MISSION INTANGIBLE

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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Reputation: Expectation, expectation, expectation

C. HUYGENS - Wednesday, July 10, 2013
Suspend for a moment the long held (mis)understanding of reputation as an affinity, and recast the word as an expression of forward-looking expectations. Suddenly, behaviors that seemed bizarre are patently rational. Follow Mission Intangible Monthly Briefing moderator Jonathan Salem Baskin as he drives this point home in Forbes magazine over the tawdry Paula Deen affair, and the even more tawdry marketing strategy of Abercrombie and Fitch.

Abercrombie and Fitch: Surprise, surprise!

C. HUYGENS - Thursday, November 15, 2012
Last Thursday, Huygens reported that there was a sense Abercrombie and Fitch's (ANF) innovative marketing had run out of steam. The stock price was in the dumps. According to the Steel City Re Reputational Value Metrics, it was ranked in the 44th percentile (CRR) but its ROE ranked a dismal 10th percentile. However, reputational volatility measures indicated among stakeholders an expectation of "a steady improvement in both rank (CRR) and reputational value (RVM)."

Thurday one week later, as MarketWatch reports, "on Wednesday, the New Albany, Ohio-based company reported a third-quarter results that were better than expected and raised its outlook for the year, as same-store sales in the United States, its top market, rose 2%. Internationally, excluding the United Kingdom, sales saw some signs of health as the retailer pointed to positive momentum in its new stores in China and Korea and flat comparable sales." The stock surged 34% to $41.92.

The Steel City Re Reputational Value Metrics provide intelligence on reputational value that, more often than not, appears to be a leading indicator of stock price movement. The RepuStars Variety Corporate Reputation Composite Equity Index (Ticker: REPUVAR), reported each week on this blog, is the most direct demonstration of the information content of Steel City Re's measures of reputational value.

Abercrombie and Fitch: 50 shades of reputation

C. HUYGENS - Thursday, November 08, 2012
Abercrombie and Fitch, the casual apparel retailer, established a reputation for innovative, sexy marketing. Reputation is an expectation that spurs stakeholder behavior. A&F Quarterly, the company’s catalog that featured photo shoots by fashion photographer Bruce Weber, was so racy that shoppers were required to prove they were over 18 years of age to buy them. It had a circulation of 1.2 million in 2002 and was branded ‘soft porn’ by critics.

Its marketing strategy, reports the Daily Mail (Abraham, 31 August 2012), appears to be failing to woo customers as effectively as they once did. In addition to 71 store closing in 2012, it expects to have closed nearly a quarter of its 1055 global stores by 2012. Sexy and vacuous is no longer innovative—in the US and Europe. Meanwhile, overseas in China and the Middle East, sexy is innovative. Sales are growing.

Were it only so simple for Research in Motion. The company that established a reputation for innovation in the smart phone arena—invented the genre as we know it—has slipped dramatically in the minds of its stakeholders. As discussed here and elsewhere, including the new book, Reputation Stock Price and You, it is simply no longer innovative. Catch up is a much harder game. Turning to the reputation metrics for both Abercrombie and Fitch (ANF) and Research in Motion (RIMM) from Steel City Re, the former is down in the dumps with upside potential, while the latter is similarly situated, but with a bleak future.

ANF's reputation rank (CRR) has been on a choppy ride down to the 44th percentile among its peer group and its ROE is in the 10th percentile. The many volatility measures, however, suggest a steady improvement in both rank (CRR) and reputational value (RVM). RIMM's reputation rank is in the 23rd percentile and its ROE is in the 12th percentile. However, its volatility measures forecast--actually, only hint--possibly a slight improvement.




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