Following a disappointing earnings announcement, a cascade of price target revisions hit Abercrombie, with analysts at 18 banks lowering revisions, including Goldman Sachs, Barclays, and Deutsche Bank. BMO Capital also downgraded Abercrombie & Fitch when adjusting its estimates on the miss.

"We now see greater gross margin deterioration than we previously anticipated and believe the pace of margin recovery will take longer than expected, particularly given management’s aggressive promotional stance in the domestic channel," BMO Capital analyst John Morris said. "Additionally, a weakening macro picture in Europe casts a cloud of uncertainty on the earnings power of [Abercrombie’s] international business in the near term."

Abercrombie & Fitch has been buffeted by shareholders over the past two weeks, following a third quarter earnings miss and news that same-store sales at international flagships has turned negative.

Abercrombie reported net income for the quarter of $50.9 million, or $0.57 a share, compared to estimates for $0.71 compiled by Thomson Reuters. Last year, the retailer posted net income of $0.56 a share. Revenue for the quarter grew 21% to $1.1 billion.

The New Albany, Ohio, retailer has had difficulty matching growth seen over the last decade, when teenagers purchased nearly anything the store could manufacture.

Michael Jefferies, Abercrombie's CEO, defended international growth on the company's conference call with investors yesterday.

"If anyone is inclined to believe that a softening of our business in Europe, this quarter, in the face of severe macroeconomic headwinds is a major issue for our model, frankly, I think they are missing the forest for the trees," he said.

Overseas flagships have contributed greater percentages of top and bottom line growth. Stores in Paris, Milan and London each generate upwards of $10 million in annual sales. The London store is second only to New York's Fifth Avenue location in profit contribution.

The teen retailer has seen its stock price near 52-week lows after missing earnings consensus, erasing a 66% rally seen over the past year.

Over the year, Abercrombie has closed three under performing stores domestically, while opening 25 Hollister and one Abercrombie & Fitch locations overseas.

U.S. sales have held up well on the back of higher promotional activity. However, that has pressured margins, which declined 360 basis points to 60.1%.

Inventories have increased by 32% over the year-ago period as the company prepares for holiday sales. That metric will be closely monitored by analysts worried that the retailer will have to turn further towards markdowns as Christmas approaches.

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"Although Abercrombie fans agree this Skyler cami is cute, a few refuse to pay $88 for it."

That's the kind of insight Brean Murray's Eric Beder drew from comments on the Facebook pages of retail brands. Here are some more:

A&F fans are loyal and most are willing to pay a premium. Foreign growth looks good.

AE fans love the spread in People magazine and they're digging the "Friends & Family Additional 30% Off" deal.

Aeropostale "are going crazy" over the 40% off for "Friends & Family" and they're also excited about the fee $25 gift card after they spend $100. But margins may suffer from all this discounting.

Hollister fans are buying the new sweaters, though a few object to the prices. The Huntington Beach cardigan is a "must have."

Urban Outfitters is pissing off its target consumers with the latest fashion line. And everyone thinks those platform heels are "hideous and unoriginal."

Now take a sneak peak at the Victoria's Secret fashion show >

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(List compiled by Eben Esterhuizen, CFA)

Abercrombie & Fitch’s stock plunged more than 15% on Wednesday after the retailer reported disappointing third-quarter earnings despite an increase in sales.

Bad Press

Maybe Abercrombie and Fitch’s (ANF) public request that Michael “The Situation” Sorentino, and others of the Jersey Shore cast, stop wearing their clothes on television (in exchange for what many assumed was ample financial compensation) wasn’t a good marketing move after all. And in an “Only in America” turn of events, The Situation countered with a $4 million lawsuit on Tuesday.

“Sorrentino claims that the retailer never actually offered to pay him, and then went on to launch clothes exploiting his trademarked phrase “G.T.L.,” an acronym for gym, tan, laundry, and “Fitchuation,” a distortion of his nickname,” reports CNN Money.

While we’re at it, I believe it’s plausible the store’s assault on the senses through dark lighting, loud music and heavy reek of cologne (detectable from blocks away) may be creating a forcefield sufficient enough to keep even the most determined parent from picking out a pair of skinny jeans for their darling tween.

Financial Breakdown

The company earned $50.9 million, or 57 cents a share, in the quarter ended October 29th. This is a slight improvement to the $50 million, or 56 cents a share, it earned a year earlier.

