The Journal. - The Resurrection of Abercrombie & Fitch

Episode Date: July 11, 2024

In the late 1990s and early 2000s, Abercrombie & Fitch was the hottest teen clothing brand. Kids would flock to their local mall to get the expensive, moose-emblazoned apparel. But then, after a series of controversies and a change in fashion, the brand seemingly lost its edge. WSJ’s Katie Deighton reports on how Abercrombie & Fitch revived itself and embraced millennial women.  Further Listening: - Shein Took Over Fast Fashion. Then Came the Backlash.  - The Unraveling of Stitch Fix  - Old Navy Tried to Make Sizes for All. It Backfired.  Further Reading and Watching: - How Jeans for Millennials Helped Revive Abercrombie & Fitch Stock  - Abercrombie & Fitch Is Reaping the Rewards of Taking Adult Women Seriously  Learn more about your ad choices. Visit megaphone.fm/adchoices

Growing up in the late 90s and early 2000s, there was almost nothing cooler than Abercrombie & Fitch. The other day, I spoke with our colleague Katie Dayton about it. I can't believe that I'm going to share this story because it's quite embarrassing. Yes. But when I was in seventh grade, I didn't have any Abercrombie clothes I couldn't afford

to buy any because they were so expensive but I did receive as a as a birthday present a couple years earlier like a screen printing thing where you could like print out something and then you could iron it onto a t-shirt yeah oh no and, no. And so I had the genius idea of making a fake Abercrombie shirt. So I typed out Abercrombie, I think in all caps, like impact font or something bold, and I ironed it onto a t-shirt and I wore it to school. And I got to school and I had spelled it wrong. And so I was in school for probably 15 minutes before somebody was like,

why does your shirt say Amber Crombie? What is Amber Crombie? It was so embarrassing. And I put a jacket on for the rest of the day. Incredible. And never wore the shirt again, obviously. And you know what? Now that you live in Brooklyn,

I bet if you wore that T-shirt, it would be incredibly cool. Even, like, I grew up in, like, the countryside of England. And even, like, there, it was, that's what you wanted. I would beg my mum to take me to London and go to the Abercrombie store. With its beautiful shirtless models, iconic moose logo, moody stores with lines out the door,

the popped collars, the cologne, it was expensive and aspirational. Abercrombie & Fitch was the definition of cool. It was like every parent's worst nightmare. And every kid wanted to go and drag their parents into shop there. It was pitch black. You couldn't see the clothes. And it was just the coolest thing in the world. But then the world changed and Abercrombie went out of fashion. Logos went out of style. Malls started dying. Fast fashion was on the rise. And Abercrombie and Fitch went from looking exclusive to exclusionary, only for white,

skinny, beautiful people. By the time I was in my 20s, no one I knew was wearing Abercrombie anymore. It was almost embarrassing to be seen in one of their shirts. But now, Abercrombie is back, and it looks a lot different than it used to. I think if you hadn't seen what Abercrombie has been up to in the last five years, you would be surprised it's even the same brand. The transformation of Abercrombie has been like, speaking to analysts, like nothing they've really seen before. Welcome to The Journal, our show about money, business, and power.

I'm Ryan Knudsen. It's Thursday, July 11th. Coming up on the show, is Abercrombie & Fitch cool again? Thank you. hiding under the desk in the BBC Gaza Bureau while airstrikes came in and were blowing the windows in. And they always deliver insight. That is the Global Story gift. Join us, The Global Story, from the BBC World Service, wherever you get your BBC podcasts. For those of you who used to wear Abercrombie,

you might remember that it was founded in 1892. The year was splashed over tons of its clothes. It was started by a man named David Abercrombie. And the idea was it was very outdoorsy. It was for the hunting man, the fishing man, the guy on a boat. And then he teamed up with his lawyer called Ezra Fitch. They still sold guns. Abercrombie and Fitch made guns? When I say they were an outdoors company,

they really were an outdoors company. They were like a Dick's Sporting Goods. Exactly. They were the Dick's Sporting Goods for the upper classes. In the early 1990s, Abercrombie was reborn when a man named Mike Jeffries took over. He became CEO in 1992. Mike Jeffries was a retail executive and his vision was sex sells to the nth degree. And he was given pretty much free reign to do what he wanted. And he basically put a lot of weight on the idea that the brand could be sold around sexy young things.

Yeah, I remember the catalogs were like, people weren't even wearing the clothes. I mean, there was like topless women and shirtless men holding a shirt. It was like, this is why I don't have a six pack, is because I don't own Abercrombie. Right. And look how much fun all these people in the catalogs are having, you know. They're canoodling on the beach and they're throwing bonfires. And it's really selling this lifestyle.

