Abercrombie May Cut US Stores

NEW ALBANY, OH-With more than 270 leases up for renewal through 2011, Abercrombie & Fitch Co. may cut back some of its stores, most probably in its namesake brand, executives said at the company’s second quarter conference call.

Now a mature business in the United States with the exception of Gilly Hicks, the company will take the rest of the year to review the number of stores in each of its brands, said Jonathan Ramsden, executive VP and CFO.

“We don’t have a specific number at this point,” Ramsden said. “If there is a contraction, it will likely be more toward the A&F brand than the other brands.” There are no future opportunities for flagships in the United States, Jeffries added.

International growth will be the driver for future growth, Jeffries said. The company still plans to open 10 mall-based stores in fiscal 2009, including one abercrombie store in Canada and seven Hollisters in the United Kingdom. One Hollister mall-based store in Germany and one in Italy also are planned. Domestically, the company plans to open two abercrombie stores, four Hollister stores, one Gilly Hicks store and two outlet stores in fiscal 2009.

“We plan to accelerate the opening of international Hollister stores in 2010 and 2011,” said Mike Jeffries, CEO and chairman.

For the quarter, company net sales decreased 23% from the second quarter of 2008 to $648.5 million. Corporate comparable-store sales decreased 30%, with Abercrombie & Fitch stores declining 27%, abercrombie stores declining 29%, Hollister dropping 33% and Ruehl 31%. The company posted a net loss of $26.7 million compared to net income of $77.8 million in the year-ago quarter.

At quarter end, Abercrombie & Fitch operated 350 namesake stores, 210 abercrombie stores, 510 Hollister Co. stores, 29 RUEHL stores–to close by year end–and 16 Gilly Hicks stores in the United States. The Company also operated three Abercrombie & Fitch stores, three abercrombie stores and five Hollister Co. stores in Canada, and one Abercrombie & Fitch store and five Hollister Co. stores in the United Kingdom.