"It has been a difficult decision to close RUEHL, a brand we continue to believe could have been successful in different circumstances. However, given the current economic environment, we believe it is in the best interests of the company to focus its efforts and resources on the growth opportunities afforded by our other brands, particularly internationally," says Mike Jeffries, CEO and chairman of the board. "While I am disappointed with the ultimate outcome, I am grateful for the effort and commitment the RUEHL team has shown in developing and positioning that brand in the marketplace. In particular, the recent strides made in differentiating and elevating the RUEHL assortment make this an especially difficult decision."

For the fiscal year that completed at the end of January, RUEHL reported a pre-tax operating loss of $58 million. This total includes a $22 million non-cash impairment charge.

The strategic review of RUEHL lead to $51 million in non-cash, pre-tax impairment charges during Q1. Company officials expect to incur an additional $65 million in pre-tax charges from shuttering the arm.

Simultaneous to this announcement, Abercrombie & Fitch has corrected the existing credit agreement in order to exclude the $65 million charges associated with the RUEHL shuttering.

"We are confident that the Company will continue to generate sufficient cash from operations to fund its liquidity needs," Jeffries says. "However, in light of the one-time costs associated with exiting RUEHL and the current uncertain economic conditions, we believe it is prudent to make these changes to give us significant cushion in our debt covenants."

In the US,tThe company owns 350 Abercrombie & Fitch stores, 210 Abercrombie locations, 507 Hollister Co. sites, 29 RUEHL stores and 16 Gilly Hicks locations.

Instant Insights /

Abercrombie & Fitch To Shutter RUEHL Arm

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