This came as a disappointment to analysts who forecast earnings to rise to 71 cents a share. “The results were worse than even the most pessimistic forecast for the company,” adds CNN Money.

On a brighter note, sales rose 21% to $1.08 billion, in line with forecasts. Same-store sales increased 7%. But sales at its core Abercrombie & Fitch brand only rose 4% compared to higher gains at its Abercrombie for Kids and Hollister brand stores.

“While the company said it is on track to open international stores, it also reiterated plans to close about 55 to 60 domestic stores as those leases expire, primarily at the end of the year.”

Other Retailers

So, which companies are taking away Abercrombie’s market share?

For ideas, we collected insider buying data on roughly 80 apparel store stocks. We managed to identify 4 names that have seen significant buying from insider executives over the last six months.

Insiders think these apparel stocks are set for more gains–do you agree?

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

List sorted by market cap.

1. American Eagle Outfitters, Inc. (AEO): Operates as an apparel and accessories retailer in the United States and Canada. Over the last six months, insiders were net buyers of 579,634 shares, which represents about 0.35% of the company's 167.85M share float.

2. Collective Brands, Inc. (PSS): Engages in the wholesale and retail of footwear and related accessories worldwide. Over the last six months, insiders were net buyers of 20,139 shares, which represents about 0.04% of the company's 55.24M share float.

3. Charming Shoppes Inc. (CHRS): Operates as a specialty apparel retailer primarily for women in the United States. Over the last six months, insiders were net buyers of 35,000 shares, which represents about 0.03% of the company's 100.25M share float.

4. Hot Topic Inc. (HOTT): Operates as a mall- and Web-based specialty retailer in the United States. Over the last six months, insiders were net buyers of 40,000 shares, which represents about 0.1% of the company's 40.91M share float.

Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.

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Barclays Capital's equity research team is out with its GLOBAL TOP PICKS 2012 list, choosing more than 140 names, 59 of which trade in the U.S.

Stuart Linde, head of equity research at the bank, expects equities to face major headwinds during the first half of the year, before any relief.

"Our forecast for the S&P at mid-year is 1150, the bottom of our expected range," he says. "We are more constructive on 2H12, as the prospect of policy changes after the election could spur a year-end rally. Our year-end target is 1330."

But Linde charged his analysts with picking the companies that would defy that decline. These are the 30 U.S. equities that will generate returns of 30% or more if they rise to Barclay's estimates.

Honeywell International: Recovery in core businesses

Potential to Upside: 30.5%

Ticker: HON

Sector: Industrial

"The specialty materials business has turned into a key driver of the overall HON story. Backlog is strong here, mix is beneficial and the outlook for 2012 appears very good."

Source: Barclays

Nike: Aggressive cost cuts will boost margins

Potential to Upside: 31.3%

Ticker: NKE

Sector: Apparel, Footwear & Textiles

"Continued progress expanding gross margin long term through cost initiatives, warehousing/logistics, and direct-to-consumer, partially offset by rising input costs. In this difficult sourcing environment, we believe Nike is well positioned to navigate challenges with its global reach and scale."

Source: Barclays

Noble Energy: Production volume increases

Potential to Upside: 32.0%

Ticker: NBL

Sector: Oil & Gas

"In the near term, we expect the start-ups of long-lead-time projects in the deepwater Gulf of Mexico and West Africa, plus new volumes from the Marcellus Shale and growing volumes from the Niobrara Shale, to add 15% to production and 25% to revenue."

Source: Barclays

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Abercrombie & Fitch announced preliminary fourth quarter results this morning, guiding for earnings substantially below Wall Street estimates and sending shares down more than 11 percent in pre-market trading. 

The New Albany, Ohio, teen retailer said it expected to post earnings per share of $1.10 to $1.15, under consensus analyst estimates of $1.58. 

Top line results for the period were $1.33 billion, as comparable store sales remained flat against last year's numbers.

"Our sales for the quarter were below expectations in a highly promotional environment, and our results were further affected by all-time high cotton costs," Abercrombie Chief Executive Mike Jeffries said. "We remain cautious on near-term sales trends; however, we are confident that we are on track with our assortment and our long-term strategy, and hope to see improvement as 2012 progresses."

Perhaps most worrisome to investors were negative comps recorded at the company's Canadian, European and Japanese flagships, which are generally seen as the main driver of growth.

