 5 % to 3.327 billion dollars (3.2 billion euro), with negative results for both Hollister and Abercrombie & Fitch, although the former kept things relatively stable at – 2 % as the latter plummeted another 9 %.
Abercrombie & Fitch spent more on marketing and discounts in 2016, wreaking havoc on its net profit, which dropped from 35.6 to 4 million dollars (3.8 million euro).
Hopeful for 2017
Abercrombie & Fitch’s fourth quarter like-for-like turnover dropped another 5 % compared to the previous year, mostly because of a weak performance at the brand itself. The Abercrombie & Fitch brand suffered a 13 % fourth quarter like-for-like turnover drop. Hollister surprisingly experienced a 1 % turnover increase but its full-year like-for-like turnover plummeted 5 %. “While overall results did not meet expectations, 2016 was a year of significant progress on each of our strategic priorities”, CEO Fran Horowitz spoke, filled with hope about 2017.
For its current fiscal year, Abercrombie & Fitch forecasts like-for-like turnover growth, even though it expects a harsh first half of the year. In any case, it will continue to work on a new brand image, like when it launched a new Abercrombie & Fitch formula in several stores across the United States last month. Several of the brand’s characteristics disappeared in favour of an improved customer experience.
