Two short years after unveiling stores at Westfield Doncaster and Westfield Bondi Junction, Abercrombie & Fitch is set to close up shop and return home.
Tumbling sales and a challenging market are being heralded as key reasons for US retailer Abercrombie & Fitch‘s decision to close down its Melbourne and Sydney stores. The brand launched bricks-and-mortar stores into the Australian market back in 2013 at a time when other British and American brands were tapping into the Australian consumer market.
“The performance of Australian stores has been disappointing, even after allowing for the seasonality challenge of operating in the southern hemisphere,” Chief Financial Officer, Joanne Crevoiserat, told analysts. “We therefore decided during the quarter to activate the provision in our leases which enables us to make a country exit and close those stores around end of fiscal 2015.”
The Ohio-based retailer, which operates its namesake brand, AbercrombieKids and Hollister & Co, boasts a network of 1,000 stores globally, with a market capitalisation of $US1.4 billion. However, the brand has struggled to reinvent itself over the past few years in the light of surging international fast-fashion brands like Forever 21, Topshop, Uniqlo, Zara and H&M, who have excelled in entering the Australian market. Disappointing sales and a failure to connect with the Australian consumer has led to a 14 percent decrease in net sales and Abercrombie & Fitch Executive Chairman, Arthur Martinez, confirmed the Australian market was “was even more challenging than expected.”
The brand is facing troubles globally too, with comparative store sales falling 10 percent overall, six percent lower in the US and tumbling 17 percent in international markets. Abercrombie shares have lost more than half their value since August, dropping 15 percent on Wednesday in the US to $US20.27.
It’s hoped that a drive to dial back its logo-centric clothing together with the introduction of new product lines including hand-painted prints, zip jeans and sweater dresses, will restore the brand to its high level of engagement with the teen market it experienced back in the 90s.
As plans wrap up to exit the Australian market, the retailer intends to focus attentions on extending into the Asian market. It plans to open 15 stores in China, Japan and the Middle East this year. It also plans to open 15 new stores in the US, but will also close around 60 stores during the year.
The struggling business has also made the decision to sell its infamous corporate jet, which Abercrombie was forced to value at $US11 million. The jet made headlines three years ago when it was revealed former Chief Executive, Michael Jeffries, had a 47-page rule book governing the attire and behaviour of those who worked as part of his crew. Jeffries was pushed out in December 2014 amid the company’s slumping sales.
Australian consumers who are enamoured with the teen retailer can continue to purchase through its online store with free shipping offered on purchases over US$150, otherwise a standard US$20 delivery fee applies. The Melbourne and Sydney stores will cease operation before the end of fiscal year 2015.