Abercrombie & Fitch’s successful 2023 has continued into 2024, with Q4 2023 Abercrombie brand comparable-store sales (comps) up +28%, Hollister comps up +9%, and Q1 2024 company comps expected to be up double-digits (our comments on Kohl's use of social media also apply here). Abercrombie's revenue is now up +70% compared to 2019, sales per square foot have reached $1.5K, and sales per location are now around $9M. As shown for Westfield UTC in San Diego, Abercrombie open-air store crushes the competition in visits and visitors, including 60% more than Gap which historically was the more inclusive brand.
We've also presented data on changes in the visitor mix for Abercrombie & Fitch locations in the Placer platform per Experian Mosaic, as shown in the table below (which shows the 10 largest changes in customer lifestyle segment from 2017 to 2023). The Influencer Influenced customer lifestyle segment has seen the largest increase, while the decline in American Royalty is as expected.
On the success with the Abercrombie brand, CEO Fran Horowitz-Bonadies noted:
“We have been able to really expand the addressable market for Abercrombie adult, particularly. So it is no longer a jeans and T-shirt company, it's truly a lifestyle brand. The addressable market has gone from the early 20s to easily through the late 30s and we've broadened all the offerings from a category perspective. Today, where we talk about things like YPB, our active brand, our wedding guest line Best Dressed Guests. This week, we're launching our Wedding Shop, which is another exciting bit of information that we learned from staying close to the customer and how important this wedding journey is and how many occasions we can address them for. Our expectation is to continue to see these ideas coming from the team and helping us understand what the consumer is looking for and continuing to grow all of those categories. So in 2024, we're focused on sustainable, profitable growth. And frankly, there's no finish line.”
As a reminder, Abercrombie is a brand that sees around 60% of its revenue from digital channels ("clicks") and 40% from physical stores (“bricks”). However, the growth of the brand, besides comps, comes from new locations in new markets which extends both the clicks & bricks business. During 2023, Abercrombie opened around 17 new locations in the U.S. Most of these are the best malls within their states (according to Placer mall visitation rankings) like Woodfield Mall (Schaumburg, IL), Bellevue Square Mall (Bellevue, WA), Westfield Topanga (Canoga Park, CA), and La Plaza Mall (McAllen, TX).
The Hollister brand has lagged Abercrombie, but now appears to be turning. Horowitz-Bonadies said, “We are seeing progress in some green shoots and guides. We see a very strong Bottoms business. They've been able to diversify out of Denim and there's lots of categories in the Bottoms that are selling. And our expectation is to continue to see this progress throughout the year.” (Each brand is now $2.1B in size.) Given the strong momentum at each brand, company-wide profits and cash generation hit a record high. Free cash flow of $500M compares to the prior peak of $414M in 2007.
