Abercrombie & Fitch decided to discount after all and slashed prices by as much as 90% in January reports the Wall Street Journal. Last December the retailer was not in a discounting mood. Revenues for Abercrombie plunged 68% in the fourth quarter. Same-store sales fell 25% compared to the year before.
The news comes as the teen-apparel retailer has been backing down on its pledge not to engage in the big discounting that has become common in the mall, plaguing retail margins.
Abercrombie reduced prices as much as 90% throughout January to clear inventory on some items. As a result, gross margin, or the difference between a company's cost of producing products and the price it receives for them, fell to 64.4% from 67.2% for the quarter. But the gamble didn't spur same-store sales, which fell 25%, in dollar terms, from the same period a year ago.
Chief Executive Mike Jeffries, in a call with analysts Friday, referred to the fourth quarter as "a nightmare that included unprecedented promotional activity by other retailers in the malls and consumers who continued to show reluctance to spend, especially for premium brands."
Abercrombie cut 50 jobs last month and has reduced the number of stores it plans to open to just ten. They have also pushed back the opening of two Abercrombie & Fitch flagship stores until 2010. Reuters says Abercombie played Foreigner's "Cold as Ice" as the as hold music for its conference call with analysts.
Abercrombie & Fitch decided to discount after all and slashed prices by as much as 90% in January 
