Abercrombie & Fitch Co. (NYSE:ANF) has decided demographics is more important than brand loyalty. In a surprising move, the fashion apparel retailer recently announced that it was removing its well-known logos from most of its clothes. This is a radical change for the ailing retailer, who has seen sales drop dramatically over the last couple of years as the younger generation lost interest in the brand.
The apparel retailer said it plans to continue selling its traditional logo-inspired designs in Europe where its conventional designs are still in demand.
Changing tastes of younger buyers
The change in consumer tastes over the last year or so is clearly related to the onset of high-street fashion and retailers such as Zara, Hennes & Mauritz and Forever 21 that offer inexpensive and unmarked designs which reflect the individuality of the wearer.
Younger buyers today are looking for clothing with more original styles instead of big logos that now seem outdated. Unlike a few years ago, young shoppers now prefer spending pocket money on smartphones and tablets rather than high-priced skinny jeans for $75 that could be easily purchased from brands like Forever 21 and H&M for as little as $10.
Abercrombie & Fitch in trouble
Abercrombie & Fitch Co. (NYSE:ANF)’s market value declined 30% this year, and the brand announced the closing of 60 stores because of poor sales. In its second quarter results for fiscal year 2014, the firm reported a 5% drop in total North America sales and a depressing 16% decrease in same store sales in international operations.
Abercrombie had tried aggressive discounting to stem the ride, but that strategy dinged profitability and shrank margins. Gross profit margins slipped 1.8% last quarter, and Cowan & Co. reported that ANF has seen merchandise margins decline by 67% since 2007.
All new Fall 2014 line up
Abercrombie & Fitch Co. (NYSE:ANF) is coming out with an all new line up for Fall 2014. ANF CEO Mike Jeffries recently noted the firm’s new “Back to School” floor set is already producing a boost in sales. The firm is trying to move beyond its traditional brand identity by leaving logos behind and designing new styles reflecting individualism for fall 2014 in North America. Sources say the new line will emphasize floral and printed wear.
ANF is also revamping its shopping experience, and is muting the nightclub atmosphere created by closed windows, dim lights and loud music.