Abercrombie's Flagship Brand Is Bouncing BackBy
Company has sought to revamp image of its namesake products
Hollister line continued double-digit comparable-store growth
Sales of Abercrombie & Fitch Co.’s namesake brand climbed for the first time in five years last quarter, a sign there may be new life yet for the preppy apparel company.
Comparable sales -- a key gauge of a retailer’s health -- rose 5 percent at the Abercrombie brand in the three months ended Feb. 3, reversing a lengthy nosedive. The results show Abercrombie’s strategy shift is bearing fruit, and pushed the stock up the most in more than a month.
The company’s sales improvement “suggests that marketing and product efforts are taking hold,” Brian Tunick, an analyst with RBC Capital Markets, said in a research note.
Abercrombie has sought to bring the 126-year-old brand back to its roots with seasonal clothing and a return of intimate apparel, while dialing back its racy ads that featured half-clad models. The retailer has already seen rapid growth at its younger, California-themed Hollister chain.
The shares surged as much as 15 percent to $24.52 in New York, the biggest intraday gain in almost four months. Abercrombie stock had already climbed 22 percent this year through Tuesday’s close.
Analysts had expected a comparable-sales increase of 2.5 percent for Abercrombie’s flagship brand, according to estimate compiled by Consensus Metrix. Same-store sales at Hollister rose 11 percent in the period, just short of the 11.6 percent estimate. By the same measure, companywide sales rose 9 percent, compared with a projection for growth of 8.4 percent.
Excluding some items, Abercrombie’s earnings amounted to $1.10 a share. That fell short of analysts’ average estimate of $1.12.
Executive Chairman Arthur Martinez, the former CEO of Sears Roebuck & Co., stepped down on Feb. 3 and handed the chairman role to Terry Burman, who already served as lead independent director. The 78-year-old had been in the role since 2014, the year when longtime CEO Mike Jeffries left and the clothing brand set out to rebuild its dated image.
The company is marketing aggressively to win back customers, including its first television commercial in more than a decade last year and a 12-episode reality show on a YouTube channel.
Abercrombie is complementing the marketing with increased investment in its mobile sales platform. About 70 percent of online customer traffic comes from a mobile device, Chief Operating Officer Joanne Crevoiserat said in an interview.