Abercrombie & Fitch has a growth starategy for the future of its company; if they can execute this plan then the future is bright but they have many obstacels to overcome. Abercrombie concentrates on teen shoppers who are by nature quite fickle so Abercrombie must always be quick and innovative in getting new clothing on the shelves in their stores. Abercrombie has one of the highest profit margins in the industry at 19% and would like to keep those high margins; however, in order to stimulate slumping future sales Abercrombie may have to lower prices and thus reduce their margins. Abercrombie has grown its year over year earnings for 43 straight quarters, a trend they would obviously like to continue but one that cannot continue forever. One goal Abercrombie has is it wants to grow its sales in women and girls apparel. Chairman and CEO Michael Jeffries states, "We continue to work very hard in mens and boys, however out biggest volume opportunities are in womens and girls." In the past Abercrombie has had much success amongst men and boys but has been unable to translate this success into the female arena of clothing. In order to grow this part of their business they must appeal more to the tastes and preferences of females, something they have been unable to do in the past. Wanting to be more flexible and reactive in the future, Abercrombie has to create many new items in low quantities to better their inventory turnover. Jeffries says, " We are designing and delivering more new items more frequently. The items will flow into stores faster and remain in stores for a shorter period of time." They are hoping that customers will respond to these new items, coming back to the store sooner and buying the brand new items they see. To grow earnings Abercrombie must decrease its unwanted inventory investment and bring new items to the stores faster.