Abercrombie has been able to charge considerably higher prices at flagships overseas, as the U.S. moved to a highly promotional environment. However, early signs showed that the company's ability to maintain premium pricing overseas was hampered.

During the quarter, total international sales including sales from its website, surged 62 percent to $367 million, while U.S. results increased some four percent to $962 million.

"Across all brands men's and women's comps were similar for the quarter," the company said in a statement. "Sweaters fleece and outerwear performed below company expectations."

The company has had difficulty raising prices in the U.S. During Abercrombie's ascent, it piloted both Ruehl stand-alone stores, to target men and women aged 25 to 34, and an Ezra Fitch line of jeans, which retailed about $100 higher than regularly priced jeans in its mainline stores. Both concepts were pulled after poor interest and the inability to generate strong returns.

Abercrombie has faced intense competition in the teen market, as higher priced retailers like Rugby, Brooks Brothers and Polo Ralph Lauren — which owns the Rugby brand — compete for a younger audience. Starting prices for women's dresses at Rugby retail slightly above Abercrombie's, and the brand appears to be making strong inroads in the college market.

At the end of its second quarter Rugby, which could become the greatest threat, operated some 15 stores, in similar markets as Abercrombie & Fitch storefronts. At the end of third quarter, there were 316 mainline Abercrombie locations, although the retailer expected to close a number.

Less expensive rivals, like Aeropostale and American Eagle have also made inroads as the economy gyrated lower. During the holiday months of November and December, American Eagle saw same-store sales jump 12 percent from year-ago levels.

Today's earnings report pushed Jeffrey Klinefelter of Piper Jaffray to cut his 12 month price target to $54 from $70, on the disappointing retail results.

Shares have traded lower over the past several months, after the company first noted weak European sales during its third quarter. The stock is now 47 percent below a $78 peak set last summer.

The company will announce quarterly results on February 15, 2012 before the opening bell. 

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Abercrombie and Fitch sure has a way with the slides from its earnings presentation (.pdf).

And

And...

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Abercrombie & Fitch has been relying on buff bods and pretty faces to sell their clothing for years — a strategy that's echoed by the company's racy advertisements and controversial "look policy." 

And now we know one way management makes sure their staff stays in such great shape!

According to The Daily Telegraph's Nick Squires, an email from one of the company's stores in Milan, which was leaked to Italy's Corriere della Sera newspaper, said that the store required male employees to do 10 push-ups, and 10 squats for females, every time he or she made a mistake.  

A former employee told Corriere della Sera, "I had to do a lot of press-ups. That's how it works there —you take it or leave it," writes Squires.  

The American-owned company is no stranger to controversy. In 2009, the retail store was sued for allegedly turning down a sales applicant because she wore a headscarf. Stateside, it's also been billed as one one of the most obnoxious stores in the mall.  

Now see: The 18 Most Hated Companies In America > 

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Abercrombie & Fitch has been dealing with a racism scandal today, reports Adrian Chen at Gawker.

People are enraged over this listing for brown cargo pants described as "[N-word] Brown." (click here to see the site).

But it's all a hoax, since it's on a website registered in China that appears to just sell a bunch of knockoffs.

A&F hadn't done anything wrong, but it still has to deal with the fallout. Twitter totally freaked out over this today.

It turns out that it's likely because of a bad translation program. In 2007, a couch was found with the same description on it. 

Investigations showed that a translation program — made by Chinese software company Kingsoft Corp. — was at fault. When the Chinese characters for "dark brown" are typed in ... well, you see the results.

Alas, there's not much A&F can do about it but try to get the word out that it's not its fault. Sometimes brands just get unlucky.

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Abercrombie & Fitch advertising photographer Bruce Weber made a series of gay wrestling videos—which included a man-on-man kiss—but the clothing chain says the ads aren't theirs.

The backstory is that everyone knows Abercrombie has a gay sensibility (its male cologne brand is called "Fierce," for instance); that the company's longtime ad photographer, Weber, is gay; and that the pair have made a mountain of beefcake ads with a homoerotic subtext in the past. This is the store that routinely paid young male models to stand around shirtless in malls to encourage shoppers to drop $150 on a pair of jeans.

Weber posted a Facebook update with a photo of two shirtless dudes wrestling in A&F branded gear, under the headline, "4 NEW WEB FILMS BY BRUCE WEBER FOR ABERCROMBIE & FITCH."

