Business

Abercrombie & Fitch Co. (NYSE:ANF) Crashes As Takeover Negotiations Stall

Abercrombie & Fitch Co. (NYSE:ANF)

Abercrombie & Fitch Co. (NYSE:ANF)

Shares of Abercrombie & Fitch Co. (NYSE:ANF) got crushed and hit 17-year lows after the company said it preferred to go it alone than to seek a buyer. The stock was down by 21.13% in Monday’s trading session to end the day at $9.59 a share, marking the biggest intraday decline in more than ten months.

Abercrombie & Fitch Co. (NYSE:ANF) is a specialty apparel retailer operating through two segments of Abercrombie and Hollister. The retailer sells tops, shorts, graphic T-Shirts as well as personal care products and accessories for men women and kids. The Company had 709 stores at the start of the year.

Abercrombie Acquisition Talk

The company has been the subject of acquisition talks on Wall Street ever since it announced it had received ‘expression of Interest’ from a number of suitors. Speculation was rife that Express, Inc. (NYSE:EXPR) and American Eagle Outfitters (NYSE:AEO) were in a race to acquire the specialty retailer.

Takeover talks helped bolster investor sentiments on the stock after disappointing quarterly results showed a comparable sales drop of 3%. However, termination of talks with potential acquirers has put the company in the spotlight and fueled the sell off.

The Abercrombie & Fitch Co. (NYSE:ANF) brand is under pressure more than ever due to a reduction in mall traffic which many experts attribute to the “Amazon.com Effect”. The entire retail industry is facing its worst run as a number of bankruptcies and store closures having rocked the space.

Management Sentiments

Arthur Martinez, Executive Chairman has sought to quash investors’ concerns about Abercrombie & Fitch prospects after the termination of the acquisition push. According to the executive, investments in marketing backed by a strong management team should help drive sales going forward

“We believe in the prospects for our business and the opportunities for our brands. We are generating solid comp store sales momentum at Hollister and continue to refine and implement strategies to position the Abercrombie brand for revitalized performance,” said Mr. Martinez

In a bid to reach out to new customers, Abercrombie & Fitch Co. (NYSE:ANF) has already started to revise its intimate’s apparel brand. The company has also added products to its storefront windows and, rather uniquely, has started using scent in stores.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

 

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Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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