Another Red Flag For US Retail: Abercrombie Abandons Sale

Abercrombie & Fitch (NYSE: ANF) has abandoned discussions to sell itself, a decision that caused the struggling clothing retailer’s stock to tumble more than 21% on Monday, closing the day at $9.59. Abercrombie’s shares had spent much of the spring ticking upward amid reports of a possible sale, rising from below $10.50 in early April to above $14 in May.

Sycamore Partners came closest to striking a deal for the company but wouldn’t meet Abercrombie’s valuation demands, per Reuters. Earlier reports had also pegged American Eagle and Express as possible buyers.

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Abercrombie’s inability to find a suitor at its preferred price is yet another sign of decreasing investor appetite for traditional brick-and-mortar retailers, whose businesses have been transformed by the rise of online retailers like Amazon and a shift in the shopping preferences of consumers. In the last year, Amazon has added roughly 35% to its market cap, while mall staples like Abercrombie, American Eagle and Express have all taken nose dives:

For Sycamore, an Abercrombie deal would have continued a busy 2017 in the retail space—unlike most of its PE peers. In February, Sycamore acquired The Limited’s brand and other related intellectual property assets as part of the bankrupt retailer’s ongoing Chapter 11 proceedings. And last month, the firm agreed to acquire office supplies giant Staples for $6.9 billion.

Check out our previous coverage of the retail industry.

Article by Adam Putz, PitchBook