For a long time, Abercrombie & Fitch had what was called a reputation. The employees were hot, the stores smelled of cologne, and if you weren't rich and skinny, this store wasn't for you. And if it's any consolation, this company wasn't for Wall Street either. Its stock price has been languishing for the last decade or so. But that's changing. While you were sleeping, Abercrombie was doing great again.
Abercrombie has made a remarkable comeback in a time when trends are changing faster than ever and many brands are struggling to survive. Business intelligence firm Morning Consult found that Abercrombie's favorability among millennials hit an all-time high in the first quarter of 2024, and it's also growing among Gen Z. According to data from brand management tool QuestBrand, Abercrombie's brand equity has steadily improved over the past few years, and young people familiar with the brand are more likely to describe it as “hip,” “good value” and “stylish” in 2023 than in 2021. Investors are crazy about Abercrombie. Abercrombie shares a year ago would have had a higher return than most other stocks, including Wall Street darling Nvidia. This is proof that comebacks, although difficult, are possible if done right.
“They reinvented themselves, and it worked,” said Janet Joseph Kloppenberg, president of JJK Research Associates. “Can you think of another apparel retailer that has literally reinvented itself and then seen sales and profits soar? It's incredible.”
Abercrombie & Fitch has been around since the late 19th century, but if you're reading this, you probably remember the brand from the late 20th and early 21st centuries. It was all the rage, known for low-rise jeans, shirtless men, and dimly lit stores that made it hard for anyone but the most confident (or just plain uncomfortable) customers to walk in. It also had its fair share of controversy, including allegations of racism and discrimination. Eventually, like many once-popular brands like Urban Outfitters and Von Dutch, it fell out of favor. (If you're Gen Z and don't know who Abercrombie is, that's a shame, but a Netflix documentary will help.) When its longtime CEO left the company in late 2014, sales had been declining for 11 straight quarters.
Can you think of another apparel retailer that has literally reinvented itself and then seen sales and profits skyrocket? Amazing.
Under new leadership, Abercrombie has turned things around since retail veteran Fran Horowitz was named CEO in 2017. The company, which also owns the Hollister brand, expects first-quarter net sales of $1 billion, up 22% from a year ago, and full-year net sales growth of about 10%. Meanwhile, investors are enamored with Abercrombie. A year ago, the company's shares were around $32; now they're trading at more than $180. Abercrombie shares are up nearly 100% this year alone.
“It's a lot of momentum right now,” said Zachary Waring, equity research analyst at CFRA Research.
As Horowitz noted on the earnings call, there's no “silver bullet” to Abercrombie's performance. The company has been steadily executing a strategy it set out years ago. Abercrombie 2.0 is a more inclusive, welcoming brand. No longer for the scariest teenagers in high school, but for adults in their 20s and 30s who want to look good, feel good, and not think too hard. Abercrombie isn't trying to be “super trendy,” a fashion analyst told Fast Company. It wants classic silhouettes and classic colors, while still incorporating prints and ruffles.
The company has carefully anticipated what its customers want, whether they're at the gym, at work, at happy hour, at a bachelorette party, on vacation, or over a long weekend. The company recently launched a wedding section with selections for honeymoon, rehearsal dinner, wedding reception guests, and brides. Abercrombie has been especially popular among young women, but it's also becoming popular among men.
“They're living their best lives,” Horowitz told Women's Wear Daily last year. “There's nothing better than being a young millennial. They live for the long weekend.”
It's not just that the product itself is great.
Kloppenberg said Abercrombie's success was due not only to a change in look — offering clothes for every occasion at affordable prices — but also to the company's execution, such as focusing on small stores and keeping inventory to a minimum.
“They've been smart with their inventory planning, their store payroll, their digital investments. Wages are going up everywhere,” she said. “So it's not just that the product itself is better.”
And because a rebranding effort is only as effective as how many people know about it, Abercrombie is leveraging social media platforms like TikTok and influencer marketing.
“They sell a lot of their products through social media affiliates, and that's what they do a lot of their marketing right now. I don't know how much attention you pay to that, but as far as apparel and retail companies go, they're probably the best at it,” Waring said. “They really benefit from influencers picking up their products, trying them on, and then of course posting links to that.”
Ali Grant, partner and chief marketing officer at influencer management company Digital Department, said Abercrombie demands less of a specific script from its creators than other brands and tends to reach a wider range of consumers by working with creators who are not “fashion girly.”
“They're really allowing for creative exploration and direction from the content creators that they hire, which is really rare,” she said. “They've made it a lot more free and a lot more authentic and real, for lack of a better word.”
Twenty years ago, Abercrombie's logo screamed A&F, but today's Abercrombie is subdued. Influencers may be promoting Abercrombie, but it's more about the items than the brand. In the early 2000s, it was about the name, but now it's about the clothes.
There's no guarantee Abercrombie will stay on top forever. American Eagle and Gap are starting to copy the same strategy. (It's worth noting that not everything Abercrombie does is entirely original; some of its pants look very similar to Aritzia's.) Gap, which owns brands like Banana Republic and Old Navy, also seems to be turning around and becoming cool again. Kloppenberg noted that Abercrombie's operating margins were pretty high, but if they went down or the company was forced to discount further, that could scare investors.
“They sell a lot of their products at list price and a profit margin, and when they make a few mistakes, their profit margins start to go down,” she said. “And then the stock price crashes.”
Still, Abercrombie has managed to do something unique: Customers love it, and so do investors.
“The fundamentals are very healthy at the moment and it will be interesting to see how the next 12 to 18 months go,” Waring said.
So maybe you don't need to be a flashy tech company to excite Wall Street, and maybe you don't need to be an alienating, elusive brand to be successful. It's great to see success stories like this, where smart work and strong execution pay off.
Emily Stewart He's a senior correspondent for Business Insider, writing about business and economics.
