Abercrombie & Fitch ($ANF) was the clothing retailer in the mid ’90s to the early ’00s. Millions of teenagers and image-conscious twenty-somethings dropped hundreds of dollars at the mall just to buy an Abercrombie sweater vest or a pair of shorts with the company’s logo. If you just wanted to take home the company’s catalog/magazine, you would still have to fork over $6 an issue.
Sadly, Abercrombie isn’t doing so hot these days. In recent months, the Ohio-based company closed 60 stores and gave hundreds of corporate workers the boot. They still operate hundreds of stores, including over 700 American locations and about 189 overseas. Many of these stores are located in malls, which are doing particularly terrible as more people stay home and shop online. There’s also the fact that, like TRL and flip phones, Abercrombie is no longer a cool, must-have item in the eyes of its young demographic.
So, how is a publicly traded company like Abercrombie supposed to compete in a dying retail world? By selling themselves to the highest bidder.
Abercrombie might be looking for a new owner.
According to Reuters, the not-so-hip apparel brand could be looking for a buyout. This could mean finding a competitor to take over their stores and brand. It could also mean someone else in the retail and/or apparel space that doesn’t directly compete with Abercrombie taking over the company to diversify their product offerings. Though it’s not confirmed that the company is looking for owners, they’ve allegedly hired an investment bank to help them find a new home.
It’s hard to compete with cheap and easy.
Abercrombie is living in an Amazon and H&M world, and they barely know how to survive. Young shoppers are flocking more towards cheap, stylish “fast fashion” stores like H&M, Uniqlo, and Forever 21. It’s in these stores where consumers can buy fashionable clothes for a fraction of the cost of an Abercrombie item. Many shoppers are also turning to Amazon for clothing purchases, where fast, free shipping and easy returns easily outweigh the inconvenience of schlepping to a mall.
The fashion chain does have an online storefront, and tried in recent years to remain competitive with hipper, cheaper companies. At the same time, they’re still a brand seen these days as more of a nostalgic throwback than a trendsetter.
Abercrombie’s stock was at a 17 year low.
Abercrombie’s stock kept falling for years before last night’s speculative report. In the last ten years alone, the company’s stock dropped by 84.19%. In the last year, $ANF is down 46.89%. It’s worth noting that the company’s stock is up 11.13% this year so far (and up 5.37% as of this writing). This is entirely due to the rumors of possible acquisition talks, which would greatly benefit shareholders and increase the value of their stock.
Should you invest in Abercrombie?
The company is currently near record lows. At the same time, their stock will likely increase if they get a decent buyout offer from a savvy competitor. The company could get acquired for more than they’re currently worth, which means new investors would make sweet gains when the acquisition goes through.
If you think this is likely to happen, do your research before you consider investing. If you’re like most other teens and think Abercrombie is beyond saving, you might want to look elsewhere.