(Updates with analyst comment, stock price)
DOW JONES NEWSWIRES
Abercrombie & Fitch Co. (ANF) will close its 29 Ruehl stores
and related operations by the end of the year, and has amended its
credit agreement to allow for the charges it will incur.
The move, announced Wednesday, comes a month after the
teen-apparel retailer said it would review the high-end Ruehl
business, which has been posting slumping results amid consumer
spending cutbacks. Abercrombie said Wednesday it determined the
timing wasn't right to pursue Ruehl's development given the "severe
economic downturn."
The company has reported month after month of dour sales
results; Ruehl's same-store sales in May slumped 33%. Abercrombie
as a whole hasn't reported sales growth since April 2008 and is
increasingly shedding its no-markdown mantra, but is still losing
out to cheaper competitors.
The retailer will record about $65 million more pre-tax charges
in the remaining three quarters of this fiscal year. Chairman and
Chief Executive Mike Jeffries said the company was confident it
would continue to generate enough cash from operations to fund its
liquidity needs.
Wall Street Strategies analyst Brian Sozzi wondered why it took
the company so long to close Ruehl, saying retailers should learn
from the unit's end that they shouldn't chase every age
demographic.
He added, "Now that Ruehl is out of the equation, I am wondering
where it leaves the women's accessories concept Gilly Hicks. At
what point does the team throw in the towel there and focus its
efforts on maximizing productivity at Hollister and Abercrombie
& Fitch?"
Abercrombie's shares were recently up three cents at $25.83.
Despite a rebound in the last three months, the stock is off 63% in
the last year.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com