Abercrombie & Fitch, a brand long been known for its clubby, cologne-drenched stores and shirtless male models with six-pack abs, wants to be a place for kids, too.
The owner of namesake and Hollister stores, which is working to regain its cool, has been testing Abercrombie kids "carve-outs" in at least 10 locations, first mentioning the plan in a May earnings call. The retailer updated Wall Street on the strategy today in an otherwise bleak earnings report, noting that while the kids business is faring well in these stores, the adult part of the store is missing the mark.
"We are not producing the volume that we need to be in the reduced square footage in the adult store," Abercrombie Chief Executive Officer Mike Jeffries said on today's earnings call. "So we have a big group of people...looking at this, how can we be more productive in the adult space? How can we merchandise that store more intensely? We practically eliminated clearance. That's not helped us, but we are dedicated to make this work because we think the kids' business in this carve-out strategy makes a huge amount of sense."
At first glance, there seems to be a sense of impropriety by inviting children into stores that have historically been dripping with sexual imagery. But scanning Abercrombie & Fitch's Instagram and Facebook accounts, the company appears to be pursuing a decidedly more wholesome presence than the soft-core porn aesthetic that defined the brand in the early 2000s. While investor presentations once regularly featured black-and-white pictures of six-packs and teenagers making out, the company has eliminated such provocative imagery from more recent slides. There isn't a shirtless male model to be found on the first few pages of Abercrombie pictures on Facebook or Instagram.
Critics don't necessarily agree with kids store carve-outs, especially given Abercrombie's new goal of targeting college kids, who may not want to shop in the same space as 12-year-olds and their parents. While it's a smart real-estate move to consolidate the two brands, one employee tells BuzzFeed News that it's unclear whether it's a good fit given what Abercrombie & Fitch aspires to be. An Abercrombie spokeswoman wouldn't offer additional details on the carve-outs.
"To some extent, it's a way to maximize short-term sales, but I think it risks further blurring the Abercrombie brand," said Allen Adamson, chairman of the North America division for brand consultancy Landor Associates in New York.
Abercrombie's chief operating officer noted in June that the company wants to move the namesake brand's demographic "back up," after consumer research showed its labels were skewing younger than intended. Over time, he noted, Abercrombie's marketing would be directed towards the interests of college-age customers.
"If high school kids were blurring the edginess or making it not cool for college kids to wear Abercrombie, offering clothes in stores for 10-year-olds will make it worse," Adamson said. "Abercrombie is already struggling to keep the edge and keep themselves cool and hot and trendy. As you broaden that, and add kids into the mix, it makes it very hard for customers."
At the same time, Abercrombie is a pricey enough brand that it's often parents who are purchasing the garments for teenagers, which makes this a good strategy, says Lee Peterson, executive vice president of brand strategy and design for WD Partners in Columbus, Ohio.
"It's a lot like Gatorade, where the buyer is the mom and the user is the kid playing soccer," he said. "So, the buyers will get a good look at children's or Abercrombie kids stuff."
The Abercrombie kids brand, typically lower-cased, is described as "the essence of privilege and prestigious East Coast prep schools," with "the perfect combination of maturity and mischief," in corporate filings. "With an energetic attitude, abercrombie kids are popular, wholesome and athletic" and "aspire to be like their older sibling, Abercrombie & Fitch," the brand description reads.
Generally, Abercrombie continues to struggle despite its turnaround efforts, with comparable sales falling 7% so far this year. It's also posting lower profits for each item sold. Hollister, in particular, is performing worse than Abercrombie. The company is continuing to cut back on logo product, even carrying a cheeky "Insert Logo Here" t-shirt on its website that shows just how far Abercrombie has come from the days when its brand name was worn as a badge of "cool" in America's high schools.
Analyst Eric Beder of Wunderlich Securities sent a note about Abercrombie to clients today titled "A Teen Giant Has Fallen," highlighting the grim investor sentiment surrounding a brand that once reigned king of the mall.
Future initiatives planned for the company "are already reaching a point where there are legitimate worries that it is too little, too late," he wrote. "The glory days of Abercrombie are long gone and the once teen giant has fallen (and can not seem to get up.) We are unsure when it will be able to rise again."
