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Facing Financial Woes, Abercrombie Will Offer Larger Sizes

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After years of excluding many consumers by only offering limited sizes, the retailer is in high water and needs to expand its reach.

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Reuters reported late this morning that the teen-apparel retailer Abercrombie & Fitch Co. (NYSE:ANF) will expand its offering of sizes, colors, and fits for all of its clothing by spring 2014. This is a measure to curtail the company's struggles to stay afloat: Yesterday Abercrombie announced yet another double-digit drop in its quarterly same-store sales. It also warned investors that the holiday season would be challenging. Since yesterday the company's stock is down 10.39%, to $34.33 per share.

Right now the retailer does not stock XL or XXL sizes in women's clothing, and its largest size for women's pants is size 10. However, the company does offer the XL and XXL sizes for men, which has obviously sparked controversy.

In a 2006 interview with Salon, the company's CEO, Mike Jeffries, talked about how important sex appeal was for his company's brand. "It's almost everything. That's why we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don't market to anyone other than that," said Jeffries.
Most Americans have found Mike Jeffries' comments about size totally uncool.

And when asked if Abercrombie was exclusionary because of this, he responded, "In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don't belong [in our clothes], and they can't belong. Are we exclusionary? Absolutely."

These remarks naturally inspired a lot of hate mail and ire, which began to gradually diminish the brand's appeal. One response, published by blogger Jes M. Baker in May of 2013, was a fake ad campaign titled "Attractive and Fat" wherein she, a size 22, posed with male model John C. Shay in the suggestive fashion typical of Abercrombie ads. The campaign made Baker into a spokesmodel for the full-figured woman, and made Jeffries look like a fool.

(For more on Jes Baker's story, read Diane Bullock's 6 David and Goliath Stories From the Corporate World.)

It seems clear that Jeffries' exclusionary policies have put the company into financial trouble. Competitors like American Eagle (NYSE:AEO) and H&M both offer large sizes and have been performing markedly better than Abercrombie in recent years. After leading American Eagle in growth year after year, in 2012, Abercrombie fell behind, with 8.49% growth compared to its plus-size-friendly rival's 11.4%. American Eagle looks set to outpace Abercrombie again this year.

Follow me on Twitter: @JoshWolonick and @Minyanville
No positions in stocks mentioned.
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