And it worked. The timing was immaculate because by the early noughties, the late nineties, the whole world had turned its focus onto Los Angeles. And it was all about this very, very aspirational, very white beach culture. You had The O.C. on TV. Welcome to The O.C., bitch. You had Laguna Beach. Just fix her makeup, put her in clothes and make her walk.

It was very much in the culture at the time to be looking at this part of the world. And right before that, in 1999, the band LFO had put out a whole song with the lyric, I like girls who wear Abercrombie and Fitch. That's right. I like girls that wear Abercrombie and Fitch. So it was Mike Jeffries' plan. It was beautifully timed to coincide with this interest in that lifestyle.

And they had the clothes that signified, I could live in Santa Monica and I could live on the beach. And I could look hot doing it. Under Jeffries, Abercrombie was a massive success. The company went public. It had hundreds of stores. It launched a sister brand called Hollister. And it raked in billions of dollars in annual sales.

But even at its height, Abercrombie attracted controversy. Some parents thought it was over-sexualized for a brand that targeted teens. Some of its t-shirts had writing on them that was considered racist, and it was hit with several lawsuits. In 2003, several former employees sued the company for racial discrimination and won a $40 million settlement. Now, a former Muslim employee who worked at the stockroom of one of its Hollister stores wore a religious headscarf to work,

and she was fired in February of last year for refusing to remove her headscarf while on the job. A woman born without a left forearm has successfully sued her employee, the retail giant Abercrombie & Fitch, for discrimination after it banished her from the floor to the stockroom. Jeffries also came under scrutiny. In 2006, Salon magazine published a profile of Mike Jeffries. And it was fairly cutting of not just the way he managed the company, but he himself, you know, they kind of made a big point of the fact he was a 61 year

old guy with bleach blonde hair that said dude a lot. And there was a there was a particular quote that really was captured by the mainstream media, which was, candidly, we go after the cool kids. A lot of people don't belong in our clothes, and they can't belong. Are we exclusionary? Absolutely. These companies that are in trouble are trying to target everybody, young, old, fat, skinny, but then you become totally vanilla. Wow. And this was at a time when the body positivity movement was starting up. After the, you know, the size zero debacle, people started to really look at Mike Jeffries as a person. And then they started to go,

well, do you know what, actually shopping at Abercrombie kind of makes me feel bad about myself. I go to the store, everyone that works there looks like a model. That doesn't make me feel good either. Things got worse a few years later, when some of Jeffrey's comments about why he didn't offer plus-size clothing in stores resurfaced. Here's Ellen DeGeneres talking about it. Because according to him, anyone who's a plus size isn't cool enough to shop in Abercrombie and Fitch.

You know what I say to that? Oh, Fitch, please. Abercrombie's sales started sputtering. And in 2013, CNBC named Jefferies the worst CEO of the year. By the late 2000s, Abercrombie was actually starting to turn customers off. I think Abercrombie was always bigger than itself. It represented a lifestyle. And then that kind of was its downfall too, because then when it became associated with exclusionary ideas and fat shaming, you know, then it, all of that baggage came with wearing the brand too. So I think the style, you know, fell out of fashion as fashions do. It became a little bit less cool to be splashing logos across your T-shirt.

So I think it got hit by a double whammy of the clothing itself becoming uncool and what the brand itself stood for becoming more than uncool. It was sort of like, you know, Abercrombie & Fitch was like the coolest cool kid in school. And then they had like a bit of a comeuppance and like they became very unpopular. And they were shunned. It was like they were the

cool kid at school that went too far with the bullying. And quickly lost their standing. Jeffries left Abercrombie & Fitch in 2014. Troubling details from his time as CEO have continued to surface. Last year, he was sued for allegedly running a trafficking operation and coercing male models into sex.

Through a lawyer, Jeffries declined to comment. So, how did Abercrombie turn things around? That's next. after jeffries left abercrombie made an interesting choice it decided that sex doesn't sell anymore i think in a press release they literally put it in writing there will no longer be sexualized marketing used in marketing materials including the in-store shopping bags, which were very famous for having the torso of a very attractive man on them. They started to put some plus-size models in their marketing, and things were starting to move quite slowly. The brand also made some other changes, like removing logos from most of its clothing.

But the rebranding really accelerated when Fran Horowitz took over. So when I first joined, business was very difficult. That's Horowitz in an interview with the Wall Street Journal earlier this year. The business was in a downward spiral. And frankly, many people said to me, you know, why are you joining?

