Eradicate the bad reputation of "the least popular brand"! A&F's stock price increased by 92% in one year, and third quarter revenue hit a new high

Abercrombie & Fitch announced its third-quarter financial report, with revenue reaching a new high of US$ 1.2 billion, and its latest market value as high as US$ 7.866 billion. The latest financial report shows an increase of 14% compared with the same period last year, and the operating profit rate increased to 14.8%. This is also A&F's best third quarter performance since its reorganization in 2010. Regarding the full-year revenue in 2024, the brand has optimistic expectations: it will be 14% higher than last year, and the overall revenue in 2024 is estimated to reach the US$ 5 billion mark.

As of June 26, the stock price of A&F (Abercrombie & Fitch), a century-old American clothing brand, has increased by 352% in the past year, surpassing NVIDIA (84% increase in the same period), which has benefited from the AI ​​craze and its stock price has soared. What has this historical brand that was popular in the Y2K era done to usher in its rapid success in recent years?

What is the origin of A&F, a century-old brand, and what troughs did it experience before its stock price quadrupled?

A&F was founded in 1892. After a series of financial crises, acquisitions and product line consolidations over the past century, then-CEO Mike Jeffries took over in the 1990s and built A&F into a "campus celebrity" serving brand: only young people with strong physiques and good looks are the customers they want to serve.

Jeffries later pointed out in public that under his leadership, A&F would not manufacture clothes in XL or XXL sizes, "because A&F does not sell to fat people." A&F became synonymous with the popular "white fashion" in the 1990s, with photos that deliberately highlighted the models' figures, a store full of strong perfume and only employing young white people.

In the 1990s, then CEO Mike Jeffries built A&F into a brand that served "campus celebrities": only young people with strong physiques and good looks were the customers they wanted to serve.

The extreme marketing methods once achieved unprecedented success in the American fashion industry, but subsequent controversial statements and changes in social climate have caused the brand's reputation to continue to decline. First, in 2004, it swallowed a US$ 50 million settlement due to recruitment strategies that discriminated against people of color. In 2016, A&F, which has not improved, was despised as "the most unpopular retailer in the United States."

Remove the label of "white fashion" and launch large-size and wedding dress product lines

Fran Horowitz, then chief procurement officer, pledged to create "a more diverse and inclusive culture." 11 consecutive quarters of revenue decline eventually led to Jeffries's ouster. After taking over as CEO in 2017, Horowitz carried out a comprehensive brand reconstruction, including hiring models of different body types and skin colors to shoot image advertisements, and adding different product lines. .

Horowitz launched the Curve Love series in 2019 to target curvy customers, with sizes up to XXXL. Horowitz said in a recent interview that this new series now accounts for nearly half of the women's jeans market in the United States. Subsequently, it also launched the sportswear product line Your Personal Best, and launched its first wedding dress product line in March this year.

These strategic changes targeting diversified customer groups and different markets have not only allowed A&F to regain the love of customers in recent years, but also allowed the stock price to rebound from the bottom. Business analysts point out that the key to A&F's success again lies in its continued focus on customers. Horowitz has successfully reversed the previous decline and led the brand to modernize. The new A&F is attractive to young people who have just met the brand or middle-aged customers who have purchased previously.

Source: Forbes, BNN Bloomberg, INVESTOR'S BUSINESS DAILY