CASE #12
The Competitive Environment in the 18-22-Year-Old-Apparel-Market

Difference in A&F΄s and AE΄s retail strategies

To start with, both A&F and AE share the same target market and offer similar merchandise. However, there are some differences in their retailer strategies that make this fashion stores stay competitive. Both retailers target mostly teenagers, and offer casual wear for young men, women and kids accompanied with accessories, outerwear, footwear and sweaters... As a difference, AE offers dorm wear and intimate apparel. In addition, A&F goods are more expensive and tend to target higher class teenagers while AE prices are ¨a little cheaper.¨ For this reason, A&F also runs Hollister Co. Stores which can compete
To conclude, as I explained the two different retail strategies for these stores, one can more easily understand their different target groups, retail mixes and competitive advantages. According to this, one would expect the gross-margin, operating expense to sales ratio, inventory turnover and asset turnover to indeed be different when comparing Tiffany’s and Blue Nile stores.

Financial Performance

Tifany΄s

• In the Americas, sales of $303.5 million in the third quarter and $887.4 million in the year-to-date were 9% and 21% below prior year levels. Comparable U.S. store sales declined 10% in the third quarter (declined 5% in the month of October) and 25% in the year-to-date. Sales in the New York flagship store declined 8% and 27% while comparable U.S. branch store sales declined 11% and 24%. During the quarter, the Company opened stores in Roseville, CA and Seattle, WA. Combined Internet and catalog sales in the U.S. declined 9% and 11% in the quarter and year-to-date.

• In Europe, sales increased 12% to $65.0 million in the third quarter and sales of $188.9 million in the year-to-date were equal to the prior year. On a constant-exchange-rate basis, sales rose 16% in the third quarter and 15% in the year-to-date, and comparable store sales increased