Abercrombie & Fitch (ANF) announced plans to launch its namesake brand and Abercrombie kids on Tmall, sending the teen apparel retailer’s shares higher in early trading.
TMALL DEAL: Abercrombie & Fitch announced this morning that it will launch its Abercrombie & Fitch and Abercrombie kids on Alibaba Group’s (BABA) Tmall consumer platform for brands and retailers. Hollister, another Abercrombie brand, has been carried by Tmall since 2014, the company said. Effective July 26, Abercrombie will sell its namesake line and abercrombie kids on Tmall, giving it access to 454 million annual buyers across Alibaba’s retail marketplaces in China. “Alibaba Group places a strong emphasis on consumer engagement, which aligns with our focus on creating a unique online brand experience for our customers, as well as facilitating a seamless and frictionless shopping experience. Building on our Hollister brand’s successful partnership with the leader in China’s online retail space, we are excited to bring our A&F brand experience to the broader Chinese market, beyond the reach of our physical stores through Tmall,” Abercrombie CEO Fran Horowitz said.
WHAT’S NOTABLE: Last week, Abercrombie said it had decided to end talks with parties interested in a potential deal to buy the company. The decision came after Abercrombie said in May that it was in preliminary discussions with several parties, with American Eagle Outfitters (AEO) and Cerberus Capital rumored to be working on a joint offer. “After a comprehensive review of all relevant factors, with the assistance of our financial advisor, the A&F board of directors determined that the best path to enhance value for stockholders is the rigorous execution of our business plan,” Abercrombie Executive Chairman Arthur Martinez said. Mall-based retailers like Abercrombie & Fitch have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21 and H&M, as well as an increase in online shopping on sites such as Amazon (AMZN). Earlier this week, Abercrombie investor SLS Management said the retailer was not being “aggressive enough” in its turnaround efforts and called on the company to buy back a “large” amount of its shares. In a letter to the teen retailer’s board, SLS laid out two ways for Abercrombie to buy back shares: SLS said the company could buy back $200M of stock while reducing its dividend, or the company could sell its real estate assets that make up a “substantial portion” of its valuation and use the proceeds from the sale to repurchase shares. A spokesperson for Abercrombie said the retailer “maintains open dialogue with and regularly considers the views of its shareholders, including SLS Management.”
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