Seventy-eight pounds for a hoodie? Bugger off!
That appears to be what Abercrombie & Fitch heard during the third quarter as shares plunged 20 percent yesterday after the pricey preppy retailer admitted shoppers in London and across Europe have been balking at its stratospheric markups on jeans, polo shirts and underwear.
The news was a shock to investors, who took it as a signal that European consumers are pulling back on jitters about Greek debt,
Abercrombie shares tumbled $14.75 to close at $59.26 — their worst one-day drop since the financial crisis in late 2008.
On Abercrombie’s UK Web site yesterday, the retailer was advertising sweatpants, beach shorts and puffer jackets for 30 to 60 percent off.
The poor results are an embarrassment for CEO Mike Jeffries, who has bet on the retailer’s international divisions to be key growth engines since US malls are already saturated with Abercrombie shops.
In August, Jeffries had boasted to analysts that the European stores had “strong momentum” and that he was “pleased” with their performance.
“Abercrombie registered results that put their entire international growth story in question,” Eric Beder, an analyst at Brean Murray Carret & Co. , said yesterday.
Comparable sales dropped at Abercrombie’s swanky flagship stores in London and Milan, while the company’s lower-priced Hollister stores posted a modest gain across Europe, the company said yesterday. Sales fell at stores in Canada and Japan. Quarterly sales for US stores were up 14 percent.
“Apparently, A&F materially raised prices in the (European) flagships around Labor Day and they may have gone too far,” said Stacy Pak, an analyst at Barclays Capital.
Abercrombie’s results were among the most disappointing as retailers reported October comparable sales — or sales at stores open at least one year.
Collectively, major chains reported a 3.7 percent increase — a gain that nevertheless fell short of the 5.5-percent rise seen a month earlier, according to the International Council of Shopping Centers.
Macy’s was among the chains that missed expectations, with CEO Terry Lundgren partly blaming the snowstorm last weekend, which kept shoppers away from its department stores.
Upscale stores also missed forecasts, with Saks posting a 1.8-percent increase, well short of the 5.4-percent gain Wall Street had expected.