To many a Millennial, Abercrombie & Fitch may mostly seem like a distant memory of murky, perfume-filled stores, half-naked employees, and the carefree, casual, cool boho-chic clothes that late 1990s to early 2010s high school dreams were made of.
But to investors, the fashion brand is a legitimate 2024 golden goose.
On Wednesday, May 29, 2024, the company announced that the first quarter of the year was its strongest. Like, ever.
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Soaring Sales
According to the earnings report, the company’s net sales reached $1 billion, a 22% increase from the first quarter of 2023, with net income per diluted share at $2.14 compared to $0.32 last year.
The company further reported that comparable sales were up 21% and that the gross profit rate was up approximately 540 basis points compared to last year, at 66.4%.
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“Our outstanding first quarter results reflect the power of our brands and strong execution of our global playbook,” said CEO Fran Horowitz, continuing,
“We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, driving sales above our expectations. Growth was broadbased across regions and brands with Abercrombie brands registering 31% growth and Hollister brands delivering growth of 12%. Strong top-line growth, along with gross profit rate expansion, led to record first quarter operating income and an operating margin of 12.7%.”
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So, What Happened?
In case you aren’t aware or simply don’t remember, the last decade has not been smooth sailing for Abercrombie & Fitch.
In May 2017, the company was trading at a 17-year low and in talks to be acquired by other companies. According to Reuters, Abercrombie & Fitch’s operating income shrank from $72.8 million in 2015 to $15.2 million in 2016. The situation, quite frankly, was dire.
But like a classic 90s trend, the fashion retailer came back strong.
First, former CEO Mike Jeffries, whom The Street declared “the worst CEO of 2013,” stepped down in 2014.
Then the stores then ditched their policy of only hiring people with model-good looks and eased their use of perfume.
And in February 2017, the company hired Fran Horowitz as its CEO.
With Horowitz at its helm, the rebirth of Abercrombie & Fitch could truly commence.
After decades of promoting an exclusionary image which centered on a white, fit and skinny image of All-American youth, the company shifted its marketing.
Now, the retailer instead markets itself as “positive” and “inclusive,” expanding its sizing, and “aging up” its brand, introducing work-appropriate wear, aiming to dress its customers from night to day, weekday to weekend.
The Market Responds
With Abercrombie’s comeback in sales, its shares have followed suit.
Abercrombie & Fitch’s stock opened at an all-time high on Wednesday, trading at $160.
The stock has increased 838.27% over the last 5 years and 79.20% year to date.
