Abercrombie to Shift Namesake Brand Toward Older Audience

Abercrombie & Fitch Co., the teen retailer under pressure from an activist investor to change its management amid sluggish sales, plans to shift its namesake brand to appeal to an older audience.

The line, which in recent years has fallen out of favor among teens, will feature new assortments, marketing and pricing to target to college-aged customers, Jonathan Ramsden, chief operating officer and chief financial officer, said in an interview March 7. He declined to share details of the changes.

Meanwhile, Abercrombie’s Southern California-influenced Hollister brand will increasingly focus on low prices and rapidly changing styles to recapture shoppers who’ve turned to retailers such as Forever 21, Ramsden said.

“It’s part of wanting to separate the brands more, take Abercrombie to more of a premium, with Hollister as more fast-fashion,” he said. “It’s an opportunity to connect Abercrombie & Fitch with its heritage and move it up in demographic.”

Chief Executive Officer Mike Jeffries has come under fire from investor Engaged Capital LLC as he tries to reverse four straight quarters of declining sales. The retailer agreed to separate the CEO and chairman roles and increase the size of the board after Engaged called for a new top executive and pushed the clothing maker to consider putting itself up for sale. Engaged nominated five directors to the board last month.

The shares rose 0.1 percent to $41.29 at the close in New York. The New Albany, Ohio-based company has gained 25 percent this year, compared with a 1.6 percent increase for the Standard & Poor’s 500 Index.

Acquisition Strategy

Abercrombie has considered acquisitions and would be more interested buying small, up-and-coming brands than larger, existing businesses, Ramsden said.

Jeffries and Abercrombie’s board plan to hire presidents to head the Abercrombie and Hollister brands “fairly soon” and are looking at people with merchandising backgrounds who have the potential to succeed Jeffries, Ramsden said. The presidents will have authority over marketing, third-party partnerships, assortments and brand strategy.

“Mike is their boss, but his intent is clearly to give them significant autonomy,” Ramsden said. “But at the same time, he’s still going to be having a point of view.”

Before it's here, it's on the Bloomberg Terminal.