A&F could see 15 percent of its value whipped off due to ineffective customer retention

Abercrombie & Fitch’s struggles to keep its customers could cost the company’s a 15 percent value whip-off, according to analysts at Trefis.

Trefis analysis team argues that “There can be a downside of close to 15 percent to Abercrombie & Fitch‘s (NYSE:ANF) value if its store sales and EBITDA margins get weighed down by the aggressive buyer shift from physical to online retail channels.”

As a matter of fact, the apparel industry is embracing online commerce around the globe, with the US-based players gradually embracing the online domain. As a result, affluence to physical stores has declined, pushing several retailers to consolidate their respective store networks and aggressively pursue omni-channel strategies, recalls Trefis in a note to investors.

Abercrombie & Fitch’s value affected by transition of physical stores to e-commerce

Truth is that, while apparel retailers have gained from incremental online sales, it has been more than offset by the considerable fall in foot traffic, which has led to a decline in retailers’ revenue per square feet (RPSF).

“Our current projections for Abercrombie’s RPSF do incorporate the fall in foot traffic on account of an online shift. However, the impact can be much more intense if the company is unable to retain the lost store customers through its websites,” further explains the analysis team at Trefis.

Clients’ loss can happen due to the growing competition from fast fashion companies such as Zara and Forever 21 and pure-play online retailers, and ineffective omni-channel strategies.

“Our price estimate for Abercrombie & Fitch stands at 28 dollars, implying a 10 percent premium to the current market price,” concludes Trefis.

Abercrombie & Fitch Company (NYSE:ANF) traded negative at 25.29 dollars on Tuesday, what takes the annual price of the stock to date down by a total 11 percent.

On a related note, the teen apparel retailer announced Tuesday that Christos Angelides, head of the group’s namesake brand, has been fired. Fran Horowitz, president of the Hollister brand, will assume the newly created position of chief merchandising officer, effective immediately.

 

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