Friday, August 15, 2008

Abercrombie & Fitch Disappoints

Abercrombie & Fitch (ANF) released Q2 results which for a retailer were predictably disappointing. Same store sales are down dramatically and continue to be forecasted as going down. The earnings release mentioned new store openings in other brands and several foreign initiatives such as a new store in Milan. At the same time they are refreshing their existing look and hoping to reverse the sales declines.

The foreign expansion comes late. Almost every industry category has recognized that growth outside of the US is better than growth in the US. Abercrombie & Fitch should have been moving years ago on that kind of insight. They are still testing stores in different markets. No one is saying they have any one foreign market figured out.

The domestic failures coupled with uncertain foreign expansion makes this all a very difficult stock to believe in.