Abercrombie & Fitch (NYSE: ANF) is preparing to give its Hollister stores a makeover. The company, which has been struggling to maintain sales for years, wants to rebrand Hollister as a fast-fashion brand that will enable it to better compete against the likes of H&M, Zara and Forever 21.
A global marketing campaign for the revamped brand will debut this summer.
Abercrombie plans to transform the Hollister brand by offering a lower pricing structure to cater to younger customers and their budgets. The company also said it is looking into more U.S.-based supply sources that will allow a faster turnover of goods to keep up with quickly-changing trends.
The remodel could include finding a new president to lead the transformation for Hollister going forward, sources close to the matter told The Wall Street Journal.
In addition to repositioning Hollister, Abercrombie said it may consider adding more third-party brands to its product assortment, as well as selling its merchandise through third-party channels. The company has carried Keds merchandise since last fall, and the partnership has been "very successful" CEO Mike Jeffries said in an earnings call.
Abercrombie has faced several struggles over the past few years. In the most recent quarter, comparable-store sales fell by 8 percent. Hollister stores reported a 14 percent decline in revenue, compared to a 10 percent decline for Abercrombie stores.
The strategy to differentiate Hollister stores is reminiscent of Gap's when it opened the first Old Navy store in 1994. The new brand was so successful it ultimately cannibalized the flagship Gap stores, pushing the company into a decade long slump. Today, Gap is enjoying a hard-won turnaround and Old Navy is its largest brand.
Abercrombie created the Hollister brand in 2000 to offer apparel and accessories to teens. There are 600 Hollister stores world-wide, roughly double the number of Abercrombie stores. This year, Abercrombie said it expects to lower that number, as it prepares to shut down between 60 and 70 stores in the U.S. this year.
-See this Wall Street Journal article
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