Abercrombie & Fitch has relied on rapid square footage growth and outsized

During the years shown, Abercrombie booked positive comps from 2004 through 2006, though barely during fiscal years 2004 and 2006, managing just 2% annual gains. When consumers spent like there was no tomorrow during the 2001 holiday season, because they weren’t sure there would be a tomorrow after the 9/11 attacks, Abercrombie posted steeply negative comps.
Despite consumers’ free-spending ways in 2006, Abercrombie’s comps fell during that holiday season, too. Its strongest months were October 2004 through September 2006; full year 2005 was such a stand-out that it stacks up as an anomaly.
Granted, part of Abercrombie’s mystique grew out of its ability to report strong earnings, despite mediocre comps, even as, admittedly, the soon to close Ruehl No.925’s (aka Ruehl) pathetic performance brought down overall comps in recent years.
Still, one wonders about a CEO who took so long to give up on Ruehl, which posted double and triple digit comp declines, almost from the day it started reporting them. Ruehl’s fate seemed obvious to me as long as 2 years ago, because it moved from concept to storefront just as missy clothing sales began withering. And Ruehl never presented any unique or heart stopping styles that would distinguish it from competitors.
Absent that single aberrational comp year, Abercrombie & Fitch has relied on rapid square footage growth and outsized -- some say obscene -- margins to post strong earnings despite negative comps. Gross margins in a few fiscal years, including FY04 & FY05 exceeded 66%, a rarity in apparel retailing, where two-thirds of that would be an improvement and thrill for many chains. Fiscal year 2005 was also the year it opened its first Abercrombie & Fitch and Hollister stores in Canada, as well as a flagship 5^th Avenue store, in New York, the better to capture tourists.