Abercrombie drops large logos from its US clothes

Abercrombie & Fitch is finally shedding its traditional logo-focused apparel, clothes that made the brand one of the most sought after among teens in the past two decades.

The company's preppy t-shirts and sweatshirts have fallen out of favor with students who are more inclined to spend their allowances on cheaper and trendier clothes offered by chains such as Forever 21, Inditex's Zara and H&M.

Abercrombie shares fell as much as 8.5 percent on Thursday, after it reported its tenth straight decline in quarterly same-store sales.

A customer carries an Abercrombie & Fitch shopping bag from a store in New York.
Scott Eells | Bloomberg | Getty Images

"In the spring season we are looking to take the North American logo business to practically nothing," Chief Executive Mike Jeffries said on a call.

Abercrombie is trying to revamp its image after Jeffries stirred controversy last year by suggesting the company's clothes were made for "cool" and "attractive" kids and not for "fat" people.

The company has since expanded its merchandise to include larger sizes for women. It has also doubled down on more fashionable clothing and slashed prices to win back teen customers who have cut back spending in a tepid job market.

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Still Abercrombie's clothes are costlier than those sold by fast fashion rivals, which have shrunk the runway-to-shelf turnover time to about two weeks.

While a pair of women's skinny jeans from Abercrombie would set a shopper back by about $75, the same could cost less than $10 at Forever 21 or H&M, according to company websites.

Abercrombie's Jeffries the worst CEO?
Abercrombie's Jeffries the worst CEO?

Phasing out logo-centric clothes "is a good strategy and consistent in where consumer interest lies but it is not going to be enough to entirely turn sales," Macquarie Research analyst Liz Dunn told Reuters.

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Abercrombie's same-store sales declined 7 percent in the second quarter ended August 2—more than the 4.1 percent dip expected by analysts polled by research firm Consensus Metrix.

Same-store sales in the United States—the company's biggest market—dipped 5 percent, dragged down by weak demand at its largest chain, Hollister.

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International comparable sales slid 9 percent. Abercrombie will continue to sell its logo-focused apparel at international stores, said Jeffries who had strongly defended the logo-centric culture up to late last year.

The CEO for the past 16 years has faced heavy criticism for Abercrombie's recent dismal performance, and was stripped of his chairman title earlier this year.

Net sales decreased 6 percent to $890.6 million. Excluding items, the company earned 19 cents per share.

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Analysts on average had expected a profit of 11 cents per share on sales of $909.2 million, according to Thomson Reuters I/B/E/S.

Abercrombie shares were last down about 4 percent on the New York Stock Exchange in afternoon trading. Shares had gained 34 percent year-to-date up to Wednesday's close.

—By Reuters