But when The ShopHound tried to confirm that A&F was finally admitting what everyone already knows—that the super gay chain's super gay photographer makes super gay ads—Abercrombie stayed in the closet. The ads are not for Abercrombie, the store told the shopping blog.

You can watch the ads here. They are suggestive but safe for work. They show men wrestling in the shower, in the ocean, and one guy skipping until his shorts fall down. This particular video ends with one man giving his shower buddy a lips-to-forehead smooch.

The evidence.

The kiss.

Wrestling in the shower.

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At a time when companies are struggling to recruit certain talent, established companies and start-ups alike know they have to dangle perks to lure recruits into the fold. And since free food and drink, stock options and yoga classes are no longer special, sometimes that means offering outrageous incentives.

In the 90s, I worked for a Silicon Valley start-up that offered refrigerators stocked with food and drink, Ping-Pong tables, a weekly cruise, happy hours, dry cleaning service, razor scooters for zipping around the building, casual dress and flex-time schedules.

Today, that’s barely the bottom-line offering for tech or financial sector employers. According to Forbes and CNN, many companies offer employees discounted or free massages and yoga, and perks like concierge service are no longer reserved for executives. Start-ups appear to have the most original perks, Mashable reports.

Sound too good to be true? You, too, could command these goodies if your skills are in demand.

To give you a sense of what’s out there, I scoured the web for articles about perks and aggregated them for your convenience:

Transportation

• Timberland, the outdoor outfitter company, offers workers a $3,000 subsidy as a down-payment on a hybrid automobile.
• Texas-based Container Store rewards employees for safe driving, giving out $5,000 for ten years of flawless driving.
• San Francisco start-up Qwiki allows commuting employees to expense train tickets. The company will buy you a bike or cover your gas expenses.
• If you work for S.C. Johnson, the company will change the oil in your car.
• Abercrombie and Fitch offers its employees electric scooters for jetting around the corporate campus.

Dining

• Google offers employees breakfast, lunch, dinner and snacks for free at any of the 16 gourmet cafes on its campus.
• Biotech giant Amgen, Inc. cooks up health-conscious meals for employee children dropped off at the company daycare. Employees also enjoy 16 paid holidays a year.
• Microsoft employees can eat in one of the 14 restaurants and pubs located in a company mall replete with stores and banks.
• Silicon Valley start-up Asana provides workers with two organic home-cooked meals for vegetarians, vegans and meat-eaters.

Child-birth and childcare

• American Century Investments offers $262,000 for employee adoption expenses and fertility treatments of up to $10,000.
• Amgen offers on-campus Lamaze and breastfeeding classes and lactation rooms for mothers.
• Google reimburses moms $500 for takeout meals during the first three months after the child is born.
• Eli Lilly allows pregnant workers to take a paid month off before the baby’s due date.
• Deloitte allows workers to check up on their kids in daycare via webcams.

Exercise/health

• Cliff Bar treats workers to a 40-foot bouldering wall, fitness center, dance studio, two massage rooms and a staff of certified trainers and nutritionists.
• Pixar Animation Studios employees run on indoors or outdoors paths, train in the gym or swim in the outdoor pool.

Assorted great perks

• S.C. Johnson gives retired employees lifetime memberships in its fitness center.
• Outfitter Patogonia grants two weeks of full-paid leave to employees who want to volunteer for any green non-profit organization.
• Steel processor Worthington Industries offers workers subsidized onsite haircuts for $4.
• Jam maker J.M. Smucker grants employees a 100 percent college tuition reimbursement, with no ceiling.
• Genentech sends ergonomics specialists to examine your work desk and gear to ensure you’re comfortable.

Perks especially for carvers

Snowboarders rejoice! If all your company offers is ten minutes to hustle down to the sandwich truck, you won’t believe what Burton Original Snowboard Company of Vermont offers its workers:

• Free season ski pass
• Company skate park
• Company closures when it snows two feet or more (so workers may go boarding)
• Dog-friendly office
• Company rides and ski trips.

If you could have any of these perks, which one would you choose?

Woodrow Aames has written articles and profiles for Yahoo, Microsoft Network & Encarta, as well as tech savvy pieces for various computer schools. He holds an MFA degree and has taught English abroad.

