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.