Abercrombie & Fitch Struggles To Stay Hot

Abercrombie & Fitch Struggles To Stay Hot, The teen retailer once attracted hordes of shoppers with its edgy ads and loud stores. At Abercrombie & Fitch, Sex No Longer Sells, Abercrombie & Fitch’s (ANF) skin-filled ads and nightclub vibe once delighted American teenagers and infuriated parents. Today, many aren’t even paying attention. The once-edgy retailer has lost a third of its market value in the past year as it grapples with falling sales in Europe and the U.S. While Abercrombie blames the economy for its woes, brand consultants say it also has failed to change with the times.

Today’s teens are underwhelmed by the half-n***d models and blaring, dimly lit stores. They’re also less inclined to wear Abercrombie’s longtime uniform of pricey denim and graphic T-shirts. “The trick for fashion brands is how to keep the core edgy and hot,” says Allen Adamson, a managing director at brand consulting firm Landor Associates.

U.S. revenue at Abercrombie’s namesake stores and its Hollister chain slipped 2.5 percent in the first half of fiscal 2012, and the retailer is bracing for lower sales in the second half at stores open for more than a year. Abercrombie, which declined comment for this story, shuttered 71 U.S. stores in its most recent fiscal year, and in February said it will close another 180 through 2015. It now has 1,055 stores worldwide.

Abercrombie is counting on new customers overseas, where it opened 47 locations in its most recent fiscal year and its styles remain fresh and popular with many teens. Still, sales at non-U.S. stores open at least a year plunged 26 percent in the second quarter. Explains Martin Lindstrom, author of Buyology: Truth and Lies About Why We Buy: “The pipeline of coolness is disappearing, and once it dries up, then they will dry up.”

That’s quite a reversal for 68-year-old Chief Executive Officer Mike Jeffries, who took over in 1992 and turned a company that originally made safari and camping gear for Theodore Roosevelt and Ernest Hemingway into a teen emporium where sex meets the Ivy League. Jeffries used Abercrombie’s reputation for quality to charge more for youthful styles, recruiting all-American teens and college-age kids to model and work as salespeople. Risqué quarterly catalogs featuring young, taut bodies enraged religious groups. The formula worked from 1995 through 2008, when the company boosted annual sales more than 20-fold and net income more than 56-fold. Then the economic downturn made it hard for Abercrombie to keep selling $70 jeans when similar styles could be purchased elsewhere for $40. The result: Customers began moving on.