Abercrombie & Fitch (NYSE: ANF) has crashed 30% in the last month or so. And as ANF stock has crashed, it has prompted some hard questions from retail investors.
ANF stock abandoned discussions to sell itself, a decision that caused the struggling clothing retailer’s stock to tumble more than 21% in a single day alone. 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.
Abercrombie’s inability to find a suitor at its preferred price isn’t just bad for ANF stock holders. Bigger picture, it’s 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.com (NASDAQ:AMZN) 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 (NYSE:AEO) and Express (NYSE:EXPR) have all taken nose dives. And it goes without saying big box department stores like J C Penney Company Inc (NYSE:JCP) and Macy’s Inc (NYSE:M) have also been under pressure in the retail sector.
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.
Article by Adam Putz, PitchBook