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Abercrombie back in the reckoning

Once considered a dying apparel brand, Abercrombie & Fitch has staged a remarkable resurgence over the past 12 months as its stock rallied 85 per cent.

That rebound was fueled by two straight quarters of annual revenue growth, breaking a multiyear streak of top-line declines. Its profit growth, which was previously threatened by markdowns, also stabilized.

Comparable-store sales bounced back sharply over the past two quarters, thanks to an impressive turnaround in its Hollister brand. Hollister is Abercrombie's largest brand. The company attributes its renewed strength to a strategic focus on young adult shoppers, marketing activities across the music, video, and gaming industries, and the use of social media influencers.

In addition, Abercrombie remodeled Hollister store interiors and launched new A&F prototype stores to reinvigorate consumer interest in both brands. It reported record digital sales across all brands last quarter and expanded its e-commerce footprint in China.

As Abercrombie slims down its brick-and-mortar presence and refines its brands, its earnings are improving. Its adjusted non-GAAP net income rose 91 per cent annually as its adjusted earnings per share shot up 94 per cent. Its revenue and earnings are expected to climb two per cent and 19 per cent respectively this year.