While Fran Horowitz declined to comment about the status of Abercrombie & Fitch Co.’s process to sell itself, she did say about its turnaround efforts, “We are making progress across the business as a whole.”
Horowitz, Abercrombie’s president and chief executive officer, was speaking at a company presentation hosted by Jefferies Equity Research in Nantucket on Tuesday.
About two weeks after first bids were due, some investors are starting to get nervous that the process has stalled, given its lackluster first-quarter earnings report. Further, sources told WWD that sales have continued to slide during the second quarter, which could have a slight chill on the per share purchase price Abercrombie might be seeking.
Before Horowitz spoke, the company’s chief financial officer Joanne Crevoiserat noted the company has made progress on the comp sales trends over the last couple of quarters, but that it still expects comp sales to “remain challenging in the second quarter, with trend improvement expected in the second half of the year” as the firm’s strategic investments gain traction.
As for the core Abercrombie brand, Horowitz said there’s still work to be done and that the company is “making progress and the foundation for its revitalization are being put in place. With strong leadership and the brand’s new positioning work complete, we are optimistic about the prospects for the storied brand.”
As for its younger teen sibling, Horowitz said, “Hollister continues to perform and demonstrate the potential for our brand when brand voice, product and experience are aligned and attuned to our customer.”
The ceo said the “key to our success is meeting our customers whenever, wherever and however they choose to engage with our brands. That means omnichannel must truly be seamless and frictionless, allowing customers to start in one medium, migrate to another and engage with the brand and complete the sale across platforms and locations.”
The company has said, and Horowitz reiterated during her presentation, that the team saw a fundamental shift in retail, one that led them early to invest in building its direct-to consumer infrastructure. She said the investments are paying off with direct to consumer now accounting for 27 percent of sales, up from 24 percent a year ago.
In a slide presentation, the company emphasized that it now has a full omnichannel offering — purchase online and pickup in-store; reserve in-store; order in-store; online and in-store returns, and shared cart between mobile and desktop — in the U.S., Canada and the U.K. Horowitz said omnichannel capability would be rolled out internationally in 2017.
She also noted loyalty programs have been an important consumer touch point. Hollister’s Club Cali loyalty program adds 250,000 members a month, and ended the first quarter with more than 5.7 million members. The ANF Club had a strong rollout in the first quarter, ending the period with 1.7 million users signed on, she said.
The company is on track to see at least $100 million in cost savings, with 65 percent of the reduction to occur in the second half of the year. That’s the same period that the company believes it will see “trend improvement” in comparable sales.It will see about half of its store leases expiring in 2018.
Shortly after the presentation, Jefferies analyst Randal J. Konik issued a research note with a “Hold” rating on shares of Abercrombie, noting that management was taking the right steps to reinvigorate sales, but could see its initiatives “muted by the tough environment.”
Shares of Abercrombie slipped 3 percent to $12.21, on a day when many retail and apparel stocks lost ground as they digested the impact from Amazon’s new “try at home before you buy” program.