Abercrombie sales slide 5.8%; dropping logo from clothes
New Dublin, Ohio — Fast-fashion competitors like H&M and Forever 21 and teens more interested in technology than clothing make these challenging times for Abercrombie & Fitch, whose second quarter revenue fell 5.8% to $890.6 million, missing Wall Street projections. In a nod to changing fashion tastes, the company is phasing out the signature logo-centric clothing that helped build it into a teen retail powerhouse.
“In North America we will be out of the logo business by next spring,” said CEO Mike Jeffries during the company’s second-quarter earnings call with analysts. “It will remain a factor in the rest of the world.”
While sales were off, Abercrombie’s income beat estimates, rising 13% to $12.9 million from $11.4 million a year earlier. The company cited an ongoing profit improvement initiative as driving its net income growth.
Abercrombie’s same-store sales in the U.S. fell 8%, while store-sales in the international division plunged 16%. By brand and including direct-to-consumer sales, comparable sales slipped 1% for Abercrombie & Fitch, fell 6% for Abercrombie Kids and dropped 10% for Hollister.
The company said it is making progress in third quarter back-to-school sales.
“In a continued challenging environment, our sales for the second quarter were somewhat below plan, but we have seen modest improvement since the back-to-school floorset,” Jeffries stated. “We are confident that the evolution of our assortment will drive further improvements going forward, in particular as we move past the headwind of adverse likes in our logo business as we work to strategically reduce that element in our assortment.”
Abercrombie anticipates opening a total of 14 full-price international stores throughout the year, including eight Hollister stores and five Abercrombie & Fitch stores.
The company also plans to open approximately eight-to-10 international and U.S. outlet stores during the fiscal year. In addition, the company now expects to close approximately 60 stores in the U.S. during the fiscal year through natural lease expirations.
Destination XL Q2 loss widens; plans 40 new DXL stores
Canton, Mass. – Charges related to the decision by Destination XL Group Inc. to exit the Sears Canada Direct business resulted in the retailer’s net loss growing to $4 million in the second quarter of fiscal 2014, from $1.6 million a year earlier.
Total sales fared better, driven by increased traffic and higher conversion rates, increasing 6% to $103.7 million, compared with $98 million in the second quarter of fiscal 2013.Same-store sales rose 7%.
For the full fiscal year, the retailer anticipates opening 40 additional 5,000-sq.-ft. to 6,000-sq.-ft. DXL stores in select smaller markets and in markets where geographical considerations warrant an additional presence, for a total of 270-300 new DXL stores. Destination XL will also close approximately 40 Casual Male XL and Rochester Clothing stores. The company also expects a continuing net loss, total sales of $413 million to $418 million, and growth in same-store sales.
Gap returning to television with ‘Dress Normal’ campaign
New York — Gap is returning to television. The brand debuted four commercials that will air on TV, in cinema, in stores and online. Created by Academy Award-nominated director David Fincher, the films were created with Wieden+Kennedy New York as part of Gap’s new marketing campaign, Dress Normal. The TV campaign launches in the United States and United Kingdom in the week of Sept. 1.
"We want these films to get people talking,” said Seth Farbman, Gap global chief marketing officer. “Each one features a confident woman at the center and tells a story of how liberating it is when you are being your most authentic self. We believe everyone who watches them will identify with one or more of the characters."
According to Gap, the Dress Normal boldly instructs individuals to shape their own authentic, personal style – and intentionally challenges every one of us to dress for ourselves.
"We were inspired by the bold and honest spirit of the millennial generation; their authenticity is what makes them stand apart in today’s complex world," said Stephen Sunnucks, Gap global president. "Gap has always stood for individuality and being your most authentic self. By challenging the idea of what it means to dress normal, we hope to inspire confidence in everyone’s own personal style."
In addition to television, the campaign spans print, outdoor, mobile, direct, social, in store and digital. Gap has also enhanced its online Styld.by platform with amplified digital and video content and a range of creative influencers, including popular bloggers, style experts, musicians, photographers, filmmakers and artists to curate the best fall looks and illustrate their own version of Dress Normal.
In mid-September, the brand will launch an experiential element to the campaign – the Dress Normal Project – which brings to life what it means to dress normal through the lens of consumers across North America.