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Brazen Life is a lifestyle and career blog for ambitious young professionals. Hosted by Brazen Careerist, we offer edgy and fun ideas for navigating the changing world of work -- this isn't your parents' career-advice blog. Be Brazen.

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It was an unusual site to see, dashing men in three-piece suits waving picket signs in the air on London's tony Savile Row.

The men were outraged that "low-brow" American retailer Abercrombie & Fitch was setting up shop among the high-class, artisan tailors who craft three-piece suits on Savile Row, according to the Washington Post.

No less, Abercrombie & Fitch, the clothing brand of choice of Jersey Shore cast members and midwestern high schoolers, was setting up shop inside the former stomping grounds of The Beatles' Apple Records.

The protesters, in three-piece suits and snap-brim hats, held signs that told the store to go "Fitch Off. (Please)."

Protesting was the last option, as The Savile Row Bespoke Tailors Group also tried blocking the company’s planning application, saying it changed the "tone and safety of the street."  You wouldn't want Snooki & Co. filming their next season nearby. 

Check out the dandy protest:

DON'T MISS: Dolce & Gabbana Officially Apologizes To Hong Kong For That Photo-Banning Incident >

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Even teenage girls who shop at Hollister have standards for the teeny-tiny shorts they buy.

While skimpy summer attire is nothing new, Hollister caused a stir with its Arrow Point short--which appears to be the shortest ever with only a 2-inch inseam.

Eric Beder, an analyst at Brean Murray Carret & Co. first tipped us off about the controversy, which ensued after the shorts were posted to the Abercrombie offshoot's Facebook page.

About half the customers Beder observed said the shorts "showed off too much."

Responses from teenage girls ranged from "the shorts are getting shorter!" to "I wouldn't even be able to get my leg in that" to "WTF."  Some customers also complained the $34.50 item was "overpriced."

Responses from teenage boys on the page were predictably positive, and a countdown for summer broke out.

Don't miss: Abercrombie & Fitch Just Isn't Cool Anymore >

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This will just never end. Abercrombie & Fitch models from around the world have released a dance to "Call Me Maybe" on YouTube. I would say it's funny, if this weren't two months and 465 re-interpretations old. Watch above.

Michael Goldberg has joined Deutsch NY as a partner, Chief Marketing Officer. Golberg was most recently a partner, global CMO at Porter-Novelli.

Time Inc. is now offering its titles on the iPad's App Store. Umm, it's about time?

Adcquire, Inc. has launched a disruptive marketing platform that aims to enhance user engagement by having them physically interact with products using mobile technology. What does that mean? Watch this video.

Hoy Los Angeles, of the Los Angeles Times Media Group, is creating a new Thursday edition that will focus on lifestyle news for the city's Spanish language readers. The new endeavor is set to launch June 28th.

Syncapse, a social performance management platform, has acquired Clickable, a social and search advertising management and intelligence platform. David Fall, former Google exec and Clickable's COO, will become Syncapse's CPO.

Blip, an original web series network that focuses on curation, is Twitter's new launch partner for the company's new "expanded tweets."

Carl Whitehouse, formerly at W+K, has joined Modus Operandi as director of agency services.

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A former Abercrombie & Fitch male model is suing the company and a modeling agent, claiming the agent exposed himself during a photo shoot and compared penis sizes with the model.

Bejamine Bowers, the model, is also suing agent Brian Hillburn for allegedly asking him to masturbate nude on set in June 2011 to help him look more "relaxed" in photos, the New York Daily News reported.

Bowers, who used to model for the teenage clothing company, claims an A&F casting director introduced him to Hillburn.

Bowers told TMZ he "feels used and believes the photos were never intended to help his career ... but just to give Hilburn a cheap thrill."

This isn't the first time the clothing chain has come under fire for how it treats its employees.

The brand's Italian outpost was accused in March of punishing employees by forcing them to do squats or push-ups.

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Abercrombie & Fitch has spent the better part of two decades being one of America's hottest brands.

It might as well have a trademark on six-pack abs in advertising; its strategy of using sex to sell the preppy look to teenagers has been a gigantic success, and it's all thanks to CEO Michael Jeffries and his infamous refusal to compromise on style, pricing and branding.

However, Abercrombie & Fitch has a cyclical problem. When recessions happen, Jeffries refuses to compromise his premium pricing. A&F has thus seen its sales decline while competitors like Aéropostale post consecutive quarters of growth. For many, the idea of Abercrombie continuing with its current strategy in these economic conditions is insane, and the numbers are beginning to back up the doubters.

