- It’s official – Abercrombie & Fitch is cool again.
- After a massive rebrand that embraces inclusion and more wholesome, brand-agnostic clothing, its stock is on the rise.
- A&F was once loathed for its superficiality, but now it’s embracing the authenticity millennials and Gen Z want.
- See more stories on Insider’s business page.
Abercrombie & Fitch is cool again.
The dimly lit mall stores filled with the smell of cologne and shirtless male greeters were once the trademarks of a brand that former CEO Mike Jeffries described as being geared toward high school’s “cool kids” who weren’t “overweight or unattractive.”
But it turns out that Jeffries’ style wasn’t resonating, and neither was he. After years of plunging value, today the brand has a new leader, a new aesthetic, and a new set of customers: The off-duty young professional.
Ditching the privilege and the prep for a more down-to-earth look and refined basics, Abercrombie has emerged a more wholesome and on-trend brand targeted to those entering adulthood, a reflection of the increasing spending power and changing consumer desires of the under-40 shopper.
The rebrand of a lifetime
The stock of Abercrombie’s parent company, Abercrombie & Fitch Co. (ANF), began falling in the early to mid-2010s and dropped below $10 per share four years ago, its lowest point since May 2000. Meanwhile, the company struggled to find a buyer. In 2014, Jeffries stepped down. By 2016, what was once a teen status symbol became America’s most hated retailer.
Roughly a year after Fran Horowitz became CEO in 2017, ANF’s stock started to climb. It’s soared 271% over the past year alone. The underlying reason is simple: the brand became cool again. And it doesn’t look like the Abercrombie of yore.
Along with A&F’s shirtless models and stark black-and-white photo campaigns, Jeffries’ “cool” kids comment went out of style years ago. An A&F Co. spokesperson said that statement was made over 15 years ago and doesn’t reflect the brand’s current values. JP Morgan CPA Matt Boss noted in a recent report that the Abercrombie product has “improved materially” over the past two years.
The shopping experience is also different: scrolling through the Abercrombie brand’s website today is a much brighter experience than strolling its low-lit mall stores. The colors and fonts are light and breezy. The clothes are casual, familiar, and brand-agnostic now that they’re mostly free of the iconic moose logo. The floral dresses and ripped jeans are photographed against a white background and worn by models diverse in both size and ethnicity. This new vibe places Abercrombie on the fashion spectrum between Reformation and Mango.
Speaking to millennials and Gen Z
The rebrand seems to have been in the works since shortly after Jeffries’ departure. In 2016, Abercrombie’s former executive chairman, Arthur Martinez, told Insider that the brand wanted to appeal to an older demographic, subsequently toning down its once sultry ads.
“They’re entering a true adulthood,” he said of Abercrombie’s targeted shopper. “They have a more refined sensibility, a great sense of themselves.”
While the brand’s old style may have spoken to its predominently teenage customers, Abercrombie has “been trying to attract older youth and young professionals with casual wear,” said Jonathan Treiber, cofounder and CEO of management solutions company RevTrax. Boss agreed, noting that the canny update of both Abercrombie and its sister brand Hollister has carved out separate niches for the digital consumer in their mid-20s and the teen mall shopper, respectively.
A company spokesperson confirmed these observations, stating that Abercrombie seeks to cater to “global young millennials” while Hollister is the “quintessential brand of the global teen customer.” The spokesperson described the brand as celebrating “the individuality and authenticity of our associates and customers.” It’s no coincidence that this tracks with the values that next-gen consumers want – everybody is a “cool kid” in the TikTok era.
The company was “wise” to evolve to a more accepting image. Treiber recalls the brand’s “raunchy” days when scantily-clad, kissing couples adorned the stores’ walls, displays, and shopping bags. Today’s color photos of a diverse group of smiling, beach-going, bike-riding young people fit the more modern lifestyle ideals of wellness and inclusion perpetuated by millennials and Gen Z.
Shoppers also won’t find as many shirts or hoodies emblazoned with “Abercrombie” anymore, which is “something that resonated with younger shoppers who want less billboard-type apparel these days,” Treiber said.
Younger generations also care about building a “capsule wardrobe” to be more sustainable, buying a few good items of good quality that will be seen as timeless as the endless cycle of fast fashion prevails. A spokesperson said the company is looking at making its practices more sustainable, telling Insider the brand knows there is still more work to be done.
The company says it has doubled-down on social media and influencer marketing to reach its target demographic. Its Instagram has nearly 5 million followers and has been featured on popular content creators such as Mik Zazon and Whitney Wiley.
This also includes getting involved in issues millennials and Gen Z value. Last year, the brand launched The Abercrombie Equity Project, a social and racial justice initiative to “empower” the voices of “marginalized” communities. It partnered with The Steve Fund, a nonprofit that supports mental health initiatives for people of color. In support of Black History Month, Abercrombie Equity Project donated $250,000 to the organization.
Despite Abercrombie’s social revival, the brand has become unprofitable in the past 12 months with revenue dropping by 14%. This might, in part, be because the pandemic hit the retail industry harder than the Great Recession did. By June 2020, Insider Intelligence predicted that retail sales worldwide for the year would be down 5.7% from 2019. The A&F spokesperson also noted that they made long-term investments to grow the brand.
Simply Wall St. estimates ANF stock will be up 62.7% in the next one to three years based on estimates from 10 analysts. UBS upgraded ANF stock from neutral to buy earlier this month, and JP Morgan raised ANF stock price target from $32 to $37. Boss of JPMorgan noted that Abercrombie expects a low-single-digit long-term growth rate in revenue.
As Saunders wrote in 2018, “In our view, the range – especially at Abercrombie – is now more sophisticated, is more on-trend, and better reflects what modern consumers want.”
And those consumers seem to agree. According to Piper Jaffray’s semi-annual Taking Stock with Teens survey, the number of teens who said they didn’t wear Abercrombie and Fitch declined from 8% to 4% between spring 2018 and fall 2019. Last year, Abercrombie’s high-rise super skinny was named top jeans on the top popular shopping app LIKEtoKNOWit. And, as this demographic becomes disenchanted with skinny jeans, its 90s-high-rise and ‘mom’ jeans have been all over TikTok.