The good folks at Abercrombie & Fitch Co. (freakishly attractive models included) will never admit to it, but the one great hope for their salvation in the U.S. market is Knight Rider demigod David Hasselhoff, an analyst says.
Paul Lejuez with Credit Suisse has already used the Hoff as a parallel for Abercrombie & Fitch's changing fortunes in the United States, noting "a person/brand can be popular in other parts of the world despite losing favour in the U.S.," in a February note.
We're looking at you, Germany.
In any case, in a sequel analysis to clients Friday, Mr. Lejuez now compares A&F's February rebound in same-store sales of +5% (well ahead of the industry consensus of -6%) to the former Baywatch Nights star's revitalization as a judge on America's Got Talent.
"If it is possible that Mr. Hasselhoff's career could teach us anything else, it's that just when you thought your star had completely faded in the United States along comes America's Got Talent … in simple terms, Hasselhoff lives!" he said. "For A&F, similar to Mr. Hasselhoff, although the relatively small month of February is not proof that it has reclaimed its former domestic status, it is an indication that the brand is not dead."
While February is a shortened month, and the uptick was likely driven by promotions, these are still good signs to Mr. Lejuez as it indicates there is still value in the brand itself.
"The ability to drive traffic to the store with promotions shows that its pricing strategy has been the culprit in preventing customers from shopping the stores," he said.
Mr. Lejuez maintains an Outperform – Volatile rating with a target price of US$49 for the company.
He also now forecasts same-store sales of +5% to +7% for March, and has increased his estimates for 2010 EPS to US$1.84 from US$1.78.
Meanwhile, the rebound also continues for Mr. Hasselhoff, who has agreed to a 10-episode deal with A&E for a new reality show featuring his two daughters.
"What better way to reclaim his former glory?" Mr. Lejuez said.