Abercrombie & Fitch is pulling off a huge turnaround: the American fashion group is revising its expectations upwards, following a successful first quarter and thanks to a “solid balance sheet”.
Better than expected
Abercrombie & Fitch says its balance sheet is once again solid; so much so that CEO Fran Horowitz is “cautiously optimistic” for 2023 as a whole, despite a “dynamic macro environment”. The fashion group, which was all the rage in the early 2000s before plummeting, is also raising its sales growth forecast for this year from 1 to 3 % to 2 to 4 %.
In the first quarter of this year, sales have already exceeded forecasts as net sales rose by 3 % to 836 million dollars (775 million euros). The flagship Abercrombie brand saw its sales rise by 14 % to 436 million dollars (400 million euros), while Hollister lost 7 % of its sales – ending at 400 million dollars (370 million euros). The group did however close a number of shops in the last quarter.
A new approach
Hollister is now focusing on youthful sportslovers, while Abercrombie wants to attract young professionals. To achieve this, CEO Horowitz is making extensive use of social media, a strategy that seems to be paying off: operating profit rose to 34 million dollars (30 million euros), while last year there was a loss of 10 million dollars.
Since 2017, Fran Horowitz has been trying to pull Abercrombie & Fitch up from the rock-bottom to which the group was dragged by its former CEO Mike Jeffries. His strategy of only being there for “thin, beautiful people” blew up in his face, and resulted only in lot of criticism and even discrimination lawsuits. His successor is now playing the inclusion and digitisation cards.
