The Gap or Abercrombie & Fitch: Who is more tragically hip?

Posted Apr 7th 2007 2:10PM by Beth Gaston Moon
Filed under: Consumer Experience, Competitive Strategy, Marketing and Advertising, Gap Inc (GPS), Abercrombie and Fitch (ANF), Battle of the Brands

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

Every time I walk through a mall (not too often these days), I see a new "hip" store of which I was previously unaware. I can always count on a few mainstays, though ... the cell-phone-accessory kiosk manned by overly enthusiastic employees, the tantalizing aroma from Auntie Anne's pretzels, and the always tasteful novelty shops. In most malls, I can typically scope out the latest yuppie fashions in either Gap (NYSE: GPS) or Abercrombie & Fitch (NYSE: ANF) (and often-times both). Despite the encroachment of Hot Topic (NASDAQ: HOTT), Pacific Sunwear of California (NASDAQ: PSUN), and other trendy competitors, these two venerable names have stood the test of time, providing relatively affordable threads for men, women, and kids.

In addition to its eponymous chain, which was started in 1969, GPS runs the Old Navy and Banana Republic chains. The retailer's most recent experiment, Forth & Towne (created to appeal to thirty-something career woman) was a bust and has now been abandoned after 18 months. Same-store sales trends have turned south of late, dropping five percent in fiscal year 2005 and slumping seven percent last year. And during the past 12-month cycle, GPS has seen its quarterly earnings drop more than 35 percent. The stock is well off its highs, having lost two-thirds of its value since early 2000. With technical resistance bearing down in the form of the equity's 10-month and 20-month moving averages, relief might not be in sight for a while.

ANF has been around even longer, outfitting Teddy Roosevelt and Ernest Hemingway (obviously, the retailer's target demographic has shifted somewhat). The firm's website indicates that comparable-store sales grew by 26 percent in fiscal year 2005, and edged up 2 percent last year. Quarterly earnings have expanded 20 percent on a year-over-year basis, and quarterly revenue is up 18.4 percent from year to year. What's more, ANF boasts a notably low forward price-to-earnings ratio of 12.87, compared to the 17.53 P/E ratio at GPS. ANF has stair-stepped around a bit of late, but remains in an overall uptrend. Above its 10-month and 20-month moving averages, ANF has appreciated roughly 250 percent since the end of 2003.

When it comes down to personal preference, I easily favor ANF jeans; they cost a bit more, but they fit well, come in a variety of funky styles, and last for years. But the shopping experience tends to be a bit more copacetic at GPS. True story: I once had an ANF employee sigh and tell me that size-six jeans were kept in the back, as only zeros through four were on the shelves for public consumption. She might as well have said she had to go grab a pair for me out of the elephant room. (Now perhaps this display practice is no longer true, or was only true to that isolated location.) GPS commercials have always cheered me, from the everybody in vests series (featuring a young, pre-Office Rashida Jones!) to the latest smart spot with Claire Danes and Patrick Wilson, while the controversial ANF catalogs basically give me the creeps. ANF clothes are always more cutting edge, while GPS has become a bit too beige for my taste during the past few seasons. So for my business, it's a draw between the two retailers, but for the short-term investor, ANF looks like the better play.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Be sure to vote in our poll for Abercrombie or Gap as your preferred brand, and let us know why you love it in the comments. Results of all Battle of the Brands match-ups coming soon.

Tags: Abercrombie, ANF, Auntie Anne's, AuntieAnne's, banana republic, BananaRepublic, Battle of the Brands, BattleOfTheBrands, Beth Gaston Moon, BethGastonMoon, blue jeans, BlueJeans, Claire Danes, ClaireDanes, consumer spending, ConsumerSpending, Ernest Hemingway, fashion, Gap, GPS, Hot Topic, old navy, OldNavy, Pacific Sunwear, Patrick Wilson, Rashida Jones, RashidaJones, shopping, shopping malls, ShoppingMalls, Teddy Roosevelt, TeddyRoosevelt

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Reader Comments (Page 1 of 1)

4-21-2008 @ 12:24AM

Sophie said...

Personally, I like both of the stores. I like Gap for their simple, good-looking, well-priced clothing. It's not nerdy at all; you might as well be calling Ralph Lauren polos nerdy (which they aren't and pricier than A&F stuff).

As for Abercrombie, I like their clothing line; it's a little more pricey but I usually buy from clearance so it doesn't really matter. I just don't like how most people automatically label you if you wear their clothing.

To sum it up, both are nice. While Abercrombie is definitely the most popular brand right now, Gap still has nice clothing.

