Clothing chain Abercrombie & Fitch fell the most in more than nine months after second-quarter sales fell below analysts’ estimates.
Revenue slid 5.8 per cent to $890.6 million (£537.2 million) in the period, while previous analysts estimated this figure would be $909.8 million on average, according to data compiled by Bloomberg.
Some analysts believe that the company is struggling to compete with fast-fashion companies such as Forever 21 and Hennes & Mauritz AB (HMB), which have won over teens with their ability to react to trends quickly.
Slow mall traffic and an industry-wide reliance on heavy discounting to entice customers were also blamed.
“Based on what we have seen and heard from other mall-based teen retailers, customer traffic continues to negatively weigh on business,” Howard Tubin, a New York-based analyst, told Bloomberg.
Signs of recovery
Chief executive officer Mike Jeffries said in a statement today (August 28th) that the company has been working to turn around these softer sales, revamping its clothing.
He said he is now seeing small signs of recovery.
"In a continued challenging environment, our sales for the second quarter were somewhat below plan, but we have seen modest improvement since the back-to-school floorset," he said.
Earlier this year, Mike Jeffries said the company would cut costs for its clothing line, which could allow it to lower prices without significantly hurting margins.
It has also reduced logo use in its merchandise and said it plans to close 60 of stores in the US this year as their leases expire, the Wall Street Journal reports.
Abercrombie & Fitch was down 6.02 per cent at 10:37 ET today (August 28th) in New York.
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