American retailer Abercrombie & Fitch Co recently reported relatively low sales numbers for the first quarter of the year, sending its shares further downward.
The struggle of retailers across the nation continues as more companies report faltering numbers amidst the ongoing trade battle between the United States and China. The Ohio-based lifestyle retailer continues to show signs of its downward trend as well with its announcement of the planned closure of three of its flagship stores.
In its latest earnings report, Abercrombie & Fitch revealed an increase in its same-store sales of 1 percent. This was below analysts' forecast of 1.4 percent for the quarter. The company's net sales have grown slightly from the $730.9 million it earned in 2017 to $734 million last year.
The firm had experienced positive sales number from its offshoot brand Hollister Co, with sales up by 2 percent. Abercrombie & Fitch shares have risen by 25 percent since the start of the year, but stocks have declined by 1 percent overall in the last 12 months.
As part of its new strategy to bolster its growth and fight its downward trend, Abercrombie & Fitch announced that it would be closing three more of its large flagship retail locations.
According to the company's CEO, Fran Horowitz, the firm has learned that its customers are apparently much more attracted to their smaller locations as opposed to their sprawling spaces. The smaller stores have been found to be more intimate and customers are enticed by closer one-on-one interactions with its store's staff members.
The flagship stores that will soon be closed are the firm's Hollister store in New York, its Abercrombie store in Japan, and another one in Milan. Horowitz explained that these types of stores are simply not getting the needed response from customers.
The move will, of course, save the company a significant amount in operating costs. The money it will save will be needed for the firm's new plan of action. Abercrombie & Fitch is reportedly planning to redesign more than 85 of its stores this year as part of its strategy to shift to smaller locations. The redesign will involve scaling down larger locations and opening up smaller ones nearby larger stores they have already closed down.
Abercrombie & Fitch is also testing out pop-up shops, which it already established inside the Roosevelt Field Mall in New York. The strategy will likely result in the company operating more stores than it had started with but with a much smaller square footage overall. Horowitz explained that the smaller stores are actually bringing in the same sales as larger stores, which means that it will be a profitable move for the company.
