This morning, ANF announced that CEO Mike Jeffries has been stripped of his role as Chairman. Stock is up 5% on the day.
With a more balanced board, ANF should have more of a clear path toward unlocking shareholder value.
I believe that the stock could be a potential double in the next 12 months, as the Street seems to be massively underestimating ANF’s earnings power. Specifically, according to industry sources, the new board is trying to change the company’s brand message such that you don’t actually have to be exceedingly cool or good-looking to wear Abercrombie & Fitch. I suppose this means that the CEO of Abercrombie can actually shop at his own stores now.
I think if they change that message to “you don’t actually have to be exceedingly cool or good-looking to wear Abercrombie & Fitch”, they’ll be playing a whole different ball game. They’ll be facing off against a whole different set of competitiors, like forever 21, jcp, and even discount retailers like ross/marshalls/tj max.
If they are not cool, what are they? I think a danger would be like what jcp tried to do, go from discounting to everyday low price, then rush back to the former after their client base objected. How will ANF client base react?
You can not go back overnight if you change your image though.
Some might say it might play out like GAP but eh… maybe.
I think what might happen is they will hire some broad from a high end fashion house for big bucks, analyst will applause, and the consumers (who don’t know who the ceo is, much less, what they do) won’t notice unless she makes some huge negative changes.
Open to discussion though, just some random thoughts.
I think they should protect their image as upscale brats, because that is what their consumers want to project. I’m not sure how A&F is doing in the US teen market, but I can tell you that Latin Americans love love love that brand. Go to Mexico City and all the children of the wealthy are wearing it. Eventually, they grow into pastel polos with the giant RL logo and Ferragamo driving mocs.
They still have brand equity though… I would liken them to a slightly less upscale version of Polo Ralph Lauren, not H&M, and certainly not Ross/Marshalls, which have a completely different business.
And I think it’s fly when girls stop by for the summer,for the summer I like girls that wear Abercrombie and Fitch, I’d take her if I had one wish, But she’s been gone since that summer… Since that summer
numi, what do you think about american eagle (AEO)?
They had some insider purchases, nice yield, earning power looks decent. Down quite a bit from last year. What’s up with them? The brand is one that may be more hip than abercrombie, and for longer. Just something that I came across this morning.
Every time I walked by the Ginza store in Tokyo there was a line out the door. Granted that’s two years ago now, but it was / is really popular.
They have a 60%+ gross margin vs. the average 40%+ for most retailers, which covers the advertising, location and other expenses (store always smells like cologne, etc.). That’s why the clothes are so expensive.
It is a bad move for them to do this in my opinion. They basically own the brand of the high school “cool” kid. People created brands like Aeropostal, Hollister, That California Bear One, American Eagle just to copy their casual yet upscale style. Maybe I’m wrong and they weren’t created in response to A&F but to me it always seemed like they were positioned slightly lower in terms of status.
People make a lot of noise that they’re not an equal opportunity clothing manufacturer (no small sizes, only represents pretty people, too expensive), but at the same time they still want to wear it. Why? Because they want to feel they belong in that class without fitting the current mold of it. I just can’t help but think that if they open this to a larger audience the people who originally set that reputation are going to move onto something different.
I understand the concept of selling more of something at slightly less, but they’re assuming their demand is not influenced by their position in the market.
I once went into the Abercrombie and Fitch shop on Saville Row but after waiting for 10 minutes to try on a few shirts on and then another 15 minutes in the queue for the till I decided to ditch the shirt and never buy anything from them in my life
2 people slowly serving a line full of people but 100s of people mincing around spraying perfume and folding things like they’re in some parody of a trippy dystopian film set in the future where we’ve created extremely good looking robots to serve us and treat us mean to keep us entertained.
And I think the brand has probably seen better days anyway.
ANF is a trading stock, IMO, not an investment. But I don’t like to trade apparel stocks, that is a really hard game unless you are dedicated to it full-time.
