9 Fashion Retailers On Life Support

Photo by Tim Mossholder on Unsplash

Closed store sign

Despite the dire threats of a retail apocalypse, retailers pulled it out last year. The retail sector, excluding automobiles and parts, saw a 4.4% increase in 2018 over 2017, with nonstore, including ecommerce retailers setting the pace, up 10.4%.

But last year, not all retail segments were so fortunate. While shoppers were busy furnishing and updating their homes, they were far less interested in updating the clothes in their closets. As a result, clothing and clothing accessories stores saw only a 1.1% increase over previous year, while building materials and garden centers advanced 8% and furniture and home furnishings stores gained 4.8%.

Signs are that fashion retail has entered a new normal, near-steady state, with sales growth leveling at about 1% in 2016 and 2017, after rising over 2% in 2013 through 2015. Look around and there are more stories of failure than success in fashion retail. Customers are simply not buying what many fashion retailers are selling.

The list of failing fashion retailers is growing. While this is by no means an exhaustive list, here are 9 retailers entering 2018 on life support, or if not that far gone, at the very least in need of intensive care:

Abercrombie Fitch lost its cool

For a brand aimed squarely at the fashion tastes of millennials, the biggest consumer generation ever, Abercrombie Fitch almost has to work to fail. With the parent company propped up by sales of its lower-priced Hollister brand, Abercrombie Fitch stores account for about 40% of total sales through 3Q2017, and lost 6% in revenue in the same period. The number of Abercrombie stores has dropped by 20% since 2013, now with some 300 in the states.

In an effort to revive sales, Abercrombie Fitch launched a new integrated advertising campaign for the past holiday season entitled “This is the Time,” that takes viewers back to the brand’s 1892 roots as an “outfitter of adventure.” But is that a message for it’s target customers? I think not.

It is also testing five AF concept stores designed to make the stores more welcoming places to shop. The concept stores are smaller in scale with gussied up fitting rooms and more friendly, rather than the previous snooty sales staff. Fellow Forbes.com contributor Walter Loeb sees signs of revival in the making, but I think it’s going to take more than an external make over to bring AF back from the brink.

BCBG is now on the D list

After filing for bankruptcy protection in February 2017, BCBG Max Azria was bought by Marquee Brands and Global Brands Group Holding in July. By that time, BCBG had already closed 120 stores to leave 71 still in operation. But upon closing the deal, the new owners will keep only about one-third of those open, continuing operations on a total of 22 stores and the company website.

What remains is an exceedingly small base on which to rebuild a fashion brand on the rocks after losing its founders’ inspiration and vision, as both Max and his wife Lubov Azria have already jumped ship.

Chico’s is getting old

After shedding Boston Proper in early 2016, Chico’s FAS has been taking on water. Net sales decreased 3.8% from 2015 to 2016, excluding Boston Proper, then through 3Q2017 the decline accelerated to 8.4% corporately, including both Chico’s, White House Black Market and Soma stores. In a recent update on 4Q2017 outlook in advance of its end of February annual report, the company expects revenues to continue to flag at a 5%-7% rate.

At its peak at the end of 2015, Chico’s FAS operated 1,546; today the number stands at 1,474. While Chicos FAS may not be ready for life support, it’s likely to close more stores in 2018.

Eddie Bauer is soaking wet

Back in 2014 Eddie Bauer tried unsuccessfully to find a buyer, and now it is trying again, but has yet to find a taker for its brand of outdoor performance wear. With some 370 stores, it is flagging against competition from less debt-ridden competitors, including North Face, Patagonia, REI and L.L. Bean.

Fellow Forbes.com contributor Debra Borchardt identifies the root of Eddie Bauer’s problems as an identity crisis suffered back in 2009, when it shifted focus to the women’s lifestyle market. It has since gone back to its testosterone-infused roots, but a hangover remains with women accounting for a lion’s share of its customers as recently as the end of 2016.

Article source: https://www.forbes.com/sites/pamdanziger/2018/01/14/9-fashion-retailers-on-life-support/

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