Abercrombie’s rebrand proves lucrative as sales exceed $4 billion

Abercrombie & Fitch Co. made a name for itself in the early 2000s, when low-rise skinny jeans and polo shirts were the order of the day. Today, it has successfully regained the loyalty of its millennial customer base, thanks to its new inclusive messaging. The rebrand has proved to be a success, with Abercrombie revealing it reached £3.35 billion ($4.3 billion) in sales for the year ending 3 February 2024.

For the fourth quarter, Abercrombie & Fitch Co. shared the following results: 

• Net sales up 21% to £1.1 billion ($1.5 billion).
• Gross profit rate up 62.9%, driven by lower freight and raw material costs.
• Operating expenses up 19%, driven by higher incentive compensation, marketing and inflation.
• Operating income of £173 million ($223 million).
• Net income per diluted share of £2.32 ($2.97).

For the full-year, Abercrombie & Fitch Co. shared the following results: 

• Net sales reached £3.35 billion ($4.3 billion), up by 16%.
• Gross profit rate up 62.9%.
• Operating expenses up 10%.
• Operating income was £378 million and £381 million ($485 million and $489 million).
• Net income per diluted share of £4.85 and £4.9 ($6.22 and $6.28).

Fran Horowitz, Chief Executive Officer of Abercrombie & Fitch Co, said: "I am incredibly proud of how we performed throughout fiscal 2023, finishing with fourth quarter year-over-year net sales growth of 21%, which exceeded our January business update expectations. Our strong fourth quarter was fueled by sales growth across regions and brands. Abercrombie brands grew net sales by 35%, continuing an impressive multi-quarter growth trend, while Hollister brands grew 9%, delivering a third consecutive quarter of sales growth.

"Following several years of transformation across our brands, people and operating model, fiscal 2023 was a defining year for our company."

Looking ahead to FY24, the company expects net sales growth to be within the range of 4% to 6% and operating margin to be around 12%. It also expects the Abercrombie brand to outperform the Hollister brand.

Horowitz concluded: "We entered fiscal 2024 in a position of strength with momentum across our brand portfolio. The success of our playbook gives us confidence that we can now shift more of our focus to expanding our global customer base. This year, our goal is to deliver sustainable, profitable growth while making the necessary investments to build and support our longer-term ambition of $5 billion in global sales."