Presented by: (GROUP - 13)

It is an American retailer brand that focuses on casual wear for consumers aged 14 to 22 years. A&F was founded in the year June 4, 1892 in New York. The founder members are David.T.Abercrombie and Zara Fitch.

A&F made its initial public offering on September 26, 1996. The per share offering was $16 and as of today it is $38.54

The present Chairman and CEO is Michael.S .Jefries. The head quarters is located in Ohio, USA. Their trade mark slogan is casual luxury - a lifestyle brand. As of July 2012 they have 1055 stores and 86000 employees.

A&F is involved in socially responsible practices ($1omillion to children hospital)

"We are committed to providing comfortable and long lasting clothes that look good. Aspirational, Quality, casual, sexy, American classic, the Abercrombie and Fitch brand personifies the all American attitude. Our legacy is a timeless juxtaposition of ivy league traditions and the great outdoors.

Abercrombie Kids (1998 - Present) Hollister (2000 - Present) Gilly hicks (2008 - Present) Ruehl No.924 (2004 - 2010)

-1%

-13%

-23%

7%

5%

 Operating income. US$ 231.932 million (2011) Net income US$ 150.283 million (2011) Total assets.. US$ 2.948 billion (2011) Total equity..... US$ 1.891 billion (2011)

Process takes 6 to 12 weeks

246 Factories

Employment practices, merchandise, and advertising campaigns have been described as provocative, sexually explicit and racist. They filed for bankruptcy in 1977.

"I think we represent sexually healthy. It's playful. It's all depicting this wonderful camaraderie, friendship, and playfulness that exist in this generation and candidly, does not exist in the older generation." -CEO, Mike Jeffries

Abercrombie & Fitch Established Revenue (billion USD) Number of stores Employees 1892 3.5

American Eagle

The Gap

1977 2.9

1969 14.1

1039

929

3248

80,100

34,900

132,000

Scope of operation

US, Canada, UK

US

More than 19 countries

S T R A T E G Y

Segmentation Strategy Targets age groups of 14-22 years

Differentiation Strategy Their tag line causal luxury

Generic strategy
Cost Leadership Slightly Expensive but exclusive
D I F F E R E NT IAT IO N

C O S T

Narrow Focus Strategy Targets the niche market

ST RAT EGY

Degree of Rivalry Moderate to high

Threat to entry Weak

Porters 5 force model

Substitutes Weak

Supplier Power Weak/moderate

Buyer Power Weak

Degree of Rivalry- moderate to high

The teen fashion retail clothing industry is very competitive.

However, A&F has a competitive advantage over other specialty retail

clothing stores through its product differentiation.

Threat of Substitutes weak

There are not many valid substitution threats to the retail clothing

business. Although wholesale distributers like B.J.s may take a bit away from the retail clothing industry as a whole, those customers usually do not shop at A&F brand stores anyway.

Buyer Power - weak

The buyers of A&F are mainly individuals aged between 14-22 years. Customers

are also fragmented. No customer has a particular influence on the product or price.

Supplier Power- weak/moderate A&F does not own or operate any manufacturing plants. However, A&F receives its clothing from over 240 vendors who are mainly foreign manufacturers. Therefore, no one supplier has a significant power over the company.

Barriers to Entry/ Threat of Entry - weak There are not many threats to entry into the market right now due to the poor economy (decreasing prices/ increased uncertainty) and the near luxury nature/ brand recognition of A&F. A&F would not have only minor difficulties exiting the industry. They do not have high exit costs since they do not own factories (only stores within high traffic areas such as malls). However, they do have somewhat of a specialized asset.

Strengths
A&F have been making a successful profit, even through the

economic recession. Excellent Return on Equity: 29% over 5 years A&F knows that in order to be successful in selling a high priced product, the people who represent Abercrombie must believe in the brand itself. They must eat, sleep, and breathe Abercrombie. A strong management team is the number one reason that Abercrombie and its brands are successful. Multiple strong and growing brands. Management team experienced in creating new and successful product lines. Strong brand equity abroad.

Weaknesses A&F has not done well in creating a culturally diverse atmosphere internally or externally. Over priced and high cost structure. Accused of racial profiling and discriminating against minorities. Limited geographical reach. Opportunities Expanding their current brands with new concepts. Expansion in new markets (countries). Expand internationally by export or subsidiary.

Threats Counterfeit goods. Increasing rental rates in US and Europe. Economic downturn reducing consumer spending, cutting into sales and margins. Competition from other chains could eat away market share and hurt profits (especially lower-cost producers) Rising cost of materials and commodity prices. Racial profiling ,has also limited the type of clientele that frequents the stores , it limits the potential income that the company could be earning.

A&F announces it plans to expand its retail presence throughout Europe.

The Company also announces it has retained PBS Real Estate, LLC, and its Principal Laura Pomerantz, as exclusive European and United Kingdom real estate consultant to identify locations that best support the A&F brand attributes.

Throughout 2012, Abercrombie & Fitch Co. plans on increasing its gross square-footage to 11% by adding 110 additional stores by the end of this year(domestically and overseas combined).

Long-term recommendations Open a discount clothing store. Invest in overseas expansion (Asia & Australia)

Short-term recommendations Sponsor college events. Strengthen rebellion and controversy image. Emphasize on online shopping. Review the choice of magazines where A&F places ads.

With such a dynamic management team A&F can figure out a way to remain exclusive without being insulting and hurtful. The company targets many different niches within the fashion-conscious retail market via its brands, so there is less risk from changing trends. There is a lot of room for growth once the economy picks up and consumer spending increases.