American teen retailers struggle to stay afloat

NEW YORK • The youth market is giving the United States retail industry a headache, with woes in attracting young customers shaping up to be more than just a passing phase.

Abercrombie & Fitch's recent announcement that it failed to reach a deal with potential acquirers sent the stock spiralling. It also dragged down the shares of other chains that target young shoppers, such as Express and Urban Outfitters.

Even American Eagle Outfitters, regarded as a bright spot in the industry, has suffered.

The rout is the latest example of the industry's inability to come up with a winning formula to counteract the slowdown of shopper traffic at brick-and-mortar stores.

Few options - from takeovers to renewed focus on Internet sales - seem to be reversing a broader sales decline. And predicting teen behaviour is as hard as ever.

"They're fickle, they shop anywhere," said Bloomberg Intelligence analyst Poonam Goyal. "Traditionally, if you shopped at Urban Outfitters, then 90 per cent of your wardrobe was Urban Outfitters. I don't think any millennial's wardrobe is 90 per cent anything."

With no deal, Abercrombie will have to go it alone, struggling to restore its image against the backdrop of broader industry woes.

To reach new customers, the company is taking a cue from American Eagle by reviving its intimates brand. It is also adding products to storefront windows while dialling back music volume and aroma use.

Its namesake Abercrombie chain is going after older customers and playing up its heritage with a throwback logo, while the Hollister brand targets teen shoppers.

Chairman Arthur Martinez has promised "sound, aggressive action" to turn the company around. As proof, the retailer pointed to solid same-store sales at Hollister and said it is following through on measures "to position Abercrombie for revitalised performance".

So far, success has been elusive.

The chain has posted falling revenue for four years and a recent rebound in Hollister sales has not been enough to offset the decline.

Urban Outfitters is also suffering. It said last month that second-quarter comparable sales are falling in the high single digits - more than the 2.5 per cent drop analysts expected, said Consensus Metrix. Express is also forecasting a drop in second-quarter, same-store sales, citing declining foot traffic.

Abercrombie and many of its peers are struggling to keep up with fast-fashion shops run by H&M and Inditex, Ms Goyal said.

"The traditional teen retailers, they can't move as fast as those guys," she said. "Speed is their biggest headwind and I don't see a way for them to develop speed that can match these rivals."


A version of this article appeared in the print edition of The Straits Times on July 20, 2017, with the headline 'American teen retailers struggle to stay afloat'. Print Edition | Subscribe