Abercrombe Shares Spike on News of Goldman Help

Trading in Abercrombie and Fitch (ANF) was halted briefly earlier today as its shares spiked over 5 percent on news that it had retained Goldman Sachs to advise it on its continuing struggles with the investment advisor Relational Investors. Abercrombie has seen its share price fell almost 50 percent in the last year as net income fell 52 percent in the last quarter. The company has pointed to weak sales in Europe as the major reason for the decline. BusinessWeek, in an article published in August blames its “soft porn” marketing approach. “While Abercrombie blames the economy for its woes, brand consultants say it also has failed to change with the times. Today's teens are underwhelmed by the half-naked models and blaring, dimly lit stores. They're also less inclined to wear Abercrombie's longtime uniform of pricey denim and graphic T-shirts.” The company has also run afoul of the U.S. Civil Rghts Commission for its lack of hiring non-Caucasians. Their Hollister brand had to issue an apology to South Koreans when models they used made fun of Asians on Twitter and in photos. Abercrombie seems to be taking the advice of its larger investors by announcing reducing store openings and slashing the capital expenditure budget. Relational Investors has increased its stake in Abercrombie to nearly 4 percent. The firm believes in a “hands-on” approach with the companies in which it invests.