Abercrombie & Fitch is experiencing its own growing pains.
The struggling teen retailer reported its eighth straight quarter of declining sales on Wednesday. Abercrombie (ANF) claims that a strong dollar, decreased demand for its namesake labels, and heavy discounts hurt profits during the holiday quarter.
Abercrombie’s former CEO, Mike Jefferies, was blamed for the brand's stumbles last year. Jefferies stepped down in December and the company has yet to appoint a successor.
Yahoo Finance’s Jeff Macke thinks Abercrombie has been suffering from weak leadership for a long time.
“They've been complaining about logo merchandise for literally over a year,” he notes. “[Jefferies] has been saying ‘you know what, we're not seeing a lot of demand for our logo merchandise. We're going to try to get out of that business.’ Here's a way to get out of that business: stop buying logo merchandise. This shouldn't be a problem for Abercrombie. They need new blood in their corner office.”
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Macke points out that it’s a bad sign when a retailer blames poor sales on foreign currency exchange rates.
“Now here we are in March, and we don't have a new CEO, we have a huge miss and we're blaming it on forex,” he says. “I assume it means we don't have a CEO or a direction in place and we've got no real strategy for getting out of this jam.”
Forex should be a non-issue for a retailer driving the top line, Macke adds.
“If you're Abercrombie & Fitch (ANF) you have so much low hanging fruit. It’s everywhere. You're in the Garden of Eden,” he says. “There's so many other things they could be doing to drive their business: let's be more relevant to consumers, let's be less creepy, let's define our brands more clearly… Nowhere on that list is 'let’s go into currency hedging.'”
Macke notes that not all teen retailers are struggling.
“American Eagle (AEO) got in higher, they were just fine. These colors don't run,” he says. “It’s as usual: bad merchants tend to find problems and good merchants tend to do things like fix stuff up and target new and aggressive markets.”
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