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Abercrombie & Fitch stock falls in trading after clothing retailer offers cash to "Jersey Shore" cast, in particular "The Situation," to stop wearing A&F brand.
The preppy teen clothing retailer issued a news release saying it is “deeply concerned” that the hit MTV show's Michael “The Situation” Sorrentino could significantly damage the brand’s “aspirational nature” by wearing Abercrombie clothing.
Abercrombie & Fitch previously sold T-shirts with the words “The Fitchuation” and appeared to embrace the "Jersey Shore" fashion connection, Reuters says. But the company has done an about face in what some described as a publicity stunt in the back-to-school shopping season.
The stock price for Abercrombie & Fitch (ANF) fell 7 percent on Wednesday, the first day of trading after the offer to Jersey Shore cast members of “substantial payment” if they stop wearing Abercrombie-branded clothes.
Analysts noted that the reason for the stock decline — A&F was among the hardest hit issues in the S&P 500 SPX — was not the unusual request to "Jersey Store," as some might like to believe, but rather it was attributed to cautious comments by management following the release of a better-than-expected quarterly earnings report.
In a conference call, Abercrombie Chairman and CEO Mike Jefferies worried investors by noting that “costing pressures will be greater in the second half of the year, and macroeconomic uncertainty has increased.”
This was enough to roil investors despite Abercrombie & Fitch reporting quarterly earnings that beat analysts’ expectations, with a 64 percent surge in net profit of $32 million, or earnings of 35 cents per share, Reuters reports.
Analysts reacted positively to the company's "Jersey Shore" news release.
“We applaud the decision to dissociate A&F brands from “The Jersey Shore” characters. Especially overseas, this is a proactive step to help maintain the brand’s emerging position as the beacon of casual American luxury. This is particularly important given that “The Jersey Shore” has taken its in-your-face, over-the-top antics to Florence, Italy this year for season 4,” wrote ISI’s Omar Saad, according to the Wall Street Journal.
Wall Street Strategies analyst Brian Sozzi wrote: "Management may be correct in asking (and offering to pay) the cast of 'Jersey Shore' to stop donning its logo-wear. It doesn't need the infusion of MTV and side-job dollars from the 'Jersey Shore' crew, if 2Q11 was any indication."
"No love for 'Jersey Shore!'" Nomura Securities Analyst Peter Lejuez wrote, according to Reuters.
The request to "Jersey Shore" came in a news release issued by the company’s Brand Senses Department, and posted on the corporate website.
"We are deeply concerned that Mr. Sorrentino's association with our brand could cause significant damage to our image," the release said. "We understand that the show is for entertainment purposes, but believe this association is contrary to the aspirational nature of our brand, and may be distressing to many of our fans."
"Jersey Shore," currently in its fourth season, which has seen the cast relocate to Italy, has drawn criticism for depicting Italian-Americans as drunken, promiscuous, and obsessed with partying, tanning booths and gyms.