9-04-2009 @ 5:47AM

Nicolas said...

hello from athens....i would like to know if the Gap and Ambercrombie&Fitch fleece have the same sizing.....i wear medium size on fleece Gap and i dont know whitch size of Ambercrombie i shoul...dorder from the internet. You now that there is no store of Ambercrombie in Greece
thanks a lot

5-12-2010 @ 12:25PM

n.a.b20vtec said...

A & F all the way!!! I mostly shop there for Jeans...there the best..! My 2 fav, store are A&F & Express!!!

4-07-2007 @ 10:03PM

aaron said...

Abercrombie. I only saw Gap as a nicer Old Navy, and with that the quality is not so great for the price. With A&F, their quality had to go up (along with their prices, unfortunately) because sister-store Hollister was killng them in sales for awhile. Hollister IS what Abercrombie WAS in the late 90's, early 2000's.

You want to know what else? I've actually seen grown black men (yes, straight) buy Abercrombie jeans (wearing some right now). They are that fucking good. Alas, I'm almost 25, so my days of A&F clothes are almost over....I have no idea where to go now for clothes. Fuck it, I'll keep buying it.

4-07-2007 @ 11:45PM

Eric said...

Gap has been struggling for several years now. They seem to have lost their edge in "mature" clothing styles. Banana Republic, their one saving grace, continues to be successful. I personally used to love Abercrombie, but now as I no longer need t-shirts that suggest I'm in college and looking to score with any blonde I have moved on. Abercrombie's new store Ruehl fills this previous void by offering great quality clothing that is a little more professional (and pricey). I think Gap has lost its cool factor among the picky youth shoppers and until they can be cool again it will suffer with dismal sales.

5-02-2007 @ 10:16PM

j.jesus olea said...

I Love ANF, their clothes are really nice, hip, edgy and sometimes very funny. I only make 10.50 an hour and live in Los Angeles, where rent is very expensive. So, to get to wear ANF jeans or whatever it is that I like, I have to wait for their sales. I used to be crazy about the Gap and their turtle neck sweaters. Now, I have lost interest. I don't think that the Gap has that "it" for me to buy their products any more. I would buy the Gap only when they are really, really cheap.

5-07-2007 @ 9:52PM

tall cool one said...

I LOVE the Gap. Their clothes are definitely more edgy than Abercrombie. They let you express yourself, while Abercrombie clothes kind of take away your individuality. And you don't feel bad walking into the Gap if you happen to be bigger than a size 0! The sizing at Abercrombie is miniscule, and a friend once commented that some of the smaller sizes of shorts there (at the juniors' store, Abercrombie and Fitch) would probably fit her 7-year old sister. And they charge too much for their clothes! No way am I gonna pay $30 for some tiny scrap of material that they call a t-shirt. Who do they think they are? Gap prices are generally pretty low, and their sizing range is a lot better. They're very unpretentious (ahem, Abercrombie!). Give me the Gap over Abercrombie any day!

5-11-2007 @ 4:22PM

Joshua said...

ABERCROMBIE.No Question.Most people know abercrombie and abercrombie&fitch is way better than gap,a store with boring clothes.Abercrombie lets You express yourself.Gap are also Wanna be's They know abercrombie is better than they are because they are putting paint on there pants just like abercrombie

5-15-2007 @ 12:40AM

soccerbling said...

Abercrombie all the way, Gap is for nerds!

6-01-2007 @ 7:55PM

Andrea said...

Until about a month ago, I didn't shop at either. Then one day I wandered into Abercrombie, trying to kill time, and BAM! It hit me. Abercrombie has really gone up. I'm sure there will be a bunch of responses to that comment, but it has. I'm not 12 or 13, I'm a 21 year old from Wisconsin. I buy all of my Abercombie clothes from clearance. I don't think I've ever paid full price for a tank or t. I don't dress like I'm trying to get some, I dress nicely. It all boils down to personal preference. I don't really like Gap clothes. Everything there is khaki, blue or red. At least, here it is. I will stick with Abercrombie.

8-25-2007 @ 12:19PM

Olivia said...

WHAT THE CRAP! GAP IS SO UGLY AND BORING AND DISGUSTINGLY BLAND!! ABERCROMBIE IS HOT! GAP IS NOT! EWW! I GOING TO BUY SOME MORE A&F JEANS NOW!

11-21-2007 @ 11:44PM

Liz :) said...

omg okay gap is gay its a nerd store!! i like abercrombie (im 13) and its so hot i mean every1 in my school goes there!!!!!!!! duh abercrombie is the choice.