Abercrombie racks up another $1B quarter as shoppers splurge on retro retail
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Fierce results... Abercrombie & Fitch’s denim may be distressed but its earnings are not. The millennial mall staple blew past Q2 expectations, with sales up 21% to $1.1B — its second straight billion-dollar quarter. And A&F’s profit more than doubled from last year. Its teen-leaning Hollister line also enjoyed double-digit sales growth as shoppers splurged on summer dresses and back-to-school jeans. A&F raised its annual sales outlook, even as it navigates an “increasingly uncertain environment.”
Not so Fitch: A&F shares fell 15% on Wednesday after the retailer said it faced higher costs and cooling margin growth. But the stock’s still up nearly 60% this year.
Restitch: Rival American Eagle yesterday reported record Q2 revenue, partly thanks to growth in its loungewear sub-brand Aerie. Gap topped estimates and raised its annual profit forecast after strong sales for Old Navy, its biggest brand.
Y2K comeback… OG teen retailers have stepped up their game to attract consumers of all ages. After years of focusing on tight jeans, oversized hoodies, and graphic tees, brands are revamping their wardrobe to cater to more style needs (like: office wear, wedding-guest fits). Abercrombie said its wedding shop collection “exceeded expectations” since its launch in March. Last quarter, it added men's suits to the mix. American Eagle has long been a hit with teen girls, but has stretched its offerings to include a men’s activewear line and an Aerie maternity collection.
Changing threads can get you ahead… Y2K brands aren’t just after Gen Z; they’re upgrading their style to win back the (now grown-up) millennials who loved them first. By rolling out fresh fits that appeal to shoppers at every stage of life, clothing retailers can capture more wallet share. It seems to be working: in July of last year, nearly half of Abercrombie's shoppers were between 25 and 34 — up from less than a fifth in 2017.