this store may be screwed

Foreigners Are Ravenous for Abercrombie

Abercrombie is doing better in the U.S than they have in years. Their losses have slowed dramatically, and the company reported a 3 percent rise in same-store sales for the first quarter. Things are looking okay for May, too, in the U.S — and positively ridiculously good overseas, according to The Wall Street Journal:

Figures issued Thursday showed May’s domestic sales rose just 1%, while international revenue jumped 84%. With the overseas business generating nearly a fifth of revenue, total company sales rose a healthy 10%.

But can the foreigners save Abercrombie, if not from further domestic shame, from more fiscal bloodletting? Can Abercrombie just jump ship and flee to Europe and Asia like they’re on the lam? Probably not, at least not immediately. The European markets won’t be enough to offset losses still occurring here, especially because Abercrombie holds $1.1 billion in leases that don’t expire until 2015 or later — those would be quite expensive to exit. So the U.S. and Abercrombie are stuck with each other for at least another half-decade. The Journal reckons:

Holding onto Abercrombie shares in the hope U.S. sales will eventually revive would be brave. With rare exceptions, such as Victoria’s Secret and Gap, most specialty retailers from 20 years ago have given way to new rivals. At 21 times this year’s earnings, Abercrombie shares are ready to fade.

You know what they say: If you really want to get to know someone, divorce them! Who knew Abercrombie would end up the hot wife skipping into the sun with the sexy accented people? Now American shareholders will know Abercrombie on levels they never wanted to. But maybe that will make room for some lust in their portfolios.

Continental Divide for Abercrombie [WSJ]

Foreigners Are Ravenous for Abercrombie