Abercrombie non molla

Da FT Alphaville

"How important is brand image in these economically-tough times?

Abercrombie & Fitch, purveyor of $138 hoodies to US teens and Savile Row shoppers with more money than sense, is refusing to go on sale — even after its third-quarter profit plunged 46 per cent.

The 116-year-old retailer, which had said it wouldn’t lower prices to lure shoppers in order to protect its brand image, expects steeper declines. The drop in sales at stores open at least a year will accelerate to 26 percent in the fourth quarter, from 14 percent in the previous three-month period, it said. Abercrombie’s offerings include $90 jeans and $140 girls’ coats.

‘Without promotions, we fear November will be even worse,’ Adrienne Tennant, an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Virginia, wrote in a Nov. 11 research note. ‘At this time, we do not expect the company to break with its non- promotional stance.’ She recommends buying the shares.

Market reaction to the strategy: shares down 21 per cent to $17.79 on Friday.

Contrast that to 2007 when the stock was trading at something like $80. Since then, there’s arguably been market-over-saturation from the likes of American Eagle and Aeropostale (both at lower price points than Abercrombie) and the company may well be cannibalising from its core A&F sales with younger and slightly cheaper offshoot, Hollister. But, despite price cuts by higher-end retailers like Chanel and Dolce & Gabbana, Abercrombie is refusing to budge on the sales front. All-American hubris, anyone?

We’d argue that Abercrombie is sitting at the crux of the recessionary trade up or trade down consumer debate — a discussion ranging from retailers to airlines. Will customers be saving their money for something of higher quality (presumeably indicated by the higher price) or switching to cheaper products? Or perhaps just not buying at all?

And just for emphasis, here is a trademark bare-chested Abercrombie male model sitting next to what is either a lamp or a tin hat. Based on that fourth-quarter sales outlook, we would think it’s the latter".