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No price cuts for ANF and Hollister

By Tiffany Montgomery
August 15, 2008 6:15 AM

Abercrombie & Fitch, the parent company of action sports industry competitor Hollister, said in a conference call with investors this morning that it won't cut prices despite the tough economy and its weak results.


In fact, the company plans to raise prices when it can because it believes higher pricing makes its brands more aspirational and separates its stores from the markdown mania at the mall.


Executives said the company is focused on creating an emotional connection with consumers rather than competing on price and promotion based on macro economic conditions.


At the same time, the company looks to find efficiencies in backend operations to help the bottom line as sales slow.


Executives talked extensively about protecting and elevating the company's brands.


"Brand protection is our number one priority," Chairman and CEO Mike Jeffries said.


The company also said it is continuing to invest extensively in its international expansion despite the slow economy and its tepid second quarter results.


Total company sales increased 5 percent to $846 million. Total comp store sales fell 4 percent. Net income decreased 4 percent to $78 million.


Hollister sales increased 5 percent to $351 million. Hollister comps decreased 9 percent.


Three Hollister stores will open in mainstream shopping malls in the UK in the fall, with a fourth planned for spring, 2009. Executives said they are "very excited about the prospect of those stores" and in 2009 may accelerate the opening of Hollister stores in Europe and the UK.


Hollister will move into the Vancouver market this year, and another seven stores are planned for Canada in 2009.


For 2008, there will be a total of 66 new Hollister stores. Twenty-three Hollister stores opened in the second quarter. Currently, there are 479 Hollister stores.


The company sees Hollister domestic growth opportunity in upscale shopping centers.


The company has moved up its holiday deliveries to the end of October.


For the fall, the company is expecting comp store sales to be down 7 percent.


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