Abercrombie & Fitch reported strong earnings for the first quarter of 2023, and stock for the retailer surged by 31% at market close on Wednesday after the report.
For Q1, Abercrombie reported same-store sales growth of 3% — markedly beating analyst predictions of a 1% decline. The retailer also recorded net sales of $836 million, up 3% compared to last year.
Over the past decade, Abercrombie has worked to rebuild its brand. In the mid-2010s, the company garnered a reputation for alienating consumers — from controversial marketing that sexualized young adults to refusing to make XL or XXL sizes until 2013. There were also a slew of lawsuits from 2004 to 2015, alleging discrimination in the workplace. As the familiar AF logo began to turn off consumers, the store’s perfume air and dark lighting took on a new connotation.
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After five years of consecutive revenue decline, the company brought in Fran Horowitz as the new CEO (Horowitz was previously the company’s president and chief merchandising officer) and committed to a rebrand of broader inclusion and a movement towards more casual, modern styles geared towards millennials.
“We really changed the brand from what people used to reference as a T-shirt and jeans brand to a lifestyle brand,” Horowitz told Yahoo Finance. “The consumer is coming to us for so many more categories today, which is really what’s driving the momentum in our business.”
Abercrombie’s earnings come at a tough time for the retailer’s competitors. Gap reported a 6% decline in net sales at the end of 2022, Nordstrom had a 4.1% decline, and Macy’s presented a 4.6% drop.