Abercrombie & Fitch takeover bid likely

Struggling street fashion retailer Abercrombie & Fitch is working with an investment bank to field takeover interest from other retailers, according to Reuters.

With its shares trading at a 17-year low, the iconic but tired brand has become “a vulnerable acquisition target” according to Reuters, which quoted two sources familiar with the matter.

Investment bank Perella Weinberg Partners will handle the takeover approaches, but the sources said there was no certainty a deal would proceed.  

Neither Abercrombie & Fitch or Perella Weinberg would comment on the report.

The Ohio-headquartered retailer has 709 stores in the US but has begun trimming its network with at least 60 store leases falling due this year unlikely to be renewed. Outside the US it has 189 stores.  The company has a market capitalisation of US$862 million.

Abercrombie & Fitch ended its last financial year in a tailspin, with sales down by almost 7 per cent and operating profit falling 49 per cent.

In a commentary in March, GlobalData Retail MD Neil Saunders said A&F was fortunate to have a strong balance sheet and that it remains in profit, giving it the time and financial firepower to turn its fortunes around.   

“That said, it is now clear that fairly decisive and radical action is required to reconnect the brands with consumers,” said Saunders. “Especially so for Abercrombie which has, like last quarter, seen same-store sales deteriorate at a rapid pace.”

The brand recently unveiled a new store format in its home state of Ohio where in a significant change of strategy, customers will be able to actually see the stock on display, the brand’s heavy scenting has been toned down and stock will be visible from outside.


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