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Abercrombie & Fitch Is Stuck in the 90s

American Eagle, Abercrombie & Fitch, and Aeropostale are in bigger trouble than anyone realizes

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If it seems like your nearby American Eagle Outfitters (AEO), Abercrombie & Fitch (ANF), or Aeropostale (ARO) stores are a little less crowded than they were a couple of years ago, you’re not crazy — they are drawing smaller a crowd.

ANF-stock-AEO-stockContrary to the picture these retailers are painting, however, the fix isn’t just a simple matter of a new season’s fashions or a tweak in the way these shops advertise. These clothing stores are off the mark in several ways, and may be set to struggle no matter how drastically they try to overhaul themselves.

Hurdles Galore

Where does one begin to describe the plethora of problems these teen-apparel retailers are facing? The most apparent one isn’t necessarily the biggest one, but it’s one well worth mentioning: Blatant contempt for its potential customers.

Case in point: Abercrombie & Fitch CEO Michael Jeffries was already pushing his luck on the “creepy” scale, but when a comment he made in an interview way back 2006 resurfaced again last year, somehow it rubbed people the wrong way — and got more attention — the second time around:

“In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don’t alienate anybody, but you don’t excite anybody, either.”

Wow. It’s bad enough that Jeffries said this at all, but it’s even worse that he’s never given the impression that he shouldn’t have said it — even after the uproar. Though most threats of boycotts rarely result in a boycott, his true colors may have caused enough of a stir to keep at least some A&F regulars from visiting since then.

Its second quarter (2013) same-store sales plunged 10% following the comment’s proliferation, and the third quarter’s same store sales were off 14%. A dip that big can’t be solely attributed to a weak market.

Whether it’s fair or not (and it isn’t), American Eagle Outfitters and Aeropostale have been lumped into the same category as Abercrombie & Fitch.

Shoppers are steering clear of them, too, with consumers wondering if the Abercrombie CEO’s vile words were in line with unvoiced thoughts by the folks running things at Aeropostale and American Eagle. Guilt by association is still a powerful force.

That being said, a gaffe isn’t the only thing plaguing these teen-fashion stores.

The details are so ubiquitous they’re tough to nail down but in simplest terms, malls are dying. From 2010 to 2013, the number of visits made to shopping centers during the all-important November/December shopping season basically got cut in half.

Overall retail spending is still decent, but different. The proliferation and mainstreaming of online shopping has hit stores like American Eagle and Aeropostale where it hurts the most. The casual browser isn’t walking past their doors anymore, not even giving the retailers a chance to convert a looker into a buyer.

Without a significant online operation to re-create the potent in-store experience (pulsing music, chipper sales people, and lots of subtle encouragement to buy), these shops just don’t compete as well in the online world.

But even that’s not the biggest reason stores like American Eagle, Abercrombie, and Aeropostale are hitting a wall…

Article printed from InvestorPlace Media,

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