Source: Facebook | Abercrombie
Has Abercrombie & Fitch Been Transformed?
It’s all smiles at Abercrombie & Fitch’s headquarters in New Albany, OH, this week after the clothing retailer posted a three percent gain in net sales at a time when many other retailers are happy with positive earnings in the face of declining revenues.
Abercrombie & Fitch Co. saw its performance buoyed by a 14 percent year-over-year sales gain at its namesake chain, the biggest single quarter increase at that business in over a decade. The retailer also said its second-quarter was off to a strong start.
“This is truly the most powerful brand transformation that I have seen in my career,” said Fran Horowitz, CEO of Abercrombie & Fitch Co., on a call this week with analysts. “By listening to our customers and putting them at the center of everything we do, we are delivering product, voice, and experience that are tightly aligned and continue to resonate.”
Ms. Horowitz said Abercrombie is “no longer just a jeans and t-shirt business.” The chain has expanded into dresses for “all sorts of occasions” and found favor with consumers.
“Our (women’s) pant business is very strong. The men’s business, third quarter of positive comps there as well. So as you know, we started this turn with women’s and now the men’s business is following suit. So as far as the customer behavior goes, we’re seeing them very excited about the product,” she said.
The strength of Abercrombie’s business has put it in a position where it has stepped up sourcing merchandise, even as many others have to choose between discounting to free up space or packing and holding product for another day.
“On the inventory side, it is great to have the chase capability back,” said Scott Lipesky, A&F Co.’s chief financial officer and chief operating officer. “Our teams are literally chasing every day. The stability in the supply chain is making that easier than it has been in the past few years. ocean shipping has been good. We can chase through ocean and there’s also a lot more air capacity out there and the rates have come down pretty dramatically since the peak back there in 2021 and early 22. So we have the ability, our teams are using that ability. We’re running the inventory lean and as we see wins, we’re able to chase them pretty quickly.”
Abercrombie said average unit retail prices were up at both its A&F and Hollister businesses.
Discussion Questions
DISCUSSION QUESTIONS: In what ways do you think Abercrombie & Fitch has transformed its business? Will it be able to continue that transformation?
Poll
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David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
Jeff Sward
Founding Partner, Merchandising Metrics
A&F’s transformation is nothing short of remarkable. And I say that as somebody who worked for A&F back in the 90’s. The ascent into the land of hip and cool was breathtaking and the crash was bitterly painful. A transformation looked like an almost impossible task. And yet here we are. The attitude and aesthetic of the product is completely different. They address a whole new range of wearing moments. The new store formats are a complete break from the dark caverns of yesteryear. Fran Horowitz and the whole team deserve enormous credit for what they have accomplished. I can fully appreciate the patience and fortitude that it could to strategize and execute this transformation. And I then appreciate why more retailers have not been able to pull it off.
I totally agree, Jeff. There’s no way that 90s era A&F would have appealed to my middle-aged sense of style the way the 2020s era A&F does. It is a far more accessible brand, and they hit the right intersection of price and quality.
There’s clearly been a facelift of their digital presence that has to be factored into the their success re-establishing themselves as a youth brand. Over the last three years they have hired in and maintained talent from both an IT and product management perspective, specifically with the hire of a CDO that is focused on digital growth.
The Abercrombie & Fitch Co. stores today no longer resemble the dark, heavily perfumed and pulsating teen palaces of the 90s. This is a good thing because Gen Z is too evolved to accept that behavior from their retailers of choice.
The Abercrombie & Fitch stores I have visited recently are beautifully appointed, rich in graphics, and the clothing assortment is curated. It’s a completely different ambiance.
Perhaps the best thing about the brand transformation is that Millennials, who wouldn’t set foot in an A&F store just a decade ago, are shopping there again. It took focused change to recapture lost customers but Abercrombie & Fitch did it.
A&F’s success is a result of truly understanding their customers and adapting shopping experiences and assortments to appeal to their constantly changing preferences. Not resting on their laurels, A&F has made bold changes to their products and have engineered an agile supply chain that has paid off! It is refreshing news to hear about a retailer doing well.
The transition was painful, but Abercrombie finally rejected its focus on unattainable coolness, and instead became relatable to regular people. If prices are relatable too, A&F will do well.
The transformation of A&F has been a long, long slog. For a while it was being written off as a dramatically failing brand, having lost its way. What an impressive turnaround. Kudos to its leaders and teams for having the courage to dig in and put in the hard work – reconnecting with its customers, rethinking what it stands for, refreshing its merchandise mix and essentially reinventing the store experience. Well done!
Abercrombie is reinventing itself by listening to its customers and putting them at the center of everything it does. The brand is delivering product, voice, and experience that are tightly aligned and continue to resonate with customers & data analytics.
The chain has expanded into dresses for “all sorts of occasions” and found favor with consumers, it is no longer just a jeans and t-shirt brand. Women’s pant business is very strong and the men’s category business is growing as well.
Abercrombie is focusing on user experience and digital sales, Web3 and finding ways how brand can enter “the circular economy” of thrift and rental.
A&F has done a brilliant job sorting its supply chain, making it more resilient, and simultaneously deploying a “customer-in-center” strategy while designing its inventory and assortment functions. I call it the C-commerce movement, where your decision-making exercise is a function of customers’ needs and wants. It also needs to be noted that none of this is possible without motivated, capable and happy employees.