Abercrombie & Fitch Company AANF

Morningstar Rating

Stock Research and Analysis

by Zoe Tan

Abercrombie & Fitch's 20%-30% same-store sales declines over the past several quarters have been among the worst in the retail industry, suggesting that consumers haven't been willing to pay a premium for its merchandise during the recession. However, Read more

Bulls Say

Abercrombie & Fitch has differentiated itself by establishing an aspirational brand name among status-conscious youth through an upscale positioning of its apparel.

While A&F has struggled during the economic downturn, we think the firm will benefit from teens trading back up as consumer spending improves.

International expansions into Europe and Asia represent a huge opportunity for A&F, which could translate to more than $1 billion in revenues, if successful. Read more

Bears Say

A&F's premium pricing strategy is particularly risky during economic downturns, when consumers tend to favor lower-priced apparel.

Marketing fashions, especially to teens, is a tough business. Although we think A&F has a small long-term competitive advantage, merchandising missteps could put the brand out of favor with its core customer base.

We believe the namesake A&F and Hollister concepts have little room for growth in the U.S. In 2009, the firm decided to close down its third concept, Ruehl--a sign that the firm has saturated the domestic market. Read more

Strategy

Abercrombie & Fitch strives to remain on the cutting edge of fashion trends for young women and men and has historically used racy advertising to appeal to this group. The retailer's popularity enables Read more

Management

Chairman and CEO Michael Jeffries is credited with building Abercrombie & Fitch into the dominant youth apparel retailer it is today. His service was rewarded in 2008 with a generous retention agreement that guarantees his employment at the firm Read more

Profile

Abercrombie & Fitch's namesake chain sells casual apparel for young women and men in the 18-22 age range. In addition, the firm operates a younger teens concept Hollister, Read more

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