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Promoting Brand Loyalty at Abercrombie & Fitch Essay

Abercrombie and Fitch is an American retailer that focuses on casual wear for consumers aged 18 to 22. It has over 300 locations in the United States, and is expanding internationally. The company also operates three offshoot brands: Abercrombie, Hollister Co., and Gilly Hicks. The company operated a post-collegiate brand, Ruehl No.925, that closed in early 2010. The company operates 1,073 stores across all four brands. The A&F brand has 316 locations in the United States, four in Canada, one in London, one in Milan, one in Tokyo, one in Copenhagen, one in Madrid, one in Paris, one in Brussels, one in Dublin, and one in Hong Kong. A&F stores range from 6,000 to 36,000 square feet. The company focuses on providing high-quality merchandise that compliments the casual classic American lifestyle. selling casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, and Hollister brands.

The Company determines its operating segments on the same basis that it uses to evaluate performance internally. The operating segments identified by the Company are Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks. The operating segments have been aggregated and are reported as one reportable segment because they have similar economic characteristics and meet the required aggregation criteria. The Company believes its operating segments may be aggregated for financial reporting purposes because they are similar in each of the following areas: class of consumer, economic characteristics, nature of products, nature of production processes, and distribution methods. The Company views the customer’s in-store experience as the primary vehicle for communicating the spirit of each brand. The Company emphasizes the senses of sight, sound, smell, touch and energy by utilizing visual presentation of merchandise, in-store marketing, music, fragrances, rich fabrics and its sales associates to reinforce the aspirational lifestyles represented by the brands.

The Company considers the in-store experience to be its main form of marketing. The Company emphasizes the senses to reinforce the aspirational lifestyles represented by the brands. The Company’s flagship stores represent the pinnacle of the Company’s in-store branding efforts. The Company also engages its customers through social media and mobile commerce in ways that reinforce the aspirational lifestyle of the brands. Flagship stores and social media both attract a substantial number of international consumers, and have significantly contributed to the Company’s worldwide status as an iconic brand. The in-store marketing is designed to convey the principal elements and personality of each brand. The store design, furniture, fixtures and music are all carefully planned and coordinated to create a shopping experience that reflects the Abercrombie & Fitch, abercrombie kids, Hollister or Gilly Hicks lifestyle.

The Company’s sales associates and managers are a central element in creating the atmosphere of the stores. In addition to providing a high level of customer service, sales associates and managers reflect the casual, energetic and aspirational attitude of the brands. Every brand displays merchandise uniformly to ensure a consistent store experience, regardless of location. Store managers receive detailed plans designating fixture and merchandise placement to ensure coordinated execution of the Company-wide merchandising strategy. In addition, standardization of each brand’s store design and merchandise presentation enables the Company to open new stores efficiently. The Company had net sales of $2.929 billion for the fifty-two weeks ended January 30, 2010, down 15.9% from $3.484 billion for the fifty-two weeks ended January 31, 2009. Operating income for Fiscal 2009 was $117.9 million, which was down from $498.3 million in Fiscal 2008.

Net income from continuing operations was $79.0 million and net income per diluted share from continuing operations was $0.89 in Fiscal 2009, compared to net income from continuing operations of $308.2 million and net income per diluted share from continuing operations of $3.45 in Fiscal 2008. Net income per diluted share from continuing operations included non-cash, store-related asset impairment charges of $0.23 and $0.06 for Fiscal 2009 and Fiscal 2008, respectively. Net cash provided by operating activities, the Company’s primary source of liquidity, was $402.2 million for Fiscal 2009. This source of cash was primarily driven by results from operations adjusted for non-cash items including depreciation and amortization and impairment charges.

The Company used $175.5 million of cash for capital expenditures and had proceeds from the sale of marketable securities of $77.5 million during Fiscal 2009. The Company’s Market Share may be Adversely Impacted at any Time by a Significant Number of Competitors. The sale of apparel and personal care products is a highly competitive business with numerous participants, including individual and chain fashion specialty stores, as well as regional and national department stores.

The Company faces a variety of competitive challenges, including maintaining favorable brand recognition and effectively marketing its products to consumers in several diverse demographic markets. And sourcing merchandise efficiently and countering the aggressive promotional activities of many of the Company’s competitors without diminishing the aspirational nature of the Company’s brands and brand equity. There can be no assurance that the Company will be able to compete successfully in the future.

The science of the Deal Ch.7

Genentech is a biotechnology corporation, founded in 1976 by venture capitalist Robert A. Swanson and biochemist Dr. Herbert Boyer.  Today, Genentech has the biggest market capitalization in biotech at US $88 billion, with an incredible reputation in drug development, especially in oncology, and a number of blockbuster drugs under its belt. Genentech has multiple products on the market for serious or life-threatening medical conditions. In March 2009, Genentech became a member of the Roche Group, and Genentech now serves as the headquarters for all Roche pharmaceutical operations in the United States. Accordingly, the list below includes products which were previously marketed as Roche products that are now being marketed by Genentech in the United States. Genentech’s relationship with Roche Holding began in 1990, when the Swiss company bought a 60 percent stake in Genentech for $2.1 billion. As a result of additional stock purchases and sell offs, Roche owned about 56percent of Genentech in 2008.

The success of Genentech as a biotechnology company is indeed in no small part derived from its strategy of forming alliances with smaller companies, whose proprietary drugs and technology platforms have the potential to become blockbusters. The commercialized drug, called Tarceva, is a drug used to treat non-small cell lung cancer, pancreatic cancer and several other types of cancer, which was released in 2004 and quickly acquired blockbuster status. It is marketed in the United States by Genentech and OSI Pharmaceuticals and elsewhere by Roche. In lung cancer, it extends life by an average of 3.3 months at a cost of CDN$95,000. Historically, this approach has brought Genentech great rewards, particularly in the field of oncology, and now the company is hoping to achieve similar success in new therapeutic areas.

To support small companies with promising technologies and/or drugs in development that are at too early a stage for licensing. In this way, Genentech has developed a highly competitive approach, singling out small companies with enormous future potential and establishing mutually beneficial relationships at the earliest possible stage. A significant proportion of the Genentech pipeline has always consisted of proprietary technology platforms and drug candidates, and its brave approach to R&D spending reflects this.

In 2003, 24% of Genentech’s revenues were directed into R&D, to address the top-heavy position of its pipeline at the time. To balance resource use with the strongest likelihood of success, Genentech continuously evaluates its pipeline products in order to determine which are the most promising projects to move through the many phases of clinical testing. The pipeline includes both breakthrough innovations and new indications for existing, well understood products that may fight more than one disease or more than one form of a disease.


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