Twelve Days of Commerce: #3 Abercrombie & Fitch

Who remembers Applecrumble & Fish?

As I edge closer to the end of my Christmas roster, today’s spotlight shines on one of the most dramatic retail revivals of the decade: Abercrombie & Fitch. With a 150-year legacy that once dressed White House elites, the brand seemed destined for the ashes after a period of cultural missteps. Yet, in the past three years, it has risen like a Phoenix, reclaiming its place in the retail landscape with a masterful rebrand.

Once the epitome of the ‘cool kids’ brand,’ Abercrombie symbolized teenage aspirations, six-packs, biceps, and status, all wrapped in an overpowering cloud of cologne. But it was this very ethos that uncovered darkness amongst their leadership and left them paddling against the current. Now, with a reimagined identity and renewed focus, Abercrombie’s transformation serves as a powerful reminder of branding’s ability to breathe life into a legacy.

Abercrombie and Fitch

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Abercrombie & Glitch

It’s exceedingly rare for large fashion brands, particularly public companies, to sustain consistent success year after year when targeting broad markets. Why? Because in today’s fiercely competitive landscape, amplified by the rapid evolution of technology, trends and subcultures emerge at a pace that disrupts stability with almost uncontrollable speed.

The irony of their story, is in the early 2000s, Abercrombie was a game-changing disruptor. Its ‘cool fashion’ persona dominated the 13 to 25 demographic (can confirm I too was swayed), making its clothing a status symbol for high schoolers in developed economies. Not wearing Abercrombie often meant social exclusion - or you wore Hollister as an ‘ok’ alternative. “In every school there are the cool and popular kids, and then there are the not-so-cool kids,” former CEO Mike Jeffries told Salon in 2006. “A lot of people don’t belong in our clothes, and they can’t belong. Are we exclusionary? Absolutely.” (read more)

The brand’s reputation took a sharp nosedive after a series of legal allegations, including accusations of racial and gender favoritism. To make matters worse, it was revealed in recent months that Jeffries was convicted of orchestrating a multi-million-dollar sex trafficking ring alongside two partners-in-crime (read more). He was released on $10M bail. To quote White Goodman (Dodgeball), Abercrombie went from cultural symbol, to ‘a skid-mark on the underpants of society.’

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My déjà vu Christmas present

This Christmas, as I carefully unwrapped my presents, a process I approach with complete seriousness, I noticed a package that clearly felt like a bundle of T-shirts. My hunch was spot on. Inside, I found not just any T-shirts but a trio of Abercrombie shirts, courtesy of my mum, who firmly believes my shopping habits require her intervention.

Suddenly, I was hit with déjà vu - 14 years old, sitting in the same spot, unwrapping what felt like the same gifts. Back then, I’d beg my aunt visiting the U.S. to bring back Abercrombie merch, desperate to join the Abercrombie cult that had blanketed my school. Looking back, it feels a little ridiculous.

But unlike the overpowering scent of Abercrombie cologne that once dominated their 2010 winter collection, these new pieces had a different vibe - looser, trendier, and leaning more Carhartt than Hollister. Ironically I’d already planned to have the brand on my roster before this dramatic event, however it was reaffirming to see the change in the flesh. So where did Abercrombie decide to shake things up?

Abercrombie shifted its focus from its previous, now-tainted persona to a more everyday fashion-line approach, curating collections from higher-grade materials and emphasizing comfort and lifestyle. Casting aside gaining initiatives in cheap, fast fashion, the brand let its products do the talking. As Elizabeth Segran noted, Abercrombie avoided splashy reintroduction campaigns, instead opting for subtle changes like scent-free stores, muted aesthetics, and collaborations with content creators to let consumers feel like they’d rediscovered the brand themselves (Abercrombie is Back: Today Explained Podcast). Or, as Abercrombie’s head of merchandising Carey Krug told Fast Company, the goal was to evolve “from being the best-kept secret in fashion to their favorite brand.”

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That’s a lot of EBITDA

In the world of retail, especially for D2C (direct-to-consumer) brands, generating a profit that’s both meaningful and scalable for reinvestment is a daunting challenge. The struggles of e-commerce brands transitioning to retail are well-documented, with notable examples like Warby Parker and Allbirds sucking majorly in this department.

Abercrombie, however, has always had a strong retail presence, and with the rise of digital, they’ve pivoted to a hybrid approach. As discussed in my Breakfast at Tiffany’s article a few months ago, boutique and high-end fashion, when marketed effectively can deliver significant lifetime value. Customers often come through paid channels (e.g., Facebook Ads, Google Ads), make an initial purchase, and return organically over time. While mass-market fashion brands heavily rely on this cycle to balance P&L with high return and exchange rates, Abercrombie has leaned into digital transformation, contributing to 60% of sales now coming from online channels - roughly $2.8 billion in 2023 sales.

Abercrombie’s hybrid shift is evident in their financial feats the last few years. Their trailing twelve-month (TTM) revenue sits at $4.81B, a 12% increase from 2023’s $4.28B. But the most striking growth is in net income, which has surged 64%, jumping from $328M in 2023 to $537M in last 12-months. Net income as a percentage of total sales has moved from 8% to 12%, with EBITDA now at $901M.

Despite staying largely out of the public eye while tech and AI steal the spotlight, Abercrombie has made waves publicly. Their share price (ANF:NYSE) has increased by 78% in the last 12 months, and a staggering 799% over the past five years, making it the highest-performing stock on the S&P 1500 in 2023 (+285%), outperforming even Jensen Huang’s precious NVIDIA. Abercrombie has firmly earned its place in the spotlight of this year’s comeback story, and as they continue their strong trajectory into 2025, I’ll be watching closely, maybe shopping a little in the meantime…