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Christmas shopping, the ultimate test for A&F

By FashionUnited

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Christmas season, ushered by Black Friday, will be

pivotal to Abercrombie & Fitch as its shares of the company have been on the downswing after the retailer reported third-quarter results that missed expectations due to higher costs and a slowdown in Europe.

In the US, A&F chose to hold down prices, which combined with double-digit average units cost increases to put "significant pressure on our gross margins," Chief Executive Mike Jeffries said on a call with analysts.

Following the last edition o the Bedford Report, an increasing number of Americans are expected to hit stores during the holiday weekend, up to about 152 million, according to estimates from the National Retail Federation. The retail trade group estimates that retail sales this holiday season are expected to grow by a modest 2.8 percent to $465 billion. National Retail Federation President and CEO Matthew Shay said the firm "fully expects to see excited shoppers as early as midnight at stores around the country, as many holiday shoppers would rather stay up all night to take advantage of retailers' Black Friday deals rather than set their alarm to wake up the next morning."

As highlighted by MarketWatch, many Apparel companies like Lululemon Athletica that market their expensive brands to wealthier customers have been able to outperform their industry peers. Consumers with high incomes have continued to buy luxury items, and Lululemon has seen its stock take off in the last year on sales and popularity of its expensive yoga and fitness apparel.

The Christmas season and this week's famous "Black Friday" will be a good test as to the health of apparel stores, and some companies are hoping that high profile ad campaigns will translate into profits. Apparel Stores are already benefitting from a drop in cotton futures, which should benefit margins in the coming quarter.
A&F
Abercrombie
Abercrombie & Fitch
Lululemon Athletica