Abercrombie sales soar as 1990s revival spreads

It’s not just styles from the 1990s that are making a comeback. One of the biggest brands of the decade is also.

Abercrombie & Fitch appears to be on track for a second year of double-digit sales growth — the first such streak in more than a decade.

The company, which also owns Hollister, told investors it expects sales to grow 10% this year compared to 2023.

That’s almost double the previous forecast, and comes after a 16% increase last year.

Known in the ’90s for its teen appeal and infamous for its shirtless models, the company has now gone after the grown-ups with wedding wear, work-appropriate offerings and baggy, baggy jeans.

It has also taken a more inclusive approach, introducing a wider range of sizes, among other steps — no small shift for a company whose former CEO, Mike Jeffries, once famously declared that “a lot of people don’t belong” in the clothing company.

In 2004, Abercrombie agreed to pay $50 million (£39 million) to settle claims that its hiring practices discriminated against minorities and women.

Mr Jefferies also faced allegations he sexually exploited and abused men at events he organized around the world and ran a sex-trafficking ring, which he denied.

Abercrombie, who was stepped down as boss by Mr Jeffries in 2014, has since managed to reinvent himself and appears to carry very little baggage from that time, said Neil Saunders, GlobalData’s managing director.

The turnaround sent shares in the company, which has more than 750 stores worldwide, from around $25 (£19) apiece in early 2023 to more than $189 (£147) on Thursday.

“I don’t think I’ve ever seen a brand come back from the dead so quickly,” Jonah Lupton, CEO of Lupton Capital, wrote on social media, commenting on the rise.

While the thongs, hats and platform shoes popular in the ’90s are enjoying a fashion resurgence, Abercrombie’s offering isn’t a repeat of the decade.

Instead, Mr Saunders said the company’s range, less sexy and logo-less than in the 90s, resonated with millennial shoppers who wanted to look fresh without following the latest “high-end” fashion.

He said the success of Abercrombie’s turnaround is unusual in retail.

“It’s quite rare that a company from the direction of Abercrombie & Fitch and its rooted image from the ’90s does a complete 180 and emerges as a very modern, successful and different brand,” he said. “We don’t see that happen very often.”

The company said sales jumped 22% year-on-year in the February-April period to $1bn (£787m), a quarterly record.

Growth was widespread, with revenue up 23% in the Americas and 19% in Europe, with the UK and Germany leading growth.

Current Abercrombie boss Fran Horowitz, who became CEO in 2017, said 2023 was a defining year for the company, as its efforts to modernize data and digital capabilities paid off.

“We entered 2024 with momentum,” she told analysts on a call to discuss quarterly financial results.

“Our results in the first quarter are further evidence that we are off to a good start.”

Shares jumped more than 20% after the report, despite caution from Chief Financial Officer Scott Lipesky, who warned there was “still a lot of uncertainty” about the economy.

He said the company’s sales could slow in the second half of the year.

Mr Saunders said slightly slower growth was expected after the 2023 boom, but the company was still outperforming the overall market and had an opportunity to grow overseas in countries such as the UK.

Ms. Horowitz focused on that perspective during the quarterly update, highlighting a recent visit to London.

“We’re really excited about the opportunity we see there,” she said.