Fashion retailer Abercrombie & Fitch is continuing to shutter Hollister and A&F flagship stores across the globe, with its Fukuoka store in Japan one of the next three on the list.
Starting with the high-profile Pedder Street store in Hong Kong’s Central in the first quarter of the 2017 financial year, Abercrombie & Fitch embarked on what it describes as a “global store network optimization” program.
Overnight, the company said it will close its SoHo Hollister flagship store in New York City and has exercised kick-out clauses for its A&F flagship locations in Fukuoka and Milan, Italy. “Today’s announcements build on the closures of the Hong Kong and Copenhagen, Denmark A&F flagship locations. These actions represent important ongoing steps in the company’s global store network optimization efforts as it continues to pivot away from large format stores to smaller, omnichannel-focused brand experiences,” the company said in an earnings statement.
While the Pedder Street store was vacated two years ago – and remains empty to this day – it took until this year for the company to close its second, in Copenhagen, Denmark. Now the flagship-closure program is gaining pace.
The Hollister store will close in the second quarter of the current fiscal year and the Milan store by year’s end. The Japanese store will close in the second half of next year.
“In aggregate, the Copenhagen, SoHo, Milan and Fukuoka locations represented less than 1 percent of total net sales in fiscal 2018. The SoHo and Fukuoka closures are expected to result in pre-tax lease-related net charges in the second quarter of fiscal 2019 of approximately US$45 million. The charges related to the Copenhagen and Milan closures are not expected to be significant in fiscal 2019,” the company said.
But Abercrombie & Fitch stressed it was not reducing its store network.
“The company remains on track to deliver approximately 85 new experiences through new stores, remodels and right-sizes this year.”
First-quarter loss reduced
Meanwhile, the company reported worldwide net sales rose by 2 percent to $734 million in the first quarter to May 4. Comp sales rose by 1 percent following a 5 percent increase in the same period last year and the company posted an operating loss of $27.3 million, less than half that of last year’s first quarter.
“We achieved our seventh consecutive quarter of positive comparable sales fuelled by ongoing strength at Hollister and a return to positive comps at Abercrombie,” said CEO Fran Horowitz.
“This contributed to top-line growth, operating margin improvement and a net loss reduction compared to last year.”
Horowitz said the company remains focused on its transformation initiatives, with global store network optimization a key priority.
“We continue to believe in stores and are committed to delivering intimate, omnichannel brand experiences that closely align with our customers’ needs.”