In the past five years, Abercrombie has been focused on overseas expansion. The specialty retailer is attempting to create an international presence comparable to its U.S. glory days.
In May, the company opened their first Parisian store on an enormous property on the Champs-Elysées. The opening was a huge spectacle marked by the presence of 100 shirtless male models (talk about brand identity). The entrance into the French market was expected to be incredibly lucrative and successful for the company. They are well-located and are banking on the renown and high traffic on the Champs to meet their margins.
So far, their presence in Europe has been encouraging and their strategy includes more store openings within the next year to complete their penetration into the European and Asian markets.
Unfortunately, I doubt CEO Michael Jeffries anticipated the utter disintegration of the European markets. No doubt, this is a major reason for their stocks falling by over 20 percent this week, marking a record loss for the company. Even though this may put in doubt their expansion strategy and creating ubiquity of the brand instead of an exclusive item, this seems to be more about the shape of the European markets in general.
I am no fan of Abercrombie and never have been, but the brand seems to be caught up in an unfortunate turn of global economic events. They may have over-expanded, but considering how well other teen retailers are doing despite market saturation, I doubt that over-expansion is the issue. The next few weeks may determine how this drop in sales will affect their long-term expansion strategy.