Abercrombie - Abercrombie& Fitch 1 Abercrombie& Fitch MGT 625 Strategic Management Professor Fernando Bello 20 March 2011 1 Abercrombie&

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Unformatted text preview: Abercrombie & Fitch 1 Abercrombie & Fitch MGT 625 / Strategic Management Professor Fernando Bello 20 March 2011 1 Abercrombie & Fitch 2 Abercrombie & Fitch’s (A&F) financial performance was recently negatively affected when a competitor and demographics of their target markets began to alter. As the younger generations of people became more interested in electronics devices by spending significantly more time devoted towards video games, the wealth of retailers such as Best Buy rose at the cost of retailers such as Toys “R” Us (Hitt, Ireland and Hoskisson, 2009). Consumer spending tightened in 2007 as the economy slowed. People spent more money on gasoline for their SUVs and food, and started cutting back on frivolous purchases, expensive name brand clothing lines. Accompanied by lower consumer confidence and a slump in the housing market things were not looking good for A&F. Some retailers saw a drop in customer traffic and overall sales in July, the start of the back-to-school sales. A&F faced some threat of becoming an acquisition target. Numerous private equity transactions were done throughout 2007. One example of such is when the Apollo Management LP acquired the retail store Claire’s Stores Incorporated for $3.1 billion, where Golden Gate Capital acquired a 67% stake in The Limited’s Express clothing chain (Hitt, Ireland and Hoskisson, 2009). The majority of retail companies are considerably influenced by the material industry and the basic materials required to produce clothing. One of the main sources of materials supply is in the Middle East (Bisnath, 2004). Since the terrorist attacks of September 11, 2001, the government of Pakistan has asked the U.S. to reduce tariffs on materials exported from Pakistan. Pakistani officials fear that without reduced tariffs, U.S. clothing companies will uphold their refusal to buy materials from these material firms. Even though this may seem like it would have an adverse effect on domestic retailers, there are numerous clothing companies that are in favor of the tariff reduction. This will provide an interesting environmental dilemma that could easily 2 Abercrombie & Fitch 3 affect the production and pricing of Abercrombie and Fitch merchandise. It will need to be watched very closely (Bisnath, 2004)....
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This note was uploaded on 03/29/2011 for the course MGT 625 taught by Professor Idk during the Spring '10 term at Western Intl..

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Abercrombie - Abercrombie& Fitch 1 Abercrombie& Fitch MGT 625 Strategic Management Professor Fernando Bello 20 March 2011 1 Abercrombie&

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