Abercrombie's Sales, Margins Don't Mesh

The chain will need to improve if Abercrombie wants to continue to be an appealing growth story. This year, 69 of the company's 107 planned new stores will be Hollisters.

The Hollister stores look great and are bursting with teenage attitude (at least to this thirty-something columnist). But if comps don't return to the plus-side soon, inventory and cost controls will become even more challenging.

Some Success

Abercrombie is doing several things extraordinarily well. A push abroad has so far been met with success, with sales at its first U.K. store booming.

The online business also has shown improvements. Jeffries said Abercrombie has tried to enhance e-commerce efforts through targeted email and better fulfillment.

Abercrombie & Fitch is also undertaking some major upgrades to its systems, particularly inventory optimization, merchandising and supply chains. While this process can be costly and have unexpected glitches, it should save the company time and money down the road.

So the company is managing its business probably as well as anyone in the industry. But retailing comes down to a very simple question: Do people want to buy the stuff you're selling?

I'm not ready to give up on Abercrombie just yet because I believe its brands, particularly Hollister, still have room to grow. But I'm not going to be patient about it. If the sales numbers don't improve in the next quarter or two, it will be time to get out while everyone is still singing management's praises.