Abercrombie & Fitch (ANF) New Brand Position Execution To Drive Stock - Cowen

Cowen analyst, Oliver Chen, likes Abercrombie & Fitch (NYSE: ANF) management's efforts to re-center brand positions in conjunction with changing product, online, & marketing. Top concerns include: traffic, consumer willingness to spend on apparel, and regaining share in women's tops. Brand Presidents join in June & Aug. The firm maintains a Market Perform rating and bumps its price target to $22.00 (from $20.00)

ANF brands became less relevant with their fashion being too much of a follower vs. trend leader. To rectify this, they went out to get new design talent to improve assortments, focusing on outfitting as an opportunity. They need their buys to be deeper behind important ideas, and allowing the improved product and fashion pieces to be a bigger part of the assortment to move the needle. ANF's goal is to be a global lifestyle brand, establishing strong emotional content to build a connection with their customer. They believe that among the most important building blocks of this effort is to have a strong point-of-view in brand positioning & make sure the customer knows exactly what the brands stand for.

Hollister has always been geared toward the global high-school customer, rooted in California lifestyle. ANF believes this high-school customer increasingly values the feeling of freedom and the spirit of summer, which Hollister holds as the core of their brand. The brand will also evoke the feeling of being inclusive, and they have done work to improve their brand sentiment (anti-bullying campaigns etc.).

The Abercrombie brand, since its inception, has been geared toward a slightly older customer vs. Hollister. The target is a 20-something customer, and not necessarily a college customer. Historically, the A&F brand was rooted in idealizing an exclusive, privileged lifestyle. Now, the brand is trying to be more inclusive, moving towards an American casual luxury brand, and away from giving off an exclusive vibe. On the luxury part of their brand ethos, management was clear that it is less about the price-points, and more about the quality of the product, and how the customer feels when they wear it. Quality will remain a focus, as this has been an important part of the heritage of the brand.

For an analyst ratings summary and ratings history on Abercrombie & Fitch click here. For more ratings news on Abercrombie & Fitch click here.

Shares of Abercrombie & Fitch closed at $19.42 yesterday.

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