Abercrombie & Fitch Stock Drops After 'Jersey Shore' Offer
The retailer sees a significant dip in stock price Wednesday, even after reporting a Q2 net sales increase.
Abercrombie & Fitch stocks dropped as much as 7.5 percent the day after the company said it would compensate Jersey Shore star Mike "The Situation" Sorrentino to not wear its clothes.
Though it coincided with the Jersey Show offer, the loss was primarily due to the company's admission during an investor call that expenses will continue to rise in 2011. The Ohio-based company actually reported a 23 percent Q2 sales increase but spooked investors with expectations of a "double digit" increase in second-half, notes Bloomberg.
Tuesday, the retailer released a statement asking Sorrentino and his MTV cronies to "wear an alternate brand." It said, "We are deeply concerned that Mr. Sorrentino's association with our brand could cause significant damage to our image. 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."
MTV responded with its own statement, "It’s a clever PR stunt, and we’d love to work with them on other ways they can leverage Jersey Shore to reach the largest youth audience on television."
Sorrentino regularly sports Abercrombie & Fitch apparel, including underwear that can been seen under his pants or shorts when he lifts his shirt or goes shirtless. He also took a pair of neon green Abercrombie & Fitch sweatpants with him to Italy for the new batch of episodes of the MTV reality series.
Abercrombie & Fitch said in its earnings statement that it plans to roll out five new stores this year, including a Paris flagship that opened in May. It also expects to open two domestic stores and close approximately 60 to 65 other locations in the U.S. due to lease expirations.