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Abercrombie & Fitch Co. Message Board

  • meijinmike meijinmike Jun 18, 2009 10:43 AM Flag

    ANF upgraded - that is the good news..

    The bad news: Cost cutting. Suntrust analyst claims that leases will be cheaper and they intend to play hardball. Whoops. Hardball ? To me that means closing stores if they can't get the deal done. Otherwise, the hardball isn't really hard.
    Inventories are leaner. Great. How long can they continue doing that for growth ?
    Price target is another source of bad news. Low 30s.
    In other words, last weeks decline will be neutralized in 2010. Why buy with an upgrade like this ?
    Seems the market agrees. Last I looked up 4 cents.
    Here is what a real upgrad sounds like. Same store sales higher, promotions are working and employment is heading back up.

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    • Malls are supposed to be convenient. But are they convenient in the ways that matter, in ways that are consistent with the way people actually shop? Especially in light of the competition today.

      For me, and everyone else in the world is different from me, the convenience of malls is illusory. They are full of wonderful stores which I never enter. The bookstore I visited in the mall was always a long walk from my car. The mall was warm and comfortable, but my car needed to be parked far from the door. Because mall space is at premium the store was smaller and more expensive than the Barnes and Noble across the street, and there I could park practically next to the door. When malls were invented I don't think people thought of considerations like that, mainly because the competition with satellite malls and the internet didn't exist. But if they are to be competitive in the future, they are going to have to start thinking about issues like that now.

    • "So I think the traditional mall concept can continue to be successful for the malls that are able to evolve."

      Part of the problem is cyclical, and has to do with fashion cycles, a big part of the problem is the emergence of competition. I think the malls were financed in a way that made certain assumptions that are no longer true. If Canadian malls are doing better, it may be because they have less debt. I think the mall business can come back but it needs to reorganize it's financial structure, and it needs to develop more sophisticated strategies for success.

      For example, theaters. Are they good for malls or bad for malls? They bring people in, but then they take them out of circulation. In terms of the overall business of the mall, which is the prevailing tendency? I don't know, but those are the kinds of question that need to be asked.

    • In Toronto, I try to go to the big box centers during the holidays because there's never parking at the malls. There still is never parking available on Saturdays at the mall closest to me.

      I think part of the difference is the Canadian economy fortunately has not been as bad as the U.S. But also, many of the malls have adapted to changing conditions. For example, over the years, the mall near me tore down a bankrupt department store, old movie theaters, and a grocery store, and replaced them with modern theaters and multi-level popular retailers like Zara and H & M.

      So I think the traditional mall concept can continue to be successful for the malls that are able to evolve.

    • The place looks awesome.

    • The malls are busy here in the winter wonderland of Minnesota during the holiday season, but it's my impression that they are less busy than they used to be. My basis for that is that seems easier to get a parking spot. The satellite malls are often more convenient for the shopping people actually do.

    • Just looked at the Greene site - there are similarities to the mall, with a movie theater and department store (Von Maur) serving anchor-like functions, and many of the mall names on streets in between, including Aeropostale, AE, Banana Republic, Cheesecake Factory, etc. I've never been in Ohio in the winter, but I'd be interested to see how it fares compared to indoor malls during the holiday shopping season.

    • "Yep, in my area "The" place to go is the town style concept of shops, entertainment, dining, and condos (above the shops) called The Greene. It looks like a beautiful town with green space, fountains, outdoor dining, evening concerts."

      Absolutely. The department stores that anchor the malls have been on the ropes for years, and the traffic in the malls no longer justifies the rents charged.

      The reason I typically went to my local mall was to check out the bookstore. But even then, books cost more in the mall than in the Barnes and Noble across the street, and now Amazon.com beats them both in price, or would if the bookstore in the mall were still open which it isn't.

    • "The mall business is just an old strategy that's played out."

      Yep, in my area "The" place to go is the town style concept of shops, entertainment, dining, and condos (above the shops) called The Greene. It looks like a beautiful town with green space, fountains, outdoor dining, evening concerts.

      http://www.thegreene.com/

    • The mall business is just an old strategy that's played out.

    • If they really wanted to play hardball, they could tell the landlord to sue them to resolve any disputed issues, should a mutually agreeable resolution not be reached. And in these economic times, the Landlords might find it to be in their interest to get a cash settlement now, rather than potentially getting a judgment for payment years down the road, that could be appealed extending the process maybe further years down the road.

      Depending on the law of the states involved, ANF could argue that the Landlord has a duty to mitigate its damages and find another tenant. Depending on the terms of the Lease, ANF could try to find another company to assign the lease to (from what I recall, the Ruehl in Las Vegas was near a front entrance to the mall, which seems like a desirable location, IMHO). ANF may have as many as four other stores in some of these malls, so it may be in the Landlord's long term interests to keep good relations with ANF.

      • 1 Reply to gwconcord
      • I don't think the mall operators could play hardball even if they wanted to. They don't have any money and nobodies going to give them any. Abercrombie may find that they're closing stores because their malls are going under.

        IMO, in the next three years you're going to see hundreds of Mall bankruptcies as well as superstore closures. The things that made these stores possible, cheap foreign products, low interest rates, low cap rates and asinine accounting conventions have all hit the perfect storm.

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ANF
26.86-0.23(-0.85%)Jan 23 4:03 PMEST

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