Abercrombie & Fitch eyes smaller stores as it continues to close flagship locations

Abercrombie & Fitch is closing some of its flagship stores and instead opting for smaller-format retail locations.

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The retailer’s CEO Fran Horowitz said Wednesday Abercrombie & Fitch will focus on opening smaller shops and renovating some of its existing locations to keep customers coming back amid the rise of e-commerce outlets that’s led to a significant reduction in foot traffic to retail stores, CNBC reported.

“What we’ve learned from the consumer is they are really enjoying the smaller spaces,” Horowitz told CNBC. “There is a more intimate feel to it…and the customer likes that one-on-one interaction.”

Abercrombie & Fitch is planning to redesign several stores to be smaller and equipped with new services and technology, the company's CEO said. (iStock)

The retailer announced Wednesday that it would be closing three more flagship stores — a Hollister in New York City’s SoHo neighborhood and Abercrombie & Fitch locations in Milan, Italy and Fukuoka, Japan — by end of the year or first half of 2020.

The company said it has closed five flagship stores since 2017, and more are expected to shutter, although details of those closures were not immediately released.

Abercrombie will redesign 85 stores, including some Hollister locations, in 2019 by closing down bigger stores in malls and moving to smaller spaces nearby — splitting a larger location or opening an entirely new shop, CNBC reported. The retailer will also test pop-ups in certain markets.

The redesign will not only brighten the spaces but also equip them with new technology, such as handheld devices for associates to help customers locate items they want, the company said. The stores will also provide an online pickup option.

”[Mall owners] appreciate we are making these investments,” Horowitz said. “They are important to us. We are important to them.”

“Mall traffic in total has been declining for several years. Fortunately for us, our traffic for Q1 and the start of Q2 has outpaced mall traffic,” she added.

Horowitz said getting rid of flagship stores haven’t hurt sales because the larger-format locations aren’t attracting customers. She added the company has seen the same or better sales in smaller stores they’ve remodeled compared to the bigger locations.

Abercrombie & Fitch announced it will be closing three more flagship stores. (AP)

Abercrombie & Fitch Co. shares fell Wednesday after the retailer released first-quarter earnings that showed same-store sales rose by just 1 percent for the company overall — the below analysts' prediction of 1.4 percent.

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Net sales rose slightly at $734 million compared to last year’s $730.9 million.

While Abercrombie & Fitch will finish off the year with more stores than it had in 2018, many other retailers are struggling to keep places open. More than 7,000 stores, including Payless ShoeSource and Dressbarn locations, are expected to close in 2019.