If there was ever a sign that the shopping mall is dying this is it: Abercrombie & Fitch has just announced it will close yet another 60 this fiscal year.
Now, that alone is not necessarily a sign of a massive consumer retail paradigm shift. But there is more to this equation. Abercrombie & Fitch has closed several hundred stores through the past five years; more importantly, every time the company closes a set of stores, the remaining stores perform much better.
Last year the company closed 53 locations and at least half of the company’s remaining 700 (or so) stores have leases that will expire in 2018; leases the company simply may not renew.
“We haven’t been shy about [closing stores],” explains Abercrombe & Fitch CFO Joanne Crevoiserat, in an earnings call, Thursday.
Same store sales for Abercrombie & Fitch fell 5 percent in the fourth fiscal quarter with a focused weakness on the brand’s label. The dip is better, actually, than the preceding three month period but trends continue to decelerate from the first half of the year.
Store closures, of course, is often an effective way to boost productivity for any retailer but this typically does not assist a company in recapturing the sales it is giving up. Surely, Abercrombie is no different from any retailer dealing with similar issues in this very tumultuous time. Of course, the once-popular teen retailer has commented it is now testing changes in marketing strategy to reduce the effects of the losses incurred from said store closures.
Now, unlike some other traditional retailers, Abercrombie has been somewhat successful in making the online transition. Yes, the store that used to rely on live models wearing their jeans (and often very little else, if anything at all) has been able to carve out a decent online niche to the point that the company now does roughly one-third of its business on the web, a decent bump from 28 percent last year.
And Crevoiserat explains, “That’s really still unfolding,” even as physical stores continue to be a “very important part of the story.”
But while even the most successful brick-and-mortar big box stores like Macy’s and JC Penney shuttering up stores, that story is definitely yet to be written.