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Hollister Abercrombie and Fitch

Abercrombie & Fitch still hasn’t nailed its revamped brand direction as sales slide

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By Natalie Mortimer, N/A

August 27, 2015 | 4 min read

Despite increasing its marketing spend by $8m in Q2, American fashion brand Abercrombie & Fitch has failed to halt sliding sales in its latest quarter.

The struggling brand, which also owns fashion retailer Hollister, saw marketing, general and administrative expense for the second quarter reach $119.8m, up from $111m in 2014. Despite the increased marketing spend, sales in the the three months to 1 August dropped by 8 per cent year-on-year to $818m.

Speaking on a call yesterday (26 August) with investors Arthur C. Martinez, executive chairman at Abercrombie & Fitch said that while the results “encourage us that we're on the right track” the brand still has “much to achieve”.

“An important part of our longer term planning and thinking is the establishment of very clear brand positioning that will guide all elements of our business. That work is also underway and we will have much more to say about that as we go forward,” he said.

Ambercrombie & Fitch last year said it would ditch its well-known logo from much of its clothing in a bid to compete with the likes of design-led fast fashion brands such as H&M and Forever 21. However, the removal of its most famous asset contributed to the 7 per cent sales decline in the quarter, although “somewhat less than expected” the brand’s chief financial officer and executive VP Joanne C. Crevoiserat maintained.

“Moving forward, we expect that logo will no longer be a headwind and we will view and manage logo just like any other part of our assortment”.

The crux of Abercrombie & Fitch’s brand positioning will be formed around its American heritage – it was founded in 1892 – something it will look to leverage going forward in its marketing and advertising including for sister brand Hollister.

“They [marketing and advertising] play a very important role and everything has to be synced up simultaneously and at the same time,” commented Hollister brand president Fran Horowitz-Bonadies. “So, when we have more colour on exactly where we think the positioning will be, we'll align all of those components together.

“What we do feel is that the positioning is evolving. Kids are playing a very important role in that positioning. So we do find that when we link kids either on the website to adults or kids in the store, then we are reaching new customers. So, it's our job to make sure we satisfy the existing customer base with our brand positioning, but also be in a position where we can attract new customers. So that's part of the thought process as well”.

Abercrombie & Fitch has been plagued by claims it allegedly used discriminatory hiring practises. Until April, front-of-store workers were called ‘models’ and were hired largely in part to their physical appearances, citing its ‘look policy.’

In 2004, the brand settled in a class-action lawsuit which claimed it mainly offered ‘model’ positions to white males and often discriminated against African Americans, Latinos, Asian Americans, and women.

Hollister Abercrombie and Fitch

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