For its next act, Abercrombie & Fitch will likely stick to what it knows best — the teen and contemporary market, according to analysts and financial sources.
While the company has been tight-lipped about what’s in store for its next concept, analysts are betting that it will be the launch of an accessories or intimates brand. “I have heard [speculation] that Abercrombie & Fitch has hired away some talent from Victoria’s Secret,” said Kimberly Greenberger, specialty retail analyst at Citigroup.
The apparel retailer has already done well with intimates and dormwear at Abercrombie & Fitch stores, especially around the holidays. With competing teen retailer American Eagle profiting from its new intimates subbrand aerie, and the possibility of the company extending the line into its own concept, Abercrombie might be looking to get a piece of the action.
“While there is already a market share in this division, with Victoria’s Secret Pink and American Eagle’s aerie, it is a repeat customer who is always buying underwear,” said Christine Chen, senior research analyst at Pacific Growth Equities.
Abercrombie & Fitch’s intimate brand would likely be less feminine than aerie and Pink, especially since chairman and chief executive officer Michael Jeffries is very protective of the masculine heritage of the brand, Greenberger said.
Abercrombie has had extremely successful launches in the past, most prominently with the teen line Hollister. But Wall Street is becoming more speculative about the ability of retailers to penetrate the intimate apparel business.
“I’ve seen many great retailers have mediocre success in breaking into the bra business. It is the most difficult new concept to launch with the lowest success rate,” Greenberger said. “But I’d be more than willing to bet on [Abercrombie to succeed].”
Although it seems an intimates concept is likely, in a third-quarter conference call to Wall Street the company said there’s money to be made in accessories. “The accessory business offers us a huge potential — huge, huge, huge. And I’m just a jerk that I’ve not been able to build more volume in the past, but I’m really on that track now,” Jeffries said.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"