Reporting quarterly sales gains on top of quarterly gains is no easy feat, but that’s what Abercrombie & Fitch Co. has managed to do — and the retailer is confident it can extend the streak.
A&F Co. has logged seven straight quarters of gains and is eyeing net salesgrowth in the range of 12 to 13 percent for 2024. That would bring its annual volume to $4.82 billion, from $4.3 billion in 2023, and near the not-too-distant goal of surpassing $5 billion in annual sales. In 2023, A&F Co., achieved its best operating margin in 15 years and increased sales year-over-year.
“Although we continue to operate in an increasingly uncertain environment, we remain steadfast in executing our global playbook and maintaining discipline over inventory and expenses,” said chief executive officer Fran Horowitz, after the company reported a solid second-quarter performance at the end of August. “We are on track and confident in our goal to deliver sustainable, profitable growth this year, while making strategic long-term investments across marketing, digital and technology and stores to enable future growth.”
“We’re continuing to look for opportunities to grow our business around the world,” Horowitz said.
At Tuesday’s WWD Apparel and Retail Summit, Abercrombie & Fitch Co. will receive the WWD Honor for Company of the Year, Public.
“Fran Horowitz and her team have changed every aspect of the brand, including the culture,” Neil Saunders, managing director of retail at GlobalData, told WWD. “The result is a modern company that resonates with consumers and has performed spectacularly well. Abercrombie will remain on a trajectory of growth in the near-term. The brand has momentum and continues to win new customers. It also has new growth opportunities in its international business. Growth levels may moderate as it laps tougher comparatives but the key measure is whether it can continue to add market share. The answer here is a clear yes for the foreseeable future.”
Hollister
The New Albany, Ohio-based retailer of the Abercrombie, Abercrombie kids, Hollister and Gilly Hicks brands has benefited from becoming inclusive in its imagery and sizing; gaining popularity through influencer and affiliate programs; streamlining and updating its store design to smaller and more open formats; differentiating its Abercrombie and Hollister brands to appeal to different age segments, and listening closely to consumer preferences. The retailer’s operations and supply chains are nimbler, enabling the merchants to chase and quickly respond to emerging fashion trends.
A&F Co.’s “Always Forward Plan,” launched in June 2022, spelled out where the opportunities are, calling for accelerated investments in customer analytics, systems and digital growth; leveraging omnichannel capabilities; new inventory practices for greater efficiency and faster response to trends, and sustainability.
The company recently partnered with Haddad Brands, which specializes in children’s apparel and accessories, to grow Abercrombie kids’ distribution. Haddad is the exclusive global licensee for Nike, Jordan, Converse and several other brands for childrenswear.
A&F will continue to design, produce and sell Abercrombie kids in its owned and operated channels, while Haddad focuses on creating distribution channels for the brand and growing the product line by adding infant and toddler categories to the existing assortment for 5- to 14-year-olds. The partnership marks the first time that Abercrombie kids will be sold at non-Abercrombie stores.
“Our brands are stronger than ever, and an opportunity to partner to grow kids, particularly outside of North America, where the majority of our business is today, just speaks to long-term opportunities ahead for us,” Horowitz said when the strategy was announced.
Also key to Abercrombie’s continued success will be adjusting prices and promotions as consumer spending patterns shift and the economy swings one way or another, and fighting off competition from fast fashion and moderate to better-priced retailers such as Macy’s, Madewell, Uniqlo, H&M and Zara. The company has been recently seeing average unit retail growth.
Retail experts and Wall Street analysts remain bullish on A&F Co.’s prospects for continued growth, at least in the near term. Zacks, a research company for investors, last week reported that A&F Co.’s bottom line is projected to rise 63.4 percent year-over-year for 2025, and that Wall Street projects A&F Co. to show 13 percent top-line gains. Zacks also noted that six analysts revised their earnings estimate upwards in the last 60 days for fiscal 2025.
“The A&F resurrection is one of the most impressive retail stories in decades,” observed Steve Dennis, author and president of SageBerry Consulting. “Given their focus and their impressive leadership, I don’t see any reason to doubt they will continue to perform well. Having said that, it will be increasingly difficult to post as impressive results as they have in the past couple of years. This is for two primary reasons: first, the large numbers issue [and] second, the competition has had time to respond.”
Today’s A&F Co. is a success, but recently, the business has come under the shadow of former CEO Mike Jeffries, who on Oct. 22 was arrested on charges of sex trafficking and prostitution and released on a $10 million bond. Jeffries, who last week pleaded not guilty, has not been involved in the A&F Co. since 2014.
“The story is terrible and troubling, but I suspect the long-term impact will be minimal,” Dennis said. “Unless a story really works its way into the cultural zeitgeist, my experience is most consumers don’t even hear about it, much less pay all that much attention to it if they do hear about it. It’s a pretty old story and Jeffries has not been in management for a long time.”
“The Mike Jeffries saga is unfortunate, especially as the Abercrombie name will be mentioned in the same breath,” Saunders said. “Most consumers will understand that this is about things that happened in the past and it is not about the Abercrombie of today. There is sufficient distance between the Abercrombie of now and the brand of yesterday.”
The day after Jeffries was arrested, A&F Co. issued the following statement. “We are appalled and disgusted by the alleged behavior of Mr. Jeffries, whose employment with Abercrombie & Fitch Co. ended nearly 10 years ago. Speaking up and coming forward is not easy, and our thoughts remain with those who have bravely raised their voices as part of the federal investigation.”
