Abercrombie & Fitch: From exclusion to inclusion, the story of a renaissance

Founded in 1892, Abercrombie & Fitch has lived through more than a century of history, marked by dazzling successes and resounding controversies. From its beginnings as a supplier of hunting and fishing equipment to its heyday in the 1990s as a pop culture icon, the brand has had its ups and downs. Today, Abercrombie & Fitch is reinventing itself to embrace values of inclusion and diversity, a radical departure from its elitist past.

Contents

• The beginnings: a brand for adventurers
• The glory years and the fall
• Controversy and decline
• The shift towards inclusion
• The transformation strategy
• Denim as the pillar of renewal
• A deliberate move upmarket
• The comeback
• A long road to renaissance

The beginnings: a brand for adventurers

Outdoor sports enthusiast David Abercrombie founded the brand in 1892. Initially, Abercrombie & Fitch specialized in hunting and fishing clothing and equipment. In 1900, Ezra Fitch, a real estate developer, joined the company, bringing a vision of diversification. Fitch wanted to broaden the product range, while Abercrombie preferred to concentrate on technical clothing for professionals. This disagreement led to Abercrombie's departure in 1907, leaving Fitch at the helm. Under Fitch's leadership, the brand diversified and attracted a prestigious clientele, including celebrities such as Charles Lindbergh and Ernest Hemingway. The brand became a symbol of the American elite, with stores in Manhattan and later in San Francisco.

The glory years and the fall

In the 1970s, the rise of cheaper ready-to-wear chains put Abercrombie & Fitch in difficulty. In 1977, the brand went bankrupt and was bought by Oshman's Sporting Goods, then by The Limited Brands in 1988. In 1992, Mike Jeffries took over the reins of the company, reorienting it towards the teenage market with a marketing strategy focused on exclusivity and elitism. Jeffries transformed Abercrombie & Fitch into an iconic fashion brand of the 1990s and 2000s, known for its dark stores, shirtless models and clothes emblazoned with the moose logo. However, this exclusionary strategy began to cause controversy. In 2006, Jeffries openly declared that the brand was targeting "cool" and "beautiful" young people, deliberately excluding those who didn't fit this image.

Controversy and decline

Jeffries' comments went unnoticed until 2013, when activist Benjamin O'Keefe dug up these statements and launched a petition calling for an apology and the introduction of plus sizes. Controversy erupted, tarnishing the brand's image at a time when it was already losing ground. Sales plummet, and in 2014 Jeffries resigns.

The shift towards inclusion

In 2017, Fran Horowitz took over as CEO of Abercrombie & Fitch and initiated a 180° turn. The brand had abandoned its iconic logo three years earlier and now focused on values of inclusion and diversity. Stores are lightened, sizes are widened, and the brand begins to support causes related to the LGBT and communities of color. In 2021, Abercrombie & Fitch records its best operating results since 2008, with revenues reaching pre-pandemic levels. The brand is counting on a solid marketing strategy and a reorientation of its retail strategy to bounce back where many others have failed.

The transformation strategy

One of Fran Horowitz's first decisions was to simplify the brand's logo, dramatically reducing the number of logoed items. In 2014, the brand abandoned the impetus, judging that clothing with logos had become obsolete for its target market. Abercrombie & Fitch now focuses on inclusion and size diversity. The brand offers a wide range of sizes, although it does not yet offer 4XL. It has also introduced gender-neutral collections, although these still represent a small part of its overall assortment.

Denim as a pillar of renewal

Denim plays a central role in Abercrombie & Fitch's renewal strategy. The brand offers a wide range of jeans, with a higher assortment share of straight jeans than its competitors. This strategy aims to better target Generation Z, who have difficulty finding denim sizes and styles that suit them.

A deliberate move upmarket

Abercrombie & Fitch charges higher average prices than its competitors, seeking to position itself as a brand "close to luxury". However, this strategy has its limits, as customers do not always perceive the brand as offering a higher-quality product that justifies a significant price increase.

The comeback

In 2023, Abercrombie & Fitch recorded the best first quarter in its history, with net sales of one billion dollars, an increase of 22% on the previous year. Sister brand Hollister also reported 12% growth in comparable sales.

Income statement chart :

Evolution of analysts' estimates (EPS) :

Abercrombie shares rise over 30% post-earnings on 05/23/2024. In the months that followed, the stock continued to climb, reaching $196.99 a year later on 05/24/2024. The stock has appreciated by 285% in 2023 and 60% in 2024 to date.

Abercrombie & Fitch's success is based on a seven-year brand transformation and a deep understanding of post-pandemic cultures. The brand managed seasonal transitions with relevant assortments and compelling marketing, while reducing promotions and inventories.

A long road to renaissance

Abercrombie & Fitch has come a long way since its early days as a supplier of hunting and fishing equipment. After hitting rock bottom in the mid-2010s, the brand reinvented itself under the leadership of Fran Horowitz, embracing values of inclusion and diversity. Today, Abercrombie & Fitch is back in the spotlight, proving that even the most controversial brands can rise from the ashes with a well-thought-out strategy and an understanding of modern consumer expectations.

 

To find out more, watch the documentary "Abercrombie & Fitch: a brand on the edge" on Netflix.