And the reason I joined is A, I love a challenge. I've been building brands my entire career, and I knew I had an opportunity to bring these iconic global brands back to their rightful place. Horowitz decided to stop going after teens and instead try to win back some of its former customers from the 90s and 2000s who had now grown up. And so we decided after some research that there was an opportunity in what we consider the young millennial world. And that was the probably, you know, early 20s to early,

late 30s, early 40s is kind of where that millennial is today. And that there was an opportunity to have a brand that was really no longer just t-shirts and jeans. It was truly a lifestyle brand. And honestly, it's been a journey. Katie says it was a bold decision. And that decision really spun it into a different company that had the essence of the brand there.

Again, that kind of aspirational, that quiet luxury, dare I say it, within its DNA, but really took it and asked, what were those teenagers wearing their Abercrombie t-shirts in 2003? What did they really want now? Under Horowitz, the company put even more emphasis on female customers, especially millennial women. And they try to cater to specific moments in their lives. So for a woman my age, sort of early 30s, late 20s,

that involves a lot of weddings. And not only does it involve weddings, it involves the myriad of events that now come around a wedding. So that's the bachelor party, the bridal shower, the engagement drinks. They were very smart in thinking about that kind of weekend. And then through the course of the week, you know, what else do they need? They need workout gear. They're going to go to a Pilates class maybe after work. Maybe they want some cute pajamas to wear that evening. They're really thinking about the realistic life of an American woman

as opposed to a teenager that gets drunk on the beach. What's interesting is that also this brand that started out as like man with gun on boat fishing, this outdoorsy man, is now this turnaround is being driven largely by women. Yeah. And the Abercrombie brand before Fran was skewing way more male, I mean, it really has seen their sales shift more into the female market than the male market. So Abercrombie really changed its customer base to more women and to older millennials. Exactly. And that's pretty unique. I mean,

in the world of fashion, young tends to be better, you know, that symbolizes coolness and the next of what's coming. And that's what fashion is all about, right? It's actually quite difficult for a brand to say, you know what, maybe that's not exactly our core audience. It seems like that would be a really tough sell, though, because people who are in their late 20s and 30s, you know, the millennial generation, they probably have a lot of strong feelings about Abercrombie, and many of them are not necessarily positive.

Absolutely. I think that was, if anything, the biggest challenge, was to convince people that this is still a company that you want to shop at. And the way they did it was honestly by letting the products speak for themselves. And a lot of it was very word of mouth. It was, hey, you're wearing that skirt. Like, where did you get that from? And then they would always be like,

actually, you'll never guess. It's Abercrombie. One of Horowitz's first focuses was jeans. She heard women regularly complaining about not being able to find jeans that fit right. So the company launched a line called Curve Love that tried to appeal to more body types. And on the men's side, all of Abercrombie's jeans always had button flies, but customers kept saying they wanted zippers instead. So Abercrombie started making more jeans with zippers. And they also increase their sizing assortments. They have a petite range,

they have a plus size range. They're really trying to make sure that they're not just saying that they're for everybody, that they actually you can go into their store and you can go online and probably find something that fits you and looks good on you. That is one of the big things that really solidified Abercrombie as we know it today. They had so many people posting on TikTok and Instagram and everyone was, you know, very surprised to hear where they had bought them. So you know how you see things on TikTok and it's like you need to go buy them? Well, you need to go buy these. You guys are not going to believe the stress I just felt from Abercrombie. It's insane.

To the jeans every girl needs. They're the Abercrombie Curve Love. If any of you are in the market for a pretty white dress this summer, this is it. And the changes seem to have worked. Sales are up, and so is the company's stock.

Over the past year, Abercrombie & Fitch's stock is up by almost 400%, making it one of the fastest growing stocks on the market. Abercrombie right now is like the god of more retail. Other companies... They're the cool kid again. I mean, it's like they're back.

They're like, hey, I know that I was kind of a mean bully, you know, and maybe I got too drunk back in, you know, college and high school. But I've grown up now. I've got a job and I got an apartment. Yeah, they went on a meditation retreat and did some self-reflection and they've come back fighting. Are there any lessons here for other businesses? are there any lessons here for other businesses? My biggest takeaway with this whole stock rally,

with this whole success story, is that they listened to women and they really heard them and took them seriously and decided to take a strategy completely different from the one they had before of inclusion and solving problems that women have had for absolutely decades. And it is really kind of that simple,

but it took a lot of bravery to do so. And there's so much space here for companies to capitalise on. And Abercrombie managed to see that first, I think. That's all for today. Thursday, July 11th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Nikki Walker. Thanks for listening. See you tomorrow.