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02:29 - Source: CNNBusiness
New York CNN Business  — 

Abercrombie & Fitch has shed its perfume-filled mall stores, shirtless models and logo sweatshirts to win over Millennials and Gen Z.

It’s working.

Abercrombie (ANF) said Monday that its women’s segment was on track to deliver its highest holiday sales period ever, and its men’s division was growing, too. The company lifted its fourth quarter and full-year sales and profit outlook, sending its stock up 9%.

“Abercrombie was a key destination for holiday shopping,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients Monday. “This a further sign that the brand has successfully ditched the baggage of its past.”

The brand, which has about 225 stores, plans to open around 10 Abercrombie stores a year over the next three years. This would bring Abercrombie closer to the 285 stores it had a decade ago.

Abercrombie was a staple of teen wardrobes during the 1990s and 2000s. Its sexualized advertising featuring young, shirtless male models turned the brand into a preppy status symbol for high schoolers. And it was proudly exclusionary, refusing to make size XL or XXL for years. (A new documentary on Netflix documents its culture of racism and discrimination.)

“We go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends,” former CEO Mike Jefferies said in 2006. “Are we exclusionary? Absolutely.”

But the brand alienated customers and fast-fashion stores like H&M emerged to win them over during and after the 2008 recession. Its sales slumped and by the time Jefferies left as CEO in 2014, the brand was toxic and had settled race and sex discrimination and harassment lawsuits.

Abercrombie tried to scrub its image of the Jefferies era. Soon after he left, brand said it would stop “sexualized marketing.”

It overhauled its marketing, stripped the old moose logo from its clothes and pulled back on the Fierce fragrance in its dimly lit stores. It also expanded its sizes.

“We are a positive, inclusive brand, with a nice sensibility, very different from what they encountered in the past,” Fran Horowitz, now Abercrombie’s CEO, said in 2016.

Today, Abercrombie’s stores are lighter than they once were and its clothes are looser. The brand has become known for its (logoless) basics, loungewear and jackets. Instead of trying to dress high schoolers for class, Abercrombie tries to outfit adults for everything from the gym to happy hour.

“They have a lot of different options for whatever you’re trying to do,” said Galenn Sekulich, 30, a fashion influencer on Instagram and TikTok who posts her shopping hauls from Abercrombie and other stores.

She said Abercrombie’s sizes did not fit her when she was younger, but its wider-cut Curve Love jean brand gives her an extra two inches in the hips.

“They made their sizing more true to size,” she said.

Abercrombie’s success comes at a moment of uncertainty for clothing stores and the broader retail industry. Shoppers have curtailed their discretionary spending and shifted from buying goods to services.

Macy’s (M) said Friday that it expects its holiday sales to be at the lower end of its forecast, while Lululemon (LULU)warned Monday of lower fourth-quarter profit than it initially anticipated.