Abercrombie & Fitch Co. Now Plans to Discount

Abercrombie & Fitch Co. recently announced that despite prior pledges not to discount, due to poor quarterly sales, the mall chain has decided to reverse its policy and discount merchandise. Lowering prices to boost sales is an about-face from its previous strategy of keeping prices high through the recession. Abercrombie joins suit with Aeropostle and American Eagle who have already slashed prices, however it may be too little, too late as shoppers have deserted the chain for other teen retailers that have implemented more sales. Abercrombie had argued that while significant price cutting would boost sales it would destroy its high-end image and the company’s pricing power. Abercrombie reported a 24% decline in revenue for the quarter ending May 2, while sales at stores open for more than a year, a key measure of retail health, fell a sharper...

Teen Retailers Struggle in Economy

The teen sector, which has typically been considered immune to economic ups and downs, has been suffering since last year. American Eagle reported weaker than expected same store sales saying that they are working to control discounts. Aeropostale, the big winner of teen retail during the recession, did not meet expectations but still rose 3%. Hot Topic, one of the few retailers on top, posted a 7.1% increase in same-store sales. Buckle was also up. All four retailers are holding the line on expense and margins. Zumiez posted a larger than expected 18% decline, while Abercrombie & Fitch Co saw a 34%...