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Abercrombie showing ‘encouraging signs of life’

After an extended run of decline, Abercrombie & Fitch is finally back with a market-beating 4.5 per cent uplift in total sales.

Although the result comes off the back of a weak prior year comparable, it nevertheless provides comfort that the group’s strategies are starting to bear fruit.

As good as the headline figure is, it masks disparities between A&F’s two core brands. Hollister’s 8 per cent increase in comparable sales is impressive and represents a significant acceleration from the first half of the year. Meanwhile, Abercrombie is still in the red with a 2 per cent drop in same-store numbers – a disappointing outcome, but one that marks a significant improvement over the double-digit declines the brand was previously recording.

That Hollister is performing better than Abercrombie is not surprising. Hollister’s brand reinvention program is more advanced, and initiatives like the Club Cali loyalty program have had much longer to play out. As a result, the brand is engaging far more with its customer base and enticing them with relevant on-trend product across categories like denim and intimates.

Abercrombie has not been neglected, but the division’s reinvention is at an earlier stage and so financial results are nowhere near as positive. Arguably, the task of finding a new voice and pitch for a brand that carries so much baggage has been far more difficult than Hollister’s reasonably gentle evolution. However, having seen the work undertaken at Abercrombie, it is clear that progress is being made and that the direction of travel is correct.

Ditching the logos

On the product front, there have been significant improvements in quality, especially to fabric and stitching. Subtle detailing, like more stylish buttons on shirts, has also helped to give basic garments a lift. On top of this, the big logos of the past have been firmly ditched in favour of no-branding or very subtle A+F monograms. The net effect is a range that is more mature and sophisticated, with much more emphasis on fit and function than branding.

The new Abercrombie prototype store, which has been opened in a select number of locations, is impressive. It is revolutionary rather than evolutionary and is a significant step forward for the brand. The two most immediately striking things about the new design are how light and open it is, and how subtle the branding is. Alone, these make the shops almost unrecognisable as A&Fs.

Beyond these significant shifts, there are more subtle changes, foremost among them a smaller footprint, with some new prototypes being around half the size of older stores. This is made possible by a much more efficient use of space and also because ranges have been thinned out.

A&F is now putting more weight behind key items and cutting back on slower, less relevant lines.

The consumer impact of all these changes is positive. The new format is more pleasant to shop, and the ‘less is more’ approach makes putting outfit ideas together easier. From A&F’s perspective, the new format provides financial benefits, with higher sales densities and lower rents.

With only a few new stores open so far, the impact on Abercrombie’s sales is currently small.

However, this should grow as the concept is rolled out further. In the meantime, there is much more work to do to reconnect the brand with customers. While initiatives like the loyalty scheme are working well, Abercrombie needs to communicate its new essence more effectively and more widely.

Overall, Abercrombie & Fitch is still a company in transition and is not back to full health.

However, it is now showing some encouraging signs of life.

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