Abercrombie has also had mixed results in innovating new brands. There was Hollister (success), but there was also Ruehl (failure).

Now, coming off perhaps the worst year since 1977 when the 114 year-old company declared bankruptcy, people are wondering whether Jeffries, the man who made Abercrombie an iconic American brand, can stay in the CEO's office much longer.

It all started in 1892.

David. T. Abercrombie opened Abercrombie & Co. in 1892 and by 1904, Ezra Fitch, one of the store's biggest customers, became a partner in the Manhattan store. By the time the Great Depression arrived, it was the largest sporting goods store in the country. Unfortunately, things turned sour in the 1960s and it went bankrupt in 1977.

In 1988, The Limited purchased the struggling store and decided it was time to get out of the sporting goods business. Michael Jeffries, who previously led women's retailer Paul Harris, was hired to lead Abercrombie as CEO 1992. In 1996 an IPO was offered and by 1996 the company was independent from The Limited.

Jeffries figured out sex sells.

Jeffries quickly rebranded A&F to focus on young, hip people. A&F describes itself as a "luxury" brand, but it's not made to compete with top fashion houses. Rather it's positioned above Gap in pricing and quality. The target customers are the "popular kids" in high school, according to Jeffries.

And there's sex. Lots of sex.

In 2003, after a few complaints about various ads sexy, the National Coalition for the Protection of Children & Families, a Christian group, launched a protest of A&F's "Christmas Field Guide." They took issue with a cache of images featuring models in various stages of undress, sex acts including "group sex and more" on the cover, and editorials about threesomes, sexual experimentation and masturbation.

The group was specifically upset because A&F's target audience is under-age.

In 2000, Hollister, a sub-brand, was launched.

Hollister was A&F's answer to brands like Aéropostale, Wet Seal, and American Eagle's increased competition. Its target market is younger, around 14-18, with lower prices and more conservative styles than the flagship A&F.

It was a major success for the company. By Q2 2011, Hollister sales in outpaced Abercrombie by a wide margin.

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Teen retailer Abercrombie & Fitch cut its full year forecasts after same-store sales deteriorated in its second quarter.

Click here for updates >

Abercrombie now expects full year earnings of $2.50 to $2.75, a full dollar before earlier guidance.

International sales, the key driver of Abercrombie's recent growth, dove 26 percent during the period, weighing on results. 

Meanwhile, sales in the U.S. declined five percent.

"Macroeconomic conditions remained very challenging during the quarter, particularly in Europe but also increasingly in the U.S.," Chief Executive Mike Jeffries said. "In that context, we will continue to be highly disciplined in our new store approval process and only commit to stores where we are confident they are likely to generate a stronger return than alternative uses of cash."

Jeffries noted that the company's international stores are substantially more profitable on a per-unit basis, as its Abercrombie and Hollister brands can often mark up items internationally. 

However, those macroeconomic issues are forcing the company to slow its global expansion. Abercrombie now expects to open 30 Hollister stores this year, roughly 25 percent lower than earlier guidance.

The company said it tallied sales of $951.4 million during its second quarter.

Abercrombie also expects to earn between $0.15 and $0.18 a share when it reports results on August 15. That was substantially below forecasts for second quarter earnings of $0.32 per share.

Shares are down more than 15 percent in after hours trading.

SEE ALSO: Abercrombie & Fitch, It's Just Not Cool Anymore >

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In celebration of the opening of its newest flagship store in Hong Kong, Abercrombie & Fitch has imported 110 of its finest male models to wreak havoc in the streets (and hopefully drive customers).

The store, located in Central's Pedder Building, officially opens August 11. But the models, wearing red board shorts and not much else, arrived several days ago to tour the city, pose for pictures and build up buzz for the prepster chain.

They come from Abercrombie & Fitch stores from as far as the U.S., Italy, France, Germany, Denmark, Spain, Japan, Belgium, and Singapore, and are reportedly being put up at the posh W Hong Kong, according to HotelChatter.

Want to know what happened when the models arrived in Hong Kong?

The guys spent time cruising the streets in a branded bus.

And got friendly with the crowds.

Very friendly. This girl looks like she's in heaven.

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Abercrombie & Fitch doesn't announce earnings until Wednesday, but its already looking like the retailer is in big trouble. 

