Abercrombie & Fitch, the fashion group behind Abercrombie and Hollister, has revised its outlook upwards following a strong second quarter. The American clothing group is becoming a textbook example of a successful turnaround in the retail industry.
Back-to-school momentum
After a particularly long and difficult struggle, Abercrombie & Fitch is reaping the rewards of its strategic turnaround. The American fashion group reported a 21% increase in second-quarter sales, totalling 1.1 billion dollars (around 1 billion euros), compared with 935 million dollars in the same period last year. The growth exceeded analysts’ expectations of a 15% increase.
Sales of the Abercrombie brand rose by 26%, while the Hollister brand for younger customers recorded growth of 17%. These increases were mainly attributable to the success of summer and back-to-school sales. Part of the momentum is driven by a partnership with the NFL, the biggest American football league, and the jumpers and T-shirts that Hollister creates for around thirty American universities.
120 new stores by 2025
Abercrombie & Fitch has overhauled its operating model in recent years, including tighter inventory management, and is investing in digital technologies and in-store experiences, CEO Fran Horowitz tells Bloomberg. The company plans to open around 120 new stores in 2025, while also investing in AI and social commerce.
As a result of the good quarterly results, Horowitz is raising the guidance for annual sales: the company now expects net sales growth of 12% to 13% for the 2024 financial year, compared with the previous forecast of around 10%. Despite this solid performance, the CEO nonetheless warns of an “increasingly uncertain environment”. On average, analysts were expecting sales to rise by 12% to 4.79 billion dollars.
