Abercrombie & Fitch to close 60 more stores
- Abercrombie has been trimming its store fleet in malls as more shoppers opt to buy clothes online.
- Roughly one year ago, the retailer rolled out a new store prototype, which has a smaller footprint and a more open layout.
- Abercrombie reported strong sales results for the holiday quarter, fueled by momentum at Hollister.
Abercrombie & Fitch announced Wednesday it will be closing 60 stores later this year.
The teen apparel retailer, which also owns the brand Hollister, has been reconfiguring its store fleet in malls as more shoppers opt to buy clothes online. Last year, it closed nearly 40 stores, having previously planned to shutter 60 locations. In 2016, it closed about 50 shops.
The company has said many of its leases are up for renewal by the end of fiscal 2018, which gives it some flexibility to move out without a fight with landlords. Abercrombie hasn't disclosed exactly which locations will be closing this year, or from which banners (Abercrombie & Fitch or Hollister).
U.S. mall owners have been met with a handful of significant store closure announcements already in 2018, following what was a strong holiday season for many companies.
Best Buy is closing its roughly 250 mobile phone stores, Foot Locker is closing more than 100 stores, while department store chain Bon-Ton filed for bankruptcy and is closing about 40 stores, to name a few. Walking Co., another popular mall tenant, also filed for bankruptcy protection earlier this week and said it's seeking significant rent relief from landlords.
In shuttering some of its stores, though, Abercrombie has been able to invest in upgrading existing locations and roughly one year ago rolled out a new store prototype. Those stores are smaller and more open, with amenities like phone chargers in dressing rooms.
"The [teen apparel] group as a whole, and Abercrombie in particular, has tightened up their inventory, pricing and store/mobile experience," Retail Metrics founder Ken Perkins told CNBC. "Zumiez and American Eagle have generated positive comp increases ... with Abercrombie's Hollister joining the party about a year ago."
To be sure, dwindling mall traffic remains a concern for these apparel companies, "but things have definitely improved from this time last year," Perkins said.
Also Wednesday, Abercrombie reported strong earnings results for the holiday period, sending the stock up more than 12 percent by midday.
Same-store sales were up 9 percent overall for the fourth quarter, surpassing analysts' forecasts for growth of 7.4 percent, according to a Thomson Reuters survey. Same-store sales for the Hollister banner jumped 11 percent.
As part of its turnaround plan, Abercrombie has cut back on what were considered to be immodest campaign ads. The company also has pushed more merchandise without as many flashy logos.
"We continue to improve the customer experience with ongoing investments in loyalty programs, stores, direct-to-consumer and omnichannel capabilities," CEO Fran Horowitz said Wednesday. The company, like its peers within the industry, aims to blend its presence online with bricks and mortar.
Abercrombie shares have climbed more than 30 percent so far this year.