After its turnaround, Abercrombie and Fitch's stock skyrocketed.
Jennifer Ortakales Dawkins/Business Insider
Abercrombie and Fitch had a blockbuster year in 2023.
The apparel brand's stock was up by more than 285%.
Abercrombie has found success by recapturing millennial shoppers.
If you're a millennial like me, you probably remember that walking into Abercrombie and Fitch as a teen felt more like walking into a private club than a clothing store at the mall.
Wooden blinds covered the windows, and the store was so dimly lit that you could barely see what was inside. A shirtless male model probably greeted you at the entrance and you couldn't help blushing as you averted eye contact. The scent of cologne punched your nose with sandalwood and musk. Loud music reverberated from the overhead speakers.
Back then, Abercrombie was the coolest brand.
But then, millennials grew up. We had jobs to go to and weddings to attend. There were fewer occasions to wear a plaid flannel or a T-shirt with a giant moose. Abercrombie's cool-kid, preppy style became outdated while consumers desired more inclusive and authentic marketing from the brands they loved.
Twenty years later, Abercrombie conjures up new sensations for its millennial customers. Under the leadership of Fran Horowitz, who's been the brand's CEO since 2017, Abercrombie has undergone drastic changes. The revamped stores are brightly lit and minimalist, the music is subtle, the air is free of heavy cologne, and instead of T-shirts stacked at the front of the store, you'll see dress pants and "grandmacore" sweaters.
Newer designs and strong marketing have caught older shoppers' attention. It has made "people take another look at the brand and, when they did, they liked what they saw," Neil Saunders, the managing director of GlobalData Retail, told BI.
In a November earnings call, Horowitz told investors that customers range in age from their late teens to their 40s. "We're seeing a very varied customer in our stores, which is super exciting," she said.
The brand's transformation successfully recaptured millennials. Abercrombie had a blockbuster year in 2023. Revenues were up by 30% and the company is on track to reach $4 billion in 2023. Abercrombie's stock was up by more than 285%, beating out the software company Nvidia.
In January, Abercrombie increased its fourth-quarter sales and its 2023 outlook. According to a press release, the company expects women's apparel to achieve its highest-ever fourth-quarter sales.
I've visited Abercrombie and Fitch stores to see why millennials have fallen back in love with the clothing brand.
-Jennifer Ortakales Dawkins
The clothes are more sophisticated.
Two outfits displayed in the Fifth Avenue Abercrombie and Fitch store.
Jennifer Ortakales Dawkins/Insider
Gabriella Santaniello, the founder and CEO of the retail-research firm A Line Partners, told Business Insider that Abercrombie has been dead set on ditching its teen image. "They don't want to be a teen brand — that's Hollister's job," she said, referring to its sister brand.
And they've done so by focusing on elevated basics, she said.
"They have a really good core business … they're not too risky with fashion. There is a little bit of fashion and color but not too much so it's not going to be a huge liability," Santaniello said, referring to Abercrombie's collection of more tailored pants and oversize blazers as key staple pieces.
Abercrombie is a destination for office wear.
Abercrombie's Sloan pant has been a popular women's style for the brand.
Jennifer Ortakales Dawkins/Business Insider
While denim continues to be an important part of the business, Abercrombie has seen strong conversion with non-denim pants.
"This young millennial can now wear this brand from work to their weekend getaway, and that's a great example of where we're seeing that extension of categories," Horowitz said in an August earnings call.
She specifically mentioned the brand's success with its Sloane pant, a wide-leg women's slack that comes in various colors. "It's all over TikTok," Horowitz said. "Women are loving that pant."
Santaniello said these more "polished" everyday items appeal to more mature shoppers. "People aren't wearing jeans all the time, and they have identified these key categories for everyone's apparel needs. You can get something for every aspect of your life," she added.
The brand carries elegant pieces for special occasions.
Evening wear is displayed in the Fifth Avenue Abercrombie and Fitch store.
Jennifer Ortakales Dawkins/Insider
Previously known for its casual-preppy style, sundresses were usually the most formal Abercrombie would get. But the brand has tapped into the millennial's need to dress up.
The company's Best Dressed Guest collection carries dresses, jumpsuits, and matching sets designed as complete looks for weddings, parties, and special occasions.
In an August earnings call, Horowitz told investors that the Best Dressed Guest collection continues to grow year over year.
"Our dress business has become a real destination," she said. "She's coming to us for those important wearing occasions now from all of her social things that she's out going to."
The company has tapped into athleisure.
The YPB collection at Abercrombie sells athletic apparel.
Jennifer Ortakales Dawkins/Insider
Abercrombie added a new category to its product offering with Your Personal Best, a collection of athletic apparel for men and women. This captured a market for athleisure, which has become more of a shift in how people dress than a trend.
In a January video interview, Horowitz told CNBC that customers are "responding really nicely" to Abercrombie's athletic apparel.
"YPB, our athletic brand, was something the consumer actually asked us for and we delivered," she told the network.
Now the company is applying these successes to menswear.
Menswear inside the Fifth Avenue Abercrombie store.
Jennifer Ortakales Dawkins/Insider
In a November earnings call, Horowitz told investors that women's was the first focus of the company's turnaround and that the men's business was now picking back up.
Horowitz told investors that non-denim bottoms, fleece, and sweaters performed well in the third quarter of 2023. They were all "areas of focus for newness as we rebuilt the assortment," she said.
Abercrombie applied its learnings in womenswear by offering dressier pieces for men, such as linen shirts and slacks that could take an outfit from the office to a dinner party.
The company has also used licensing deals with Formula 1 and the NFL to bring in male shoppers.
