Just two years ago the Abercrombie & Fitch tombstones were being engraved.
Buyers had abandoned a retailer that was hot in the early 2000s, the stock price was low, and the retailer was being criticized in a Netflix documentary.
The bosses had recruited only thin white people, and the models and staff wore little clothing as the brand sold sex to young people between 15 and 22 years old.
In a surprising reversal, anyone checking their stock chart this year will see a green line that has risen even steeper than Wall Street darling Nvidia.
Abercrombie & Fitch shares have soared more than 400 percent in the past year, far outpacing the chipmaker’s 210 percent gain in that time.
Since Abercrombie & Fitch’s multiple controversies, the brand has undergone a major makeover that has made it popular among millennials and Generation Z.
Abercrombie & Fitch was the hottest department store in the 2000s, famous for its perfectly stylish, tanned, well-groomed employees.
So what changed?
The first traces of a real departure from its bold and provocative image during the tenure of previous CEO Mike Jeffries came when Fran Horowitz took over as CEO in 2017.
To get a sense of the difference between these two leaders, Horowitz sits on the board of directors of a corporate responsibility organization that advocates for companies to do good in the world, not just make profits.
Jeffries, who is widely credited with initially growing the brand, is best known for his bold and offensive statements.
To be sure, the company began its decline under Jeffries, who resigned in 2014 after 11 consecutive quarters of declining same-store sales.
Seven years after Horowitz was appointed to the top job, Abercrombie & Fitch posted its strongest quarterly numbers in its 132-year history.
In the three-month period ending in May, it had $1 billion in sales, up about 22 percent from a year earlier. Not only that, profits grew 22 percent, much more than analysts expected.
The story of how this remarkable change was executed begins with how Abercrombie & Fitch overhauled its entire image from top to bottom.
A 2022 Netflix documentary called ‘White Hot: The Rise & Fall of Abercrombie & Fitch’ cataloged exactly how the brand used to promote itself.
In the early 1990s and 2000s, she ran sex appeal-filled advertising campaigns that primarily featured fit, attractive white models. In some of the ads, the models were wearing practically nothing.
Their ads also had incredible star power, with Taylor Swift, Karlie Kloss and Jennifer Lawrence early in their careers.
A quick look at Abercrombie & Fitch’s website today shows a much more inclusive picture. Models of all races and sizes feature prominently in their summer promotions.
That’s a far cry from 2002, when the company proudly sold a line of T-shirts featuring Asian stereotypes and caricatures.
One of the offending T-shirts had the slogan “Wong Brothers Laundry Service: Two Wongs Can Make It White” with two caricatures of Chinese men.
In the early 1990s and 2000s, Abercrombie & Fitch ran sex appeal-filled advertising campaigns that primarily featured fit, attractive white models.
In some of the ads, like this one promoting boxers, the models were practically wearing nothing at all.
Taylor Swift and Karlie Kloss modeled for Abercrombie early in their careers
Jennifer Lawrence recalled her 2006 photo shoot in an interview: “They wanted natural photos, so they made us play soccer on the beach. The other models played soccer pretty, but I didn’t. My face was bright red and He was sweating and his nostrils were flared.
The brand’s controversies were not limited to the clothing itself. Their stores, like their advertisements, were committed to the idea that sex sells.
That meant rejecting people who applied as models in stores and didn’t fit a certain “look,” which supposedly included minorities.
Nine people of color subsequently filed a class-action lawsuit against Abercrombie & Fitch for alleged discrimination against African Americans, Latinos, and Asian Americans. It was settled for 40 million dollars. in November 2004.
Mike Jeffries, former chairman and CEO of Abercrombie & Fitch, was known for making brash statements that some considered offensive.
Attitudes have certainly changed since the days of 2006, when then-CEO Mike Jeffries said Lounge: ‘We are looking for the attractive, American boy with a great attitude and many friends. “A lot of people don’t belong (in our clothes) and can’t belong.”
‘Are we exclusive? Absolutely. Companies that are in trouble try to attack everyone: young, old, fat, skinny,” he added.
Coinciding with the image that its models in the store were thin, the brand also received endless criticism for not selling clothing for people of size XL or XXL.
But now that Abercrombie & Fitch has expanded its customer base, it is flourishing with Generation Z and millennial professionals, according to data from QuestBrand.
Both demographic groups surveyed in 2023 were much more likely to describe Abercrombie & Fitch as a “modern” and “stylish” brand than they were two years earlier.
The company’s net preference among millennials hit a record high in May 2024, according to morning consultation.
A model appears in a recent Abercrombie & Fitch summer promotion on the company’s website.
The brand is also much more active on social media, selling products through affiliates on Instagram and other platforms.
But of course, in a world full of competitors, Abercrombie & Fitch isn’t destined to be the leader forever.
Other brands that also suffered similar declines as malls and in-person shopping declined with the rise of e-commerce are also renewing themselves.
American Eagle and Gap, which owns Banana Republic and Old Navy, are taking their own steps to position themselves as the leading clothing choice for young professionals. Business Insider reported.
But for now, investors are celebrating an unlikely winner in the market that isn’t a tech giant or an artificial intelligence startup.