`Drinking 101' controversy helps Abercrombie & Fitch, analysts
say

COLUMBUS, Ohio - Abercrombie & Fitch is experiencing a good buzz, not a
hangover, from an uproar over its recent clothing-catalog feature that gave
students directions for "creative drinking." The article, called "Drinking
101," has not hurt the company's reputation or its bottom line. Maybe it
should have been called "Marketing 101."

"It's just created more hype in the company," Kindra Hix, a senior analyst
with NationsBanc Montgomery Securities, said of the two-page article in A&F
Quarterly that came out last month.

"With this customer segment, you like controversy. You like to be a little
rebellious," Hix said. The company targets its designs and the catalog to
college-age people, many of whom are not of legal drinking age.

Critics said the article, with recipes for drinks called the Woo-Woo and
Brain Hemorrhage and instructions for a drinking game, encouraged alcohol
abuse.

Abercrombie & Fitch admitted it went too far, and recalled the catalog from
its 171 stores to slice the articles out. It also said future issues would
tell readers to be responsible with alcohol. The next catalog is due out in
early October.

The Columbus, Ohio-based company recently released results for the second
quarter ended Aug. 1, showing its earnings quintupled from the same period
a year earlier.

"These guys are running the best business results of any retailer in
America," said Steve Kernkraut, a retail analyst with Bear Stearns.
"Clearly, they are on the right track with everything they are doing."

Sales were up 70 percent for the quarter and same-store sales - often the
best indicator of a retailer's performance because it compares the sales of
stores from one year to the next - were up 45 percent.

The company's stock fell slightly after the controversy started, but has
rebounded to a record high.

And the controversy apparently has helped the catalog. Paid circulation has
gone from about 75,000 to 100,000 and copies of the catalog that still have
the article have become a collector's item, Hix said.

Mothers Against Drunk Driving, among the groups upset with the article, was
satisfied with the company's response. But one retailing consultant said
the company did not go far enough and ought to apologize.

"There is nothing ethically wrong to the advertising, but it's morally
wrong to put that before the community that supports you," said Robert
Kahn, publisher of the newsletter Retailing Today. "They should be
criticized."

Company spokesman Lonnie Fogel said the company did not intend to create a
controversy, but hasn't exactly suffered.

"While we acknowledge that the inclusion of the drinking game was
ill-advised, the impact resulting from the controversy served to draw more
attention to the magazine and the brand, and did stimulate an interest in
purchasing copies," Fogel said.

Checked-by: Pat Dolan