Stephen Foley: Abercrombie & Fitch has made the usual mistake

US Outlook A few years ago, every trip I took back to the UK I had to stuff my suitcase full of Abercrombie & Fitch gear to hand out as gifts. The retailer's kind-of-preppy, kind-of-sporty polo shirts were practically a fashion uniform for the folks back in London. Not any more.

A&F spotted its opportunity, expanded hard into the UK and across Europe, opened huge stores with shirtless hunks on the door and dance music pumping through the darkness inside, and, as is entirely typical in the retail sector, immediately destroyed its exclusivity and its brand cachet. Also it took management too long to realise its gear was going out of fashion at the core A&F chain and at the even more ludicrously overpriced Hollister chain.

International same-store sales (of which the UK is the largest single component) plunged 26 per cent in the second quarter, and stockrooms are full of unsold items that will have to be flogged at knockdown prices for the rest of the year. For investors, the outlook is as chilly as an A&F model in a London doorway in winter.