The Abercrombie & Fitch Debacle - “Who Loves Ya, Baby?”

Investors, shoppers and Abercrombie & Fitch seem to be at cross roads over the company's refusal to discount its merchandise despite its 24 percent decrease in same-store sales this past December and a 28 percent drop in November.

Chief Executive Mike Jeffries, defended the company's position during a November conference call stating that, "It is clear to us that the short-term relief provided by the use of promotions is more than offset by the damage inflicted on the brand in the long-term," adding, "Promotions are a short-term solution with dreadful long-term effects."

With Abercrombie & Fitch shares trading at a 70 percent decrease compared to this time last year, investors have to wonder if the no-markdown strategy will benefit the company in the long term, or shut its doors.

Recessionistas vs. Abercrombie & Fitch

Every generation embraces its own labels and this generation of young luxury-loving shoppers seems comfortable being known as Recessionistas. Born from the label Fashionista, Wordspy defines a Recessionista as, "a person who dresses stylishly on a tight budget" and has mastered the art of living well on less.

Abercrombie & Fitch would benefit by showing respect to the quickly emerging group and dump the old-fashioned thinking that expensive prices equal style. The assumption that these Recessionistas will one day return to stores that have turned their backs on them during the tough economic times is risky business. By the time the economy turns around significantly enough for this group, they will have moved on to a different level of priorities and buying habits.

"Who Loves Ya, Baby?"

Abercrombie & Fitch might benefit by remembering the customer that contributed to their success and who apparently, based on the company's lack of sales, now has decided to shop elsewhere.

See Also:

• Recessionistas Live Large on Shrinking Dollar
  
• Abercrombie full-price strategy proving a hard sell

Related: Abercrombie & Fitch Outlet Stores

_{Credit: "Who Loves Ya, Baby?" Popular phrase by Telly Savalas in the role as "Kojak"
Photo Credit: Getty Images}