More Potential Store Closures for Abercrombie & Fitch
Roughly 50 percent of Abercrombie & Fitch's 745 U.S. retail store leases are up for renewal over the next 18 months, the company said Friday. With profits under pressure, this window gives management the opportunity to continue pruning the company's footprint without being penalized for exiting space early. Though management didn't outline how many of its domestic stores could potentially close, it plans to shutter 35 locations in the fourth quarter through natural lease expirations. That's in addition to the 15 stores it's closed so far this year.
Total Retail's Take: Potentially more bad news for the struggling teen apparel chain. Between the Abercrombie & Fitch and Hollister brands, the company has closed more than 350 stores over the last six years. What's more, sales at Abercrombie's stores fell 14 percent during the fiscal third quarter — double the second-quarter decline of 7 percent. The reason for the sluggish sales are myriad. Management has blamed its shortfalls on traffic declines at its mall-based stores and tourist flagships; unseasonably warm weather; and currency fluctuations. Steeper-than-planned promotions also took a bite out of Abercrombie's profits. Hopefully rightsizing its store count and repositioning itself as a higher quality label will help the chain win back customers.