Abercrombie & Fitch, the all-American clothing chain that opened its first London store in 2007, lost one-third of its sales in March, as it refused to cut prices and watched as customers fled to cheap, discount stores.
The retailer has been leading the hold-outs who argue that slashing prices would devalue their brand, even as rivals are piling on incentives to keep cash-strapped consumers coming to their stores.
The bargain-hunting trend was visible again yesterday as the top US retail chains announced their sales estimates for last month, providing new hope to investors who believe the US economy is emerging from its period of free-fall. Overall sales were still lower in March, but the declines were less steep, and more than half of the companies reporting put out figures that beat analyst expectations. Some even raised profit forecasts for the period, sending retail shares broadly higher.
Consumer spending accounts for more than two-thirds of US GDP, so the monthly retail sales reports are seen as a vital barometer of the economic climate.
Yesterday's figures showed that the winners and losers of the conflagration on the high street are beginning to emerge. Abercrombie's sales were down 34 per cent on March 2008, missing forecasts by 10 percentage points. Similar mid-market fashion names were also suffering, with Gap sales down 8 per cent and American Apparel losing 11 per cent.
High-end chains are having a particularly tough time. Neiman Marcus, which includes Neiman Marcus stores and Bergdorf Goodman, lost 30 per cent of its sales of a year ago, and the upmarket department store Saks was off 23.6 per cent.
Only discounters posted stand-out results. Wal-Mart, Costco and TJX – owner of TJ Maxx – all reported sales gains on March 2007. Carol Meyrowitz, TJX's chief executive, said the company's success was the result of giving struggling customers "a great value proposition on fresh selections of great brands", and two consecutive months of above-forecast sales prompted her to raise the company's profit guidance for the year.
The better competition for other discounters meant that Wal-Mart, the largest retailer in the US and the one chain to have consistently outperformed since the recession began, missed forecasts in March.