Potential buyers are reportedly targeting Hollister parent company Abercrombie & Fitch, according to a Reuters report.
The company confirmed Tuesday afternoon that it is in preliminary talks with several interested parties. However, there is no guarantee a transaction will take place, Abercrombie said.
Abercrombie’s stock had been trading at a 17-year low as the company has struggled over the past few years.
The retailer’s net income fell 88% to $4 million in 2016 compared to the prior year. Compared to 2012, net income fell 98%.
One of the biggest problems of late has been the company’s struggling Abercrombie & Fitch banner, which operates a total of 355 stores globally.
That chain’s same-store sales fell 11% in 2016, while net sales fell 9% to $1.5 billion.
Meanwhile, Hollister, the industry’s nemesis and competitor at the mall, has stabilized.
In 2016, Hollister showed sequential same-store sale improvement from Q2 on. In Q4, which was a difficult quarter for many competitors, same-store sales rose 1%.
For all of 2016, Hollister same-store sales were flat.
Total Hollister sales in 2016 were $1.8 billion, a 2% decline from the previous year. That makes Hollister one of the largest beach-inspired brands in the world.
One number the surf industry should take note of: The Hollister “Club Cali” loyalty program now has 5 million members.
Abercrombie & Fitch has worked to revamp Hollister stores, products and messaging under new Abercrombie CEO Fran Horowitz.
They remodeled 65 stores in 2016 to a more open, inviting format, and 40 more remodels are planned this year. Hollister added new categories like swim based on customer feedback, and introduced a new fragrance called “Wave.”
Hollister also redefined its brand messaging: “Hollister celebrates the liberating spirit of the endless summer inside everyone.” Clothes are inspired by “California’s laid-back attitude.”
Abercrombie executives describe Hollister as “performing” and say it has proven to be “sustainable.”
“Hollister’s 2016 performance shows the potential for our brands when brand voice, product, and brand experience are aligned and focused on the consumer,” Horowitz said during the Q4 earnings conference call.
Hollister is not immune to the retail challenges, and executives predicted that the first half of 2017 would be challenging Abercrombie as a whole.
While news reports flashed around today about a potential takeover of parent company Abercrombie & Fitch, it’s unclear if a transaction will take place.
It’s also unclear how any potential transaction would impact Hollister.
