Abercrombie’s Failure to Conclude Sale Points to Larger Problems in Teen Retail Sector

Published By : 11 Jul 2017 | Published By : QYRESEARCH

Abercrombie’s proposed sale, with discussions rumored to involve rivals American Eagle and Express as well as private equity firm Sycamore Partners, has been shelved, leading to significant ramifications for the U.S. retail sector. Abercrombie and Fitch, beset by a worrying decline following the steady rise of internet-based retail shopping avenues, had been contemplating a sale since May. Following news of the absence of a takeover bid, Abercrombie’s stock dropped more than 20%, with the decline triggering a fall in the valuation of other companies in the retail sector as well. Sycamore Partners came the closest to sealing a deal, but couldn’t match the company’s valuation expectations.

Retail Sector Shares Hit by Increasing Difficulty of Teen Apparel Sector

The teen apparel sector, where Abercrombie’s primary economic interest lies, has become increasingly difficult to navigate in recent years thanks to the growing role of online shopping. Several apparel retail market players centered on traditional brick-and-mortar stores have been forced to shut shop in recent years. In the last two years, leading players such as Aeropostale, BCBG Max Azria, and Wet Seal have filed for bankruptcy, making Abercrombie’s failure to seal a sale all the more notable for the sector.

While new entrants such as Amazon as well as established players such as H&M have made the most of trends in the apparel retail sector, stores focusing on conventional brand labels such as Abercrombie are likely to suffer in the coming years. The company has diverted its attention to its beachwear brand, Hollister, in order to try to stem the reversal in the company’s fortunes and try to right the company in an increasingly turbulent teen apparel retail sector. 

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