Abercrombie Admits to Missing the Mark

Abercrombie admits to not staying current with young women’s trends. In a conference call to investors on Thursday, May 14th, Abercrombie reported same-store sales fell 24% and 34% for their older-shopper stores, Ruehl. Abercombie admitted that they are re-strategizing Ruehl, 29 stores that were intended to expand their demographic reach outside of youth culture markets with Abercombie and Hollister.

Abercombie also reported a loss as of May 2 of $26.8 million. This is a sharp change from their $62.1 million profit last year in the same time period.

“The consumer is reluctant to spend on premium brands,” said Chairman and Chief Executive Mike Jeffries during a conference call with investors. “There is a price consciousness dictating shoppers%uFFFD purchases today, unlike anything I have seen before.”

Sales also suffered, he said, because the company failed to anticipate some key women%uFFFDs fashion trends.

“Clearly we missed dresses and clearly we weren%uFFFDt as aggressive with print and pattern as we should have been,” Jeffries said. “We were wrong. I was wrong, and we%uFFFDre correcting as we go forward.”

Dresses will be delivered to the company%uFFFDs stores “aggressively” during the current quarter, he said.

Nike Lay-offs

Nike announced Thursday, May 14, that it will lay off 1,750 employees worldwide including 500 in its Beaverton, OR headquarters, to save Nike an estimated $225 million. This is 5% of its 35,000 workforce. The cutbacks are more than what the company estimated in their February plans for restructuring.

According to a letter Nike sent to state dislocated workers unit, some of the layoffs started April 3. The layoffs should be completed by May 31.

“We remain a growth company and we know these changes have created a stronger organization that will enable us to invest in our most significant opportunities,” said Mark Parker, Nike president and chief executive officer. “However, the decision to reduce our workforce has been a difficult and challenging one as it affects our colleagues, teammates and friends.”

Some analysts predict that the estimated $225 million savings will be used towards helping Nike to grow more effectively in China.

To see where Nike, Abercrombie, and Hollister fare among 13-25-year-olds in North America, contact us about our North American Youth Culture Study 2009. Trends, charts, graphs, and analysis from Label Networks’ primary data quantify how the brands and stores have tracked in youth consumer preferences and where the competition now lies.