Abercrombie, the hottest mall brand of the early 2000s, makes a massive comeback worth $1 billion

For those of you who wear low-rise jeans, you’ve been right all along. Not only has the style returned from its two-decade slumber, but so has one of its most famous suppliers.

Abercrombie & Fitch, the beloved clothing retailer of the 1990s and early 2000s, put an emphatic stamp on its comeback, posting its best first quarter in company history. The company reported $1 billion in net sales, an increase of 22% from last year, far exceeding expectations. Sister brand Hollister saw 12% growth in comparable sales, and Abercrombie shares rose more than 20% to $187 on Wednesday.

“We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile tracking capabilities and inventory discipline, driving sales above our expectations,” CEO Fran Horowitz said in the earnings report.

The company owes its spectacular numbers to savvy clearance sales, a pullback in promotions and inventory, and its mastery of what’s hot, like low-rise, wide-leg jeans. But its most profound success, which fueled 285% stock growth that surpassed even 2023 AI darling Nvidia, is due to a seven-year transformation of Abercrombie’s brands and a deep understanding of Abercrombie’s cultures. post-pandemic changes.

Before Abercrombie ascended to retail royalty, it first hit rock bottom. In 2016, the company was ranked the most hated retailer by the American Customer Satisfaction Index, as its consumers overcame the perfume-laden air in stores and hypersexualized models and were put off by the company’s series of controversies. When Horowitz took the helm in 2017, he brightened up the stores and revamped their inventories, expanding sizes and focusing on dressing young professionals for all aspects of their lifestyle, a shift that fits with the post-COVID casual dressing trend.

“We grew up at Abercrombie,” Horowitz said in a 2022 report. Fortune interview. “We really focused on this young millennial, this young 20-something consumer, and we got the response we were hoping for.”

Will people relax at the mall again?

While Abercrombie has surpassed its competitors, it also represents a ray of hope for other clothing retailers that were once stalwart mall brands. Both American Eagle and Gap, which will release results this week, are expected to continue Abercrombie’s positive trend, although not to the same magnitude.

Good luck is coming to the retailer’s relatives near the mall. Sportswear mainstay Dick’s Sporting Goods raised its full-year profit guidance after reporting on Wednesday a 5.3% rise in comparable sales for the quarter as more people bought sports shoes and equipment. Discount department stores Ross Dress for Less and TJ Maxx both posted sales increases last week, as young shoppers looking to save money flocked to the stores.

Neil Saunders, managing director of retail at analyst firm GlobalData, said Fortune that these companies, while sharing similar environments, have been successful simply because they know their own discrete consumer bases.

“In the case of TJ Maxx, it’s about value for money and offering great deals and great prices on the brands people want to buy,” he said. “For Dick’s, it’s really about having all the latest sports brands under one roof and taking part in more casual clothing from department stores.”

In fact, department stores have withered due to the rise of e-commerce and the proliferation of direct-to-consumer brands. Macy’s is in the midst of a restructuring effort, closing 150 locations this year to make way for its upscale subsidiaries. Kohl’s and Nordstrom have also struggled to attract young people. Analytics firm Coresight Research projected that by 2026, U.S. department store sales will have plummeted 21%, from $103 billion in 2018 to $81 billion.

Even with nostalgic mall brands like Abercrombie making a comeback amid the decline of department stores, Saunders argued that the rise of these mall-adjacent favorites doesn’t mean the shopping complexes of the ’90s and ’00s will return with the same fervor. . There’s really only a collection of brands that turned out to be old-time mall favorites that have found ways to stay relevant.

“It’s not really a return of the mall per se,” Saunders said. “It’s the return of some particular brands that are doing the right thing.”

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