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Saturday, January 21, 2012

Abercrombie & Fitch in Barcelona...FLOORED! And Plans for Europe Shift...

A&F Madrid will be the only Abercrombie in Spain for now...  |  (image source)
This is very disappointing news...

Abercrombie & Fitch has just made the decision to cancel its plans to open in Barcelona. The Company had been planning, since 2011, on opening a Barcelona flagship store - what would have been the second location in Spain - inside the previous Banco Vitalicio de Españia building addressed on the corner of Paseo de Gracia and Gran Via de les Corts Catalanes. Unfortunately, there has been a change in plans which could have repercussions in its greater plans for Europe.

Up until the end of 2011, A&F was awaiting to sign papers for the go-ahead in Barcelona - leasing the space and initiating its construction. It seems that while it waited, Abercrombie & Fitch had enough time to consider the future impact that the uncertain and ongoing economic conditions in Europe would have on its business growth. Financial European growth for A&F during the third quarter of 2011 slowed. The Company cited "macroeconomic headwinds" as a factor of this slow in growth because it is susceptible, naturally, to the effects of the economic environment. Tourism traffic itself slowed down and it plays an prominent role in the performance of A&F flagships located in global cities. Nevertheless, Mike Jeffries (chairman and CEO; and "god" to A&F fanatics), maintained in the October earnings call that the European operations were still healthy and that the strategy and financial objective was unchanged. Now that we're nearing the end of the fourth quarter, things have become off-putting and the game has changed...

The Barcelona flagship has been cancelled and the decision is a reflection of a reassessment on future European expansion. Particularly in Spain, the Madrid flagship will be the only A&F location in the foreseen future. This may also mean that the idea to open a Gilly Hicks in Spain may also be reconsidered. Back in February 2011, Abercrombie & Fitch signed a contract for 34 College Green in Dublin for the first A&F - a flagship - in Ireland. The store was originally scheduled to open by the end of 2011, but was postponed and its fate is publicly unknown as of now. Flagships which are definitely on track to open include Hamburg (26 April 2012), Munich, and Hong Kong (late-2012). Amsterdam and Stockholm were also said to open in 2012, but their opening is also uncertain (at least to the public). Openings for fiscal 2012 will be shared by February...

This is the first piece of bad news we've covered that's definitely neither 'hot', 'funny' or 'wow'...Although you could call it an 'interesting' turn of events, albeit sad. :(