Abercrombie & Fitch To Close 60 Stores As Online Becomes ‘Largest Storefront’

Abercrombie & Fitch To Close 60 Stores As Online Becomes ‘Largest Storefront’

Abercrombie & Fitch Co. will close 60 U.S. stores in 2018 when their leases expire, but the retailer’s Q4 and full year earnings report reveals strong underlying fundamentals. The retailer saw Q4 total comparable sales increase 9%, well ahead of analyst growth forecasts of 7.4%, and full-year comparable sales jumped 3%.

Wall Street has been high on Abercrombie over the past year. Since March 8, 2017, the retailer’s stock has jumped more than 11 points, or approximately 93%. Just since the start of 2018, the stock has risen more than 31%.

The retailer’s namesake brand Abercrombie & Fitch saw Q4 comparable sales increase by 5%, the first quarterly increase in five years, while its other major brand, Hollister, had an 11% boost. Online direct-to-consumer (DTC) sales are becoming the “largest storefront” for the whole company, said CFO Fran Horowitz-Bonadies in an earnings call. DTC sales grew to approximately 34% of total company net sales in Q4, compared to approximately 31% last year. Approximately 70% of online customer traffic comes from a mobile device.

“The DTC investments we’ve made early and continue to build on are paying off, validated by our customers’ high level of mobile engagement,” said Chief Operating Officer Joanne Crevoiserat in the call.

Abercrombie has been reconfiguring its mall-based store fleet as brick-and-mortar traffic declines. The company has closed more than 400 stores since 2010, and 60% of its leases are expiring over the next 10 years. Last year, Abercrombie closed 39 stores, having previously planned to shutter 60 locations. The company also remodeled 35 Hollister stores and seven new A&F prototype stores, which included 16 downsizings of existing stores. In 2016, the company closed 54 shops.

Abercrombie hasn't disclosed exactly which locations will be closing in 2018, or from which banners (Abercrombie & Fitch or Hollister). 

The closings aren’t stopping Abercrombie & Fitch from opening new stores. The company plans to open 21 full-price stores in 2018, including 11 in the U.S. and 10 in international markets.

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