After U.S. teens stopped lining up to buy its signature cologne and $40 tank tops, Abercrombie looked to an international expansion for salvation. 

But the international stores are failing, and Abercrombie is doing some major backpedaling, according to a note from Sterne Agee analysts Margaret Whitfield and Tom Nikic.

Following consistently bad sales numbers (international is down 26 percent from last year), Abercrombie has slowed growth rate overseas and "postponed" the much-publicized openings of flagship stores. 

This is bad news because international markets were considered Abercrombie's only hope for growth. 

Perhaps Abercrombie could learn a thing or two from Gap. Both retailers once reigned the world of the young and hip, and both looked to expand internationally when things stopped going great in the U.S. 

But Gap CEO Glenn Murphy learned the hard way that location doesn't mean success. With his domestic and international businesses flailing, Murphy decided to bring in top-notch designers to reinvent Gap's product. 

With the right product, sales at the retailer soared, and Gap is now considered the retail success story of the year. Maybe Abercrombie's clothes, and not its market presence, led to the current predicament. 

DON'T MISS: Gap Finally Solved Its Decade-Long Identity Crisis >

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Abercrombie disappointed analysts this morning when it reported sales missed already lowered expectations.

The teen retailer said it earned $0.19 a share on sales of $951.4 million as same-store sales tumbled.

"The second quarter results we are reporting today are disappointing and below our expectations coming into the quarter," the company's CEO, Mike Jefferies, said this morning.

Once the darling of the specialty retailer sector, Abercrombie has remained uncompetitive since the recession hit in 2007 and its shares have fallen more than 33 percent this year.

But the financials aren't the only thing that disappoint people about the company.

1. Prior to a legal settlement, Abercrombie was allegedly hiring predominantly from white sororities and fraternities

Abercrombie and Fitch has faced a number of lawsuits over discriminatory hiring practices — including recruiting at predominately white sorority and fraternity houses. In 2004, Eduardo Gonzalez, a lead plaintiff said he was urged to apply for an overnight stock position and that the store manager favored two white applicants in a group interview. The company settled and said it would change its recruitment practices. 

Source: New York Times

2. Abercrombie managers reportedly made an employee with a prosthetic limb work in the stockroom

But the lawsuits for Abercrombie do not end at the interview process. The teen retailer also shifted mostly non-white employees and those who were less attractive to the stock room, away from customers. Then, in 2009, the company was rocked by a lawsuit in the U.K. when managers forced a 22 year-old employee with a prosthetic arm (Riam Dean) off the selling floor. 

Source: BBC

3. Instead of calling employees store associates or cashiers, like most retailers do, Abercrombie calls them models

So this is a screwy one, because most of their employees are not models but teenagers ringing up jeans at a register or opening fitting rooms. But Abercrombie refers to its employees who work in front of customers as "models." The teen retailer used to call them brand representatives, but made the switch in the 2000s. Those sent to the back to unload shipments and restock the front are called Impact Team members. 

Source: Abercrombie

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Abercrombie & Fitch got battered in the second quarter, reporting that net income had tumbled to half of what it was last year.

And CEO Mike Jeffries doesn't plan to change much about the customer experience, he told investors on a conference call today.

He said that the bad European economy, and not missteps from the brand, are to blame for the "disappointing" results.

"We continue to believe the macroeconomic environment situation in Europe has continued to become more difficult," Jeffries said on the conference call today.

And while the CEO has tweaked plans for inventory and supply, he doesn't plan to make any big changes with product.

"Do our stores continue to stand out in excitement and energy?" Jeffries asked. "The answer is yes."

NBG Productions retail analyst Brian Sozzi struck back in a note he emailed to us this morning, saying that Abercrombie should reconsider its product offerings:

"Management dropped the classic line “we can control what is in our control”, implying that sub-optimal performance was solely a function of global macro deterioration.

Let’s be real, the fact is teen clothing preferences have moved away from Abercrombie’s American prep aesthetic (as their budgets have shrunk and get sliced into from new competing purchases). 

That is a factor beyond management’s control (company is not a trendsetter), and it will take more than tapered fits in denim and hoodies and the displaying of them to Facebook followers to disguise the wares as being on trend enough to reignite traffic."

DON'T MISS: 11 Reasons Why People Hate Abercrombie & Fitch >

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