After a one-month “strategic review,” Abercrombie & Fitch decided to shutter its 29-door Ruehl unit and amend its credit agreement, giving the firm an additional financial cushion as it winds the business down this year.
Ruehl had pretax operating losses of about $58 million last year and was deemed to be less promising than the company’s overseas expansion.
“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,” said Mike Jeffries, Abercrombie’s chairman and chief executive officer.
Abercrombie registered a $51 million pretax impairment charge in the first quarter as it conducted a strategic review of the business. The firm expects another $65 million in charges related to Ruehl, covering lease-related charges, severance and other items.
The company tweaked its credit agreement so that most of the charges for Ruehl are excluded from minimum coverage and maximum leverage ratios.
For complete coverage, see Thursday’s WWD.