Abercrombie & Fitch just scored its highest operating margin in over a decade with 2022 expected to show greater annual net store openings than closures for the first time since 2008.
On its fourth quarter call, Fran Horowitz, who replaced Mike Jeffries as CEO in 2017, said the improvement reflects “substantial foundational changes” outlined on its 2018 Investor Day.
“If you told me five years ago that I would be shopping at Abercrombie & Fitch again, I never would have believed it,” wrote Meaghan Brophy, senior retail writer, in a RetailWire online discussion last week. “Behind the scenes, Abercrombie has done a lot to improve the quality of its clothes, aesthetics, and operational logistics.”
Ms. Brophy and many of the other industry experts on the RetailWire BrainTrust applauded the retailer’s unexpected return to popularity, and gave their insights into which strategies were resulting in such success.
“A&F always struck me as a company totally out of control. It never had a real direction in stores or product,” wrote international business professor Gene Detroyer. “Today’s discussion on how this company turned around should be a primer for any turnaround or, in fact, any company. The strategy is simply optimizing, enhancing, increasing and improving in a thoughtful manner and avoiding the temptation to institute the next silver bullet.”
“The A&F team deserves a lot of credit for the patient overhaul they have executed,” wrote Jeff Sward, founding partner at Merchandising Metrics. “They basically changed everything. The aesthetic and attitude of the apparel. The marketing. The store footprint and ambiance. It’s been five years and is still a work in progress, but A&F is giving us a great example of the patience required for a brand overhaul.”
Ms. Horowitz said Abercrombie shuttered 23 percent of its store base, including most large locations, since 2018 to reduce annual occupancy costs by 31 percent. Newer stores are 30-to-50 percent smaller than heritage locations “and better reflect the modern Abercrombie & Fitch to clean and open sight lines and improve functionality that supports the digital nature of our customer.”
Hollister’s updates likewise “open up and brighten the store front and interior.”
Stores have been designed to embrace localized preferences. Ms. Horowitz said, “We no longer take a one-size-fits-all approach.”
Some on the BrainTrust saw this revamped attitude for both chains as a definite improvement.
“My kids shopped at Abercrombie when they were in their teens,” wrote Georganne Bender, principal at Kizer & Bender. “Even without the ear bleeding music and choking fragrance it was a miserable experience for parents and their credit cards, but that was the point. The sales floor had an obvious ‘are you cool enough to shop here?’ vibe that everything about the brand gave off. Thankfully, that’s all in the rear view mirror and Hollister finally has a store front sign.”
“For their target, marketing is what got them paying attention again,” wrote David Weinand, chief customer officer at Incisiv. “However better product is what will keep them coming back. My kids were turned off of the old A&F as ‘frat boy clothes’ – now they are paying attention again.”
Abercrombie has worked to significantly upgrade the quality of the product with better fabrics, zippers and buttons. The mix now features more down-to-earth looks and refined basics, replacing the oversize logos and low-rise jeans of the past. Extended sizes have been added for a more inclusive approach.
Ms. Horowitz said, “We refined our design calendar, re-balanced our vendors and expanded countries of origin. This has enabled us to move quicker and further improve the quality of our product.”
From an engagement standpoint, “the most critical steps thus far have been clearly defining the purpose and competitive positioning of each brand,” said Ms. Horowitz.
Abercrombie, now re-positioned around younger Millennials, has ditched its shirtless male model greeters, dimly-lit stores and sexualized marketing. Hollister is centered around Gen-Z.
Newer examples of engagement include Abercrombie’s rollout of a Best Dressed Guest franchise to take advantage of an expected record number of weddings this year, Hollister’s gaming partnership with Fortnite’s Bugha and the work both brands are doing with social influencers. Ms. Horowitz said, “With the DNA in positioning solidified for each of our brands, our marketing teams are authentically engaging with their respective customers on a channels that are most relevant to them.”
“From a marketing standpoint, TikTok has been one of the best things to happen to Abercrombie,” wrote Ms. Brophy. “Viral try-on and haul videos have brought the brand back in front of former customers who may not have otherwise thought to give the store another chance. And, to Abercrombie’s credit, they seem to be really listening to the reviews and feedback from these videos. “
But while most were enthusiastic about the changes made across the board, not all BrainTrust members were convinced that Abercrombie & Fitch is truly back on top of the apparel world.
“The hot guys and girls imagery defined it. ... Time will tell if this ‘comeback’ is real or imaginary,” wrote David Slavick, Co-Founder & Partner, Ascendant Loyalty.
