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Gap and Abercrombie & Fitch slump on unhappy holidays | Gap and Abercrombie & Fitch slump on unhappy holidays |
(about 4 hours later) | |
Shares in two of America's largest clothing retailers plunged on Friday following disappointing third quarter sales and a downbeat forecast for the crucial holiday shopping season. | Shares in two of America's largest clothing retailers plunged on Friday following disappointing third quarter sales and a downbeat forecast for the crucial holiday shopping season. |
Gap shares sank by 13.1% after a seventh consecutive quarter of falling revenue and warned that fewer people were visiting stores. | Gap shares sank by 13.1% after a seventh consecutive quarter of falling revenue and warned that fewer people were visiting stores. |
Abercrombie & Fitch's stock fell 13.9% on poor sales and a weak outlook. | |
Both have been attempting to revitalise their brands, with limited success. | Both have been attempting to revitalise their brands, with limited success. |
Neil Saunders, chief executive of Conlumino, the retail research company, pinned the blame for Abercrombie & Fitch's poor figures on a failure to communicate with customers about the changes it has made to its fashion lines. | Neil Saunders, chief executive of Conlumino, the retail research company, pinned the blame for Abercrombie & Fitch's poor figures on a failure to communicate with customers about the changes it has made to its fashion lines. |
Once known for its picture-perfect models and sales assistants, as well as Abercrombie & Fitch monogrammed garments, the retailer has shifted "towards a more inclusive and gentler approach with an emphasis on stylish, quality clothing", said Mr Saunders. | Once known for its picture-perfect models and sales assistants, as well as Abercrombie & Fitch monogrammed garments, the retailer has shifted "towards a more inclusive and gentler approach with an emphasis on stylish, quality clothing", said Mr Saunders. |
However, a "confusing" marketing campaign, poor foot traffic at both its flagship and mall-situated shops and warmer weather resulted a 6% fall in third quarter sales to $821.7m and an 80% slump in profit to $7.9m. | However, a "confusing" marketing campaign, poor foot traffic at both its flagship and mall-situated shops and warmer weather resulted a 6% fall in third quarter sales to $821.7m and an 80% slump in profit to $7.9m. |
Abercrombie & Fitch said it expects business to remain challenging for the rest of the year, which includes Black Friday, the post-Thanksgiving Day shopping jamboree, as well as Christmas and the New Year. | Abercrombie & Fitch said it expects business to remain challenging for the rest of the year, which includes Black Friday, the post-Thanksgiving Day shopping jamboree, as well as Christmas and the New Year. |
'Challenging' | 'Challenging' |
Gap also said that footfall was down in the current quarter covering the holiday period and said that it would shut 65 stores this year compared to a previous forecast of 50 closures. | Gap also said that footfall was down in the current quarter covering the holiday period and said that it would shut 65 stores this year compared to a previous forecast of 50 closures. |
The retailer announced in October that it was closing all its Banana Republic outlets in the UK to focus on its North American business. | The retailer announced in October that it was closing all its Banana Republic outlets in the UK to focus on its North American business. |
For the third quarter, sales fell by 2% and profit dipped to $204m. While its Old Navy brand thrived with revenue up 3%, sales at Gap Global and Banana Republic both fell by 8%. | For the third quarter, sales fell by 2% and profit dipped to $204m. While its Old Navy brand thrived with revenue up 3%, sales at Gap Global and Banana Republic both fell by 8%. |
The management at Gap, under chief executive Art Peck, has been struggling to stop a continuing slide in turnover. | The management at Gap, under chief executive Art Peck, has been struggling to stop a continuing slide in turnover. |
Mr Peck said: "The retail environment and the apparel environment continues to be challenging. Traffic remains challenging and, as a planning assumption, we believe that will carry forward as well." | Mr Peck said: "The retail environment and the apparel environment continues to be challenging. Traffic remains challenging and, as a planning assumption, we believe that will carry forward as well." |
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