Abercrombie & Fitch Co. (“A&F”), a company that was incorporated in
Delaware in 1996, through its subsidiaries (collectively, A&F and its subsidiaries
are referred to as “Abercrombie & Fitch” or the “Company”), is a specialty
retailer that operates stores selling casual apparel, such as knit shirts, graphic
t-shirts, jeans, woven shirts and personal care and other accessories for men,
women and kids under the Abercrombie & Fitch, abercrombie, Hollister and
RUEHL brands. As of February 3, 2007, the Company operated 944 stores in the
United States and Canada.
The Abercrombie & Fitch brand was established in 1892 and became well known
as a supplier of rugged, high-quality outdoor gear. Famous for outfitting the
safaris of Teddy Roosevelt and Ernest Hemingway and the expeditions of Admiral
Byrd to the North and South Poles, Abercrombie & Fitch goods were renowned
for their durability and dependability.
In 1992, a new management team began repositioning Abercrombie & Fitch
as a fashion-oriented casual apparel business directed at 18 to 22 year-old
male and female college students with a product assortment reflecting a youthful
lifestyle based upon an East Coast heritage and Ivy League traditions. In reestablishing
the Abercrombie & Fitch brand, the Company’s goal was to combine its historical
reputation for high quality with a new emphasis on casual American style and
youthfulness.
In 1998, the Company launched abercrombie, a brand directed at seven to 14
year-old boys and girls, based on the traditions of Abercrombie & Fitch.
The Company launched its next brand, Hollister, in 2000. Hollister is a West
Coast oriented lifestyle brand targeted at 14 to 18 year-old high school aged
guys (“dudes”) and girls (“bettys”) that embodies the laid-back California surf
lifestyle.
The RUEHL brand, targeted at 22 to 35 year-old men and women, was launched
in 2004. RUEHL’s product assortment is a mix of casual sportswear and trendy
fashion created to appeal to the modern-minded, post-college customer. The RUEHL
concept is inspired by New York City’s Greenwich Village. The store appearance
is based on a Greenwich Village townhouse and conveys an aura of sophistication
through its creative use of interconnected rooms, fine furniture, lighting,
vintage books, photography and music.
The Company’s brands, Abercrombie & Fitch, abercrombie, Hollister and RUEHL,
represent different American lifestyles and are targeted to appeal to the same
type of customer through different stages of his or her life from elementary
school through post-college. This is consistent with the Company’s belief that
“trend transcends age.”
In-store Experience and Store Operations.
The Company views the customer’s in-store experience as the primary vehicle
for communicating the spirit of each brand. The Company utilizes visual presentation
of merchandise, in-store marketing, music, fragrances and its sales associates
to reinforce the aspirational lifestyles represented by the brands.
The Company’s in-store marketing is designed to convey the principal elements
and personality of each brand. The store design, furniture, fixtures and music
are all carefully planned and coordinated to create a shopping experience that
reflects the Abercrombie & Fitch, abercrombie, Hollister or RUEHL lifestyle.
The Company’s sales associates and managers are a central element in creating
the atmosphere of the stores. In addition to providing a high level of customer
service, sales associates and managers reflect the casual, energetic and aspirational
attitude of the brands.
Every brand displays merchandise uniformly to ensure a consistent store experience,
regardless of location. Store managers receive detailed plans designating fixture
and merchandise placement to ensure uniform execution of the Company-wide merchandising
strategy. Standardization of each brand’s store design and merchandise presentation
creates the opportunity for cost savings in store furnishings, maximizing the
productivity of selling space, and enabling the Company to open new stores efficiently.
Competition.
The sale of apparel and personal care products through retail stores and direct-to-consumer
channels is a highly competitive business with numerous participants, including
individual and chain fashion specialty stores and department stores. Brand recognition,
fashion, price, service, store location, selection and quality are the principal
competitive factors in retail store and direct-to-consumer sales.
The competitive challenges facing the Company include anticipating and quickly
responding to changing fashion trends and maintaining the aspirational positioning
of its brands so that it can sustain its premium pricing position.
10.37% 
