Financial Analysis : Abercrombie & Fitch

1698 Words Aug 26th, 2015 7 Pages
Despite Abercrombie & Fitch’s efforts to win back loyal consumers with their new rebranding initiative, the company continues to experience a decline in annual revenue and dismal growth coupled with a poor return on investment, making it a risky investment option for potential shareholders. According to the company’s annual report, Abercrombie & Fitch saw a decline in revenue from $4,116.90 billion in February 2014 to $3,744.03 billion in 2015 with fourth-quarter revenues falling nearly 14% to $1.12 billion (Abercrombie & Fitch 41). The company contributed its dismal report to a decrease in the number of operational stores at the end of Q4 fiscal 2014, weak consumer demand for both Hollister and Abercrombie & Fitch, slowing growth in online sales, and “negative currency headwinds” (Forbes Contributor). For the fiscal year, Abercrombie & Fitch reported a 12% decrease in comparable store sales, contributing the negative growth to a decline in foot traffic and lackluster customer responses to rebranding efforts. Similarly, while the retailer was successful in increasing its earnings per share from $2.15 to $2.35 at the end of Q3, Abercrombie & Fitch’s stock tumbled by 15%, thus creating concerns regarding the company’s efforts to rebrand by opting-out of their logo-heavy merchandise and focus on a direct-to-consumer channel of retailing. While financial analysts argue that Abercrombie’s rebranding strategy will help the company make a comeback in the U.S. and increase their…
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