Abercrombie & Fitch Says "No No" to Its Logo

The retail apparel company seems to be suffering an identity crisis.

Aug 30, 2014 at 1:07PM
Abercrombie

Source: Rob Young via Wikimedia Commons.

The prolonged soft economy has caused growing mistrust of big business among many and that seems to now be spreading even to teens. The decades-long fad of kids acting as a human billboard is falling out of favor faster than Justin Bieber's acting career.

Abercrombie & Fitch (NYSE:ANF) feels their pain where it hurts the company most -- in the bank account -- and is shedding the logo-wear for good in North America. Is Abercrombie coming to grips with the harsh reality that its brand isn't what it used to be?

Sales results that are out of style
Whatever the case, the store known for its chokingly strong cologne smell and super-model employees doesn't seem to have its finger on the customer pulse lately.

Maybe it's just that today's teen wants to feel more independent, and trying to use a clothes label to brand himself as the cool kid is no longer cool. Maybe humble is the new cool, and Abercrombie & Fitch sure had a humbling report for the fiscal second quarter.

U.S. same-store sales were down 5%. International same-store sales were down 9%. Total same-store sales including direct-to-consumer were down 7%. CEO Mike Jeffries blamed a "continued challenging environment" and a headwind of "adverse likes in our logo business as we work to strategically reduce that element in our assortment."

Guess what I'm wearing
During the latest quarter's conference call, Jeffries said Abercrombie is looking to decrease the logo business aggressively, including cutting the North American logo business to "practically nothing." He expects North America will be essentially out of the logo business by next spring.

It was kind of a strange call. There was a lot of talk about logo versus non-logo business as if the two types of apparel were unrelated products that have no effect on each other. It seems it would be as silly as a restaurant asking you to only pay attention to its growing burger sales while ignoring its decline in guests coming in the door and the decline in total sales. American teens are buying less of the company's stuff. Period.

Fashion's a tough game
When it comes to fashion, it's a company's responsibility to anticipate products that are in style and that customers actually want, or for the company to have marketing that's savvy enough to persuade people to start a trend. During the conference call Q&A, Jeffries even said to apparel research analyst Jennifer Black, "Jennifer, I have to congratulate you because you have been on the push for less logo for a while. So, you are a forecaster there. Thank you."

Crazy. Back in November of last year, Jeffries stated during a conference call:

I think that it's very smart that there is a logo business that is ongoing. Our mission in logo is to make that category cooler, and by doing so, I don't think we have to relegate that to a promotional business only.

This statement was in response to a question about whether logo clothes would be part of promotional discounts as the company was doing with other apparel and accessories. Apparently things changed.

Mission failed. Now what?
If kids really don't want to be seen admitting that they shop at Abercrombie or its Hollister brand, am I the only one who sees a possible major problem? I don't know if things have changed since I was younger, but it seems that once a brand starts to become tainted in the minds of teens, it quickly ends up in a death spiral that's hard to stop. For Abercrombie to be this behind the curve instead of ahead of it leaves almost as bad of a taste in my mouth as its cologne-saturated air.

Try this on for size
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early, in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Nickey Friedman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers