The Beloved 90s Fashion Brand Is Making A Turnaround—Even Beating Nvidia Over The Past Year

Topline

Abercrombie & Fitch, the iconic fashion brand that dominated the Y2K era, reported record-breaking first-quarter earnings Wednesday, signaling a successful turnaround as young millennials turned back to the nostalgic brand’s inclusive revamp—with shares growing over four-fold, outpacing Nvidia over the past year.

Key Facts

Key Background

Abercrombie & Fitch has undergone a significant transformation over the past decade. In 2015, the company announced it would end its “sexualized marketing” practices using shirtless models and tone down the provocative in-store atmosphere—characterized by dim lighting, strong cologne scents and loud music. After being labeled America’s most-hated retailer in 2016, Horowitz, then-chief merchandising officer, committed to fostering “a more diverse and inclusive culture.” Upon becoming CEO in 2017, Horowitz spearheaded a comprehensive rebranding, featuring models of various body shapes and skin tones, and expanding product lines. In 2019, the company introduced Curve Love, tailored to curvier customers with sizes up to XXXL, which now accounts for nearly half of the women’s denim segment, according to Horrowitz’s recent interview with Vogue Business. The company also launched Your Personal Best (YPB), an activewear line in 2022, and unveiled a bridal shop in March, catering to the diverse lifestyles of young millennials. On the back of these strategic shifts, the retailer’s stock soared 285% in 2023, with an additional 91% surge so far this year.

Crucial Quote

“The key factor behind Abercrombie’s success is a relentless focus on the customer,” Neil Saunders, managing director and retail analyst at GlobalData, told Forbes. “The brand has also been transformed from its 1990s vibe into a modern label that is appealing to younger and middle-aged shoppers. On the assortment side, a focus on quality and moving into areas of growth like athleisure and wedding outfits have served Abercrombie very well.”

News Peg

The 131-year-old apparel company had a controversial history under the helm of its former CEO Mike Jeffries. In a 2006 interview with Salon, he said that the company targeted an “attractive, all-American kid with a great attitude and a lot of friends.” He also said the company would “hire good-looking people in our stores,” as “we want to market to cool, good-looking people. We don’t market to anyone other than that.” This approach led to a series of controversies, including a $50 million settlement in 2004 over discriminatory hiring practices. Amid increasing criticism and 11 straight quarters of declining earnings, Jeffries left the company in 2014. The brand hit a 17-year low stock price below the $10 mark in 2017, five months after Horowitz took over as CEO.

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Tangent

While Abercrombie & Fitch is making headlines with its stunning revival, Gap is another nostalgic 90s brand signaling a comeback under new leadership. Following the appointment of Richard Dickson—former president of toymaker Mattel who helped revive Barbie—as CEO last August, the company has undergone a turnaround, which seems to be paying off so far: shares rose by 256% over the past year as of Friday afternoon, with the company’s promising earnings announcement Thursday pushing up shares over 20% after market close. The company posted an annual sales growth of 3% for the first quarter, with all four brands—Gap, Old Navy, Athleta and Banana Republic—seeing quarterly sales growth “for the first time in what we can’t necessarily find in our history,” according to Dickinson in an earnings call. The company also raised its full-year guidance to “up slightly year-over-year” from the prior outlook of “roughly flat,” with its market share gaining for the fifth consecutive quarter. Dickinson appointed fashion designer Zac Posen, also known as the former Project Runway judge, as the company’s creative director in March—which would enhance “the brand’s reinvigoration” and has already started to “show up on the scoreboards,”” according to Dickson. Posen has recently elevated Gap’s media exposure by dressing Da’Vine Joy Randolph in a custom denim gown on the Met Gala red carpet, and Anne Hathaway in a white shirtdress for a Bulgari event in Rome—the dress was launched online on Tuesday and sold out within several hours.

Further Reading

Beyond the ‘young millennial’: Can Abercrombie maintain momentum? (Vogue Business)

Gap Snaps Slump With Sales Gain (The Wall Street Journal)