Abercrombie & Fitch is exploring options for its China business, including the possibility of bringing in a local partner as the American apparel group looks to reignite growth in one of the world’s most competitive fashion markets, sources told Bloomberg on Wednesday. The Ohio-based retailer said its China assets could be valued at several hundred million dollars.
Discussions remain at an early stage and may not result in a transaction, but local sources told WWD that the company has already approached established fashion e-commerce operators including Baozun and Buyquickly.
The move follows the company’s broader strategic review of its Asia-Pacific operations announced in March.
Asia-Pacific has emerged as one of Abercrombie’s fastest-growing regions, despite its relatively small size. In the first quarter ended May 2, sales in the Asia-Pacific region jumped 24 percent year-over-year to $46.5 million, outperforming its other regions.
The apparel company initially entered the China market in 2014 with a four-story flagship at Shanghai’s Kerry Centre. However, the store closed during the COVID-19 pandemic period in 2022. Abercrombie currently operates around 21 stores across 10 cities, while Hollister has around 15 locations.
On Tmall, where Abercrombie and Hollister count over 3 million followers each, the brands diligently engage with shoppers with daily livestreams and participation in platform-led sale festivals.
In 2024, Abercrombie tapped Chinese actor Li Xian as the face of the brand.
The potential deal comes as Abercrombie & Fitch navigates an increasingly sophisticated Chinese market, where local players thrive on agile supply chains and timely marketing strategies across both online and offline channels.
For Jacques Roizen, cofounder of Shanghai-based Foresight Performance Partners, Abercrombie needs to strengthen its brand positioning in China before seeking potential investors, as adapting a global brand to the Chinese market can take three to five years — a significant challenge as investors become more cautious and focused on cash flow.
“The difficulty is that a Chinese investor is not buying a distribution agreement. They are buying desirability, and they read a China profit-and-loss statement faster than the headquarters that produced it. What is left is a business with no pricing power, a diminished brand, and no one wants to be handed the last chapter and asked to write the first one,” Roizen said.
“Most of the time, these premium fashion brands manage online purely for revenue, no storytelling, discounts all the time, which leads them to fall into all the traps of the Chinese e-commerce ecosystem,” said Roizen.
“By the time a global brand starts looking for a Chinese investor, it has usually spent years buying revenue with discounts, and the damage is already done,” Roizen added.
