Abercrombie & Fitch CEO says smaller stores are the future

epa05643359 A man leaves the Hong Kong flagship store of Abercrombie & Fitch in Central district in Hong Kong, China, 23 November 2016. The store announced on 18 November 2016 that it will close down in 2017, two years before the end of its lease, as it can no longer afford to pay the 7,000,000 Hong Kong dollar (848,510 euro) per month rent - a rent that is reportedly more than double what the previous tenant in the same store was paying in 2014. According to reports, property agents said rents for street level stores in Hong Kong's central business district have dropped by 50 to 70 per cent from their peak in 2014. The sharp drop is due to the slowdown in the number of tourists from mainland China visiting the city for luxury shopping, however locals are optimistic that the drop in ground floor retail rents will allow for local stores to re-enter the market paying lower rents and catering towards the needs of Hong Kong people by selling cheaper goods and services. EPA/ALEX HOFFORD

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Abercrombie & Fitch CEO Fran Horowitz said in an interview with CNBC that smaller stores are the future.

Abercrombie will do 85 store redesigns in 2019, including some for its Hollister brand, after doing 70 in 2018.

This entails the apparel retailer either closing a bigger store in a mall and opening a smaller one nearby, chopping up a bigger store to take up less square footage, or opening up a small-format location in an entirely new market.

As a result, Abercrombie will end 2019 with more stores than the company had in 2018, but less square footage overall, which is the retailer’s ultimate goal, Horowitz said.

The CEO said these smaller and remodeled locations are still bringing in the same sales if not better than the larger stores.

Via CNBC

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