Abercrombie & Fitch's bad year is getting worse.
The teen retailer, ahead of an analyst meeting Wednesday morning, said that its third-quarter sales through Oct. 27 plunged 12% to $1.03 billion. Notably, Abercrombie's comp sales — which includes purchases online and at stores open at least a year — dropped 14%, marking a stunning seventh straight quarterly comp sales decline in a row, and the retailer said it's taking "a cautious approach into the fourth quarter."
Chief Executive Officer Mike Jeffries blamed the drop on a tough spending environment among teen consumers, which has indeed plagued competitors like American Eagle and Aeropostale this year. Still, the steady comp sales decline shows that Abercrombie has actually been troubled for longer than that, and the concerns that its styles and stores are stale may have merit.
As foreshadowed by BuzzFeed in September, Abercrombie also said it's shutting down its standalone Gilly Hicks stores, which numbered 28 at the end of July. It will instead carry the fledgling underwear brand online and in Hollister locations. Sources told BuzzFeed at the time that the company spent in the ballpark of $150 million in capital opening the locations, which have a cumulative operating loss in the $200 million range, but Jeffries remained gung ho on the brand.
Indeed, Jeffries said in today's statement that the decision to shut down the stores actually "reflects the successful pilot of selling Gilly Hicks branded intimates in Hollister stores."
Abercrombie said it will offer more details on the long-term strategic review it began this spring in tomorrow's meeting. BuzzFeed also reported in September that the company's 10% comparable sales decline in the second quarter included a 30% drop in the girls' side of the business — the meeting may offer more color on that.
Analysts and investors will also be looking tomorrow for any insight into the future of 69-year-old Jeffries, who built the company into a global retailer over 20 years. Jeffries has been criticized for being a micromanager and holding Abercrombie back in some ways, as well as running the retailer with scant oversight, from corporate jet shenanigans to the dubious involvement of his partner in the business. His latest employment agreement is set to expire in February 2014, meaning he's probably in negotiations for another contract right now.
Abercrombie's stock fell 7% after the market closed. Its stock, before that drop, was down 20% for the year, compared with a 24% gain for the S&P 500.