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Abercrombie & Fitch Q4 profit falls 80% on holiday promotions, flat sales

BY Katherine Boccaccio

New Albany, Ohio — Margin squeezes and flagging same-store sales hurt Abercrombie & Fitch Co.’s fourth quarter profit dropped nearly 80% drop, to $19.6 million from $92.6 million a year earlier, amid margin squeezes and flat same-store sales.

"Our results for the fourth quarter were below our expectations in an extremely challenging environment.,” said Mike Jeffries, CEO and chairman, Abercrombie & Fitch Co. “However, we are confident that we are on track with our long-term strategy of leveraging the international appeal of our iconic brands to build a highly profitable, sustainable, global business.”

On a conference call with analysts, Jeffries blamed "highly aggressive promotional environment" for being unable to raise prices to counter the effect of higher apparel manufacturing costs.

Sales for the period ended Jan. 29 rose 16% to $1.33 billion, from $1.15 billion. In the United States, sales increased 4% to $962.2 million. Same-store sales overall were flat. By brand, same-store sales fell 4% at namesake stores, dropped 3% at Abercrombie kids and increased 2% at Hollister Co.

For the full year, the company reported net income of $127.7 million, compared with $150.3 million for the prior year. Sales rose 20% to $4.16 billion from $3.47 billion, and total same-store sales increased 5%. It opened 47 new international stores and closed 71 U.S. stores during fiscal 2011.

Plans in 2012 call for opening five international Abercrombie & Fitch flagship locations, one abercrombie kids flagship, and opening approximately 40 international Hollister stores.

Based on current new store plans and other planned expenditures, the company expects total capital expenditures for fiscal 2012 to be approximately $400 million, predominantly related to new stores and investments in the distribution center and direct-to-consumer operations.

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Office Depot adds style with desk line

BY CSA STAFF

BOCA RATON, Fla. — Office Depot is hoping to appeal to working women with a new desk accessories line.The See Jane Work line includes mix-and-match organizational products starting at just $3.99.

"It helps to have a good system of organization and well-designed products that are as functional as they are beautiful," said Holly Bohn, founder of See Jane Work. “This new collection encourages female professionals to be innovative with organization, and provides them with plenty of design options to enhance, improve and brighten their workspace."

See Jane Work was created by entrepreneur Holly Bohn eight years ago when she set out to decorate the offices of her accounting business and became discouraged by the challenge of finding desk accessories with style, utility and quality. Bohn’s approach lead to the creation of See Jane Work.

“This exciting line of desk accessories is a great complement to the wide assortment of everyday organizing solutions that are currently available at Office Depot," said Farla Efros, EEVP and chief merchandising officer for Office Depot. "The collection reinforces our commitment to help female professionals stay organized with little things that work in a big way."

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Retailers invest in customer engagement

BY CSA STAFF

WASHINGTON — Retailers in 2012 will invest heavily in IT, e-commerce, customer service and mobile platforms in order to build customer engagement, a new report from the National Retail Federation Foundation and KPMG found. The report, titled,Retail Horizons: Benchmarks for 2011, Forecasts for 2012," surveyed 247 retail executives from various sectors, outlines retailers’ top strategic initiatives for 2012 including merchandising, ecommerce, store and field operations, supply chain and human capital, among others.

“Retailers are poised to enter 2012 with a renewed focus on building up and building out many of their most important operations, hoping to establish a new sense of brand loyalty with all of their customers,” said NRF president and CEO Matthew Shay. “Though customers are always a company’s top priority, customer satisfaction will get a huge facelift this year. From increasing their brand visibility through cross-channel initiatives to providing unique, personalized shopping experiences through every channel, retailers have indicated 2012 is all about the customer.”

According to the survey, nearly 67% of companies rank customer satisfaction as the top strategic initiative for 2012 and, similarly, 82% say customer service strategies will be their top priority in the coming year, up from 75% last year.

A major shift found by the report was that, for the first time in the survey’s ten-year history, retailers’ websites or online channels eclipsed physical stores as the top channel for marketers (81% for brick-and-mortar vs. 86% online). As such, retail executives say they will invest in programs that directly resonate with today’s shopper. According to the survey, 85% will emphasize increasing online sales, up from 83% in 2011, and 38% will have a greater focus on increasing m-commerce sales over the next year, up from 29% in 2011. Additionally, more than half (53%) of those surveyed say they will specifically focus on web personalization engines in the coming months, which includes such enhancements as location-based services and tracking methods unique to shopping habits.

To better serve mobile-savvy shoppers in their stores, retailers also stated enhancing handheld technologies, such as mobile point-of-sale, will be a core focus over the next 18 months. While 17% already use mobile POS technologies in their store, an additional 33% indicate they plan further POS investments during that timeframe.

Social media is also becoming more important for retailers, with45% of companies are actively developing widgets, gadgets or advanced links that can be incorporated with their social media pages, and another 41% planning to develop these items over the next 18 months.

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