NEW ALBANY, Ohio (AP) — The Abercrombie & Fitch logo has lost the power it once wielded.
Shares of Abercrombie & Fitch Co. tumbled Thursday after reporting weak sales as more teens shop elsewhere.
The company is trying to stock trendier clothing — and it turns out that means stripping off the once-prized Abercrombie logo.
The New Albany, Ohio-based retailer reported that revenue fell 5.8 percent to $890.6 million, short of analyst estimates.
Revenue at stores open at least a year dropped a steep 11 percent, including 8 percent at U.S. stores. The company’s earnings per share beat estimates.
A&F and other traditional teen stores are facing an uphill battle to turn their businesses around as mall traffic drops and shoppers’ tastes change.
A slowly recovering economy is making parents and teens to think twice about splurging on clothes. Expensive standbys like Abercrombie also have lost business to “fast fashion” chains like H&M, known for quickly churning out trendy $9 tops.
Teens are also spending less time at the mall and more time researching and buying on mobile devices. And when they do buy, they’re more likely buying the latest gadget than filling their closets.
Last week, Aeropostale last week reported its seventh consecutive quarterly loss on slumping sales. It also forecast another loss in the current quarter.
At the same time, Aeropostale, based in New York, reinstated Julian Geiger, its former CEO.
Earnings at another competitor, American Eagle, have also declined on weak sales.
Mike Jeffries, A&F’s CEO, said in a statement that the retailer has made progress in stocking trendier clothing and said the progress is “clearly evident” in its back-to-school business.
“In a continuing challenging environment, our sales for the second quarter were somewhat below plan, but we have seen modest improvement since the back-to-school floor set,” he added.
For example, A&F is getting rid of most of its logoed clothing at U.S. stores, because it has fallen out of favor with teens. Jeffries told investors on a call with analysts Thursday that it reduced its logoed clothing by half this fall compared to a year ago.
“In the spring season, we are looking to take the North American logo business to practically nothing,” he added.
A&F said it earned $12.9 million, or 17 cents in its fiscal second quarter. That compares with $11.3 million, or 14 cents per share, a year earlier.
Earnings, adjusted for non-recurring costs, came to 19 cents per share.
The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 10 cents per share.
A&F’s shares fell nearly 6 percent, or $2.57 to $41.43 in late morning trading. American Eagle’s shares fell nearly 2 percent, or 25 cents, to $13.95. And Aeropostale’s shares slipped more than 2 percent or 9 cents, to $4.07 in late morning trading.
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