As consumers go, so goes the U.S. economy. And consumers are increasingly going online.That’s been a major headache for brick-and-mortar retail chains lately, with Abercrombie & Fitch the latest major casualty. On Monday, the youth-oriented clothing retailer canceled its plan to sell itself off — apparently because it couldn’t find anyone willing to meet the asking price.Following the announcement, Abercrombie shares plummeted 21 percent to 17-year lows Monday, dragging other retailers along for the day’s hellish ride.Some key points to remember:
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- Abercrombie sales have fallen for four straight years. Its Hollister surfwear brand has been a bright spot, however. The company said Monday it will now focus attention there.
- According to census data, e-commerce in the U.S. grew 14.7 percent in the first quarter, almost triple the rate of growth in retail overall. Online sales are still a relatively small part of the pie — just 8.5 percent of total sales. But the concern for incumbent retailers is that the fast growth in the digital sector will eventually overtake brick-and-mortar stores altogether.
- Of several potential bidders, the private-equity firm Sycamore Partners, which recently bought Staples for $6.9 billion, came the closest to buying Abercrombie. But it ultimately backed off, Reuters reported.
- Wall Street is skeptical of Abercrombie’s efforts to shift its focus from teens to college-age consumers. The younger cohort is increasingly drawn to chains like Zara and H&M that specialize in low-cost, rapidly produced “fast fashion.”