New York City Abercrombie & Fitch Co. announced Wednesday it will shutter its struggling Ruehl division, closing its 29 Ruehl stores and related operations by the end of the year. The company has amended its credit agreement to allow for the charges it will incur.
The move comes a month after the chain said it would review its underperforming Ruehl business (the division’s same-store sales fell 33% in May). Abercrombie said Wednesday it determined the timing wasn't right to pursue Ruehl's development given the "severe economic downturn."
"It has been a difficult decision to close Ruehl, a brand we continue to believe could have been successful in different circumstances,” said Abercrombie chairman and CEO Mike Jeffries. “However, given the current economic environment, we believe it is in the best interests of the Company to focus its efforts and resources on the growth opportunities afforded by our other brands, particularly internationally.
The retailer will record about $65 million more pre-tax charges in the remaining three quarters of this fiscal year. Jeffries said the company was confident it would continue to generate enough cash from operations to fund its liquidity needs.