February 21, 2011, 4:19 PM

Abercrombie will consolidate its fulfillment operations

The chain will spend $26 million over two years reducing two centers to one.

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Abercrombie will consolidate distribution

As part of an ongoing move to cut costs, Abercrombie & Fitch Co. is making plans to consolidate its distribution centers into a single facility.

Abercrombie & Fitch, No. 65 in the Internet Retailer Top 500 Guide, currently operates a pair of distribution centers near its headquarters in New Albany, OH. One center is used to ship orders for its global e-commerce channel and for its Abercrombie & Fitch store locations. A second center supports the retailer’s store network for the Hollister and Gilly Hicks brands.

But beginning this year, Abercrombie will consolidate distribution centers, including for online, into a single facility, chief financial officer Jonathan Ramsden told Wall Street analysts on the company’s recent year-end earnings call. “Going forward, we plan to consolidate into a single distribution center, which should, in turn, facilitate a sale of our second center and result in reduced distribution costs upon completion by mid-2012,” Ramsden told analysts.

Abercrombie expects to spend about $26 million over the next two years to consolidate its fulfillment operation, including about $11 million in 2011, Ramsden said. Despite the cutback in distribution center space, Abercrombie says capital expenditures will total about $300 million in 2011. “The capital expenditures will be predominantly related to new stores, store refreshes and remodels,” Ramsden told analysts.

Abercrombie finished 2010 with healthy web sales. For the year ended Jan. 29:

  • E-commerce revenue grew year over year 41.3% to $352.5 million from $249.4 million in fiscal 2009.
  • Total sales increased year over year 18.5% to $3.46 billion from $2.92 billion.
  • Comparable-store sales increased 7%.

Internet Retailer calculates the web accounted for 10.2% of total sales in fiscal 2010 compared with 8.5% in fiscal 2009.

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