Abercrombie & Fitch Is Already Being Left in Fast-Fashion's Dust

Embracing the motto "If you can't beat 'em, join 'em!" Abercrombie & Fitch (NYSE: ANF  ) made the very public decision to convert its Hollister brand into a fast-fashion enclave, a place where even preppy surf kids can buy cheap, California-style beachwear. Yet because it's so late to the game, the disposable clothing trend is already speeding away from the center, threatening to leave the teen retailer in its dust and its stock in the pits.

The change in focus comes as teens increasingly eschew traditional retailers in favor of those outlets that take the latest runway trends and quickly repurpose them to appear on the racks at H&M Hennes & Mauritz (NASDAQOTH: HNNMY  ) , Forever 21, rue21, and Zara. These fast-fashion leaders accelerate the timeline for how long trends stay around, meaning it's essential they manufacture the clothing as cheaply as possible.

Abercrombie knows as well as any of its teen retailing peers the pain being inflicted by the sea change under way in fashion. Comparable U.S. store sales fell 13% in its fiscal fourth quarter ending Feb. 1, and were down 15% for the year, while Hollister's comps alone plunged 14%. Hollister accounts for about half of the company's sales.

In comparison, H&M saw its comps rise 3% in the quarter (though they were flat for the year), and it plans on vastly expanding its presence by opening the equivalent of more than one store a day in 2014 by launching additional sports clothing stores, home furnishing outlets, and online clothing shops. The Swedish retailer is already the world's second-largest fashion retailer in terms of sales after Inditex, the owner of Zara.

Yet as Abercrombie rushes into fast-fashion, H&M is running out. It announced late last year it would be opening its first U.S. COS store -- or Collection of Style -- this month. The brand extension features more classic styling than its eponymous stores and better-quality materials. At the time of its announcement, it had 75 COS stores operating around the world and it planned on opening as many as 40 more this year.

At the other extreme is Forever 21, which will be opening this weekend its new F21 Red brand, which will feature even faster and cheaper fashions at ridiculously low prices. It's said women can get camisoles for as little as $1.80 and jeans for $7.80 a pair. 

Abercrombie is not alone in trying to jump on the fast-fashion bandwagon. Both lululemon athletica and even Sears Holdings are going all trendy, with the former introducing a line of clothes you can wear right from the gym to a night on the town -- um, ew! Go shower first, please -- and the latter opening store-in-store boutiques catering to a quick-turnover clothing line.

It's not certain either H&M or Forever 21 will be successful with their new ventures, but as Abercrombie & Fitch and others run headlong into the space, it's notable that the niche's leaders are running out. And that could mean Abercrombie investors are left running in place.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2937641, ~/Articles/ArticleHandler.aspx, 9/4/2015 9:13:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


Today's Market

updated Moments ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:01 PM
ANF $20.45 Up +0.05 +0.25%
Abercrombie & Fitc… CAPS Rating: *
HNNMY $7.47 Down -0.13 -1.65%
Hennes & Mauritz CAPS Rating: No stars