Abercombie & Fitch is taking care of business at home and abroad!

Implications: Abercombie & Fitch (ANF)  has worked hard  in developing their stable of brands and now is going to go global. While their competition tends to cater to a wider demographic ANF targets their customer and has created a very loyal following. Utilizing their merchandising prowess they have developed into a life style brand that caters to children, tweens, teenagers and young adults. The four concepts, abercrombie, Hollister, A&F and Ruehl give their target consumer aspirational assortments from ages 3 to 35. Unlike Gap, they know their consumer and do not try to be everything to everybody.

Analysis:  

-ANF under the stewardship of Michael Jeffries has built a business that is aspirational facilitated by trend right merchandise with a premium pricing strategy. One would be hard pressed to find a sale sign in any of the stores. ANF has taken the high road and travel is not cheap. The company is constantly upgrading and remodeling existing stores with high staffing levels resulting in a heavy SG&A. This erodes margin but allows ANF to run a premium business at the same margins as their strongest competitors. (AEOS)

-ANF runs a very clean assortment with a keen control on inventory management. This mitigates the heavy end of season markdowns that erode their competitions margins.

-With the expansion globally, the major success of Hollister (600 doors by FY’10) and the emerging Ruehl brand, ANF is positioning them selves as the dominant player in their category.

-The company needs to expand their presence and sales in the direct channels of distribution. Although the company seems to want to “keep above the fray”, they need to market themselves on the internet in their own unique way as this channel is clearly the future of retail and margin growth.