Wednesday, September 17, 2014

Abercrombie and Fitch Ditching logos to Win Back Teen Market

Back in the "bigger is better", "greed is good" 80s, styles dictated big bold logos and branding on apparel.  The more exclusive and chic the brand, the more consumers clamored to wear their logo blazoned across their chest, bag, jeans pocket or sneaker. Then came the grunge 90s, and soon big logos went the way of the dodo bird.  

Now twenty years later, we're seeing a similar scenario play out in the field of juniors and teen apparel, as the violent swing of the pendulum away from big visible logos is making giant retailers like A&F reconsider their entire strategy. In the next year or so, expect to see a lot LESS Abercrombie, Hollister, and A&F branding on the corporation's clothing lines.

Hunter Communications Original News Source:
Wall Street Journal

Link to article:

Excerpt: "Abercrombie's merchandise margins have fallen from about 67% in 2007, according to analysts at Cowen & Co. The company's goods are still priced higher than those at fast fashion retailers. A typical Abercrombie dress sells for $58, compared with $14.95 at H&M, according to Cowen.

Abercrombie is speeding up its supply chain so it can better capitalize on hot trends. Mr. Jeffries said the move has started to pay off with improving sales during the back-to-school period.

The company has also moved to take costs out of its clothing, which has enabled it to reduce its prices and better compete with some of the fast-fashion chains.

For now, the phasing out of logo gear is weighing on sales. Mr. Jeffries said the company halved its logo business for the fall season.

'A few years ago, all the girls wore their Abercrombie and Hollister T-shirts, but now my friends don't wear them as much,' said Micayla Lubka, a 20-year-old student from Wisconsin. Logos are still OK if they are understated, like those on shirts by Vineyard Vines or Polo Ralph Lauren, she added.

Once considered must-have items, products bearing logos have been broadly relegated to the discount bin as consumers clamor for merchandise that relies more on design details like ruffles or trim. Brands ranging from Louis Vuitton to Michael Kors to Coach have moved to limit their logo offerings. But logos will continue to be part of Abercrombie's business in Europe.

While heavier promotions in the period weighed on margins, Abercrombie executives said they expected better pricing traction in the second half because inventory levels will be lower. Merchandise inventories fell 13% in the second quarter, and the company expects inventory to be down by double digits at the end of the third quarter."

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