Abercrombie went from the most loathed brand in America to 2023's Wall St winner.
Who needs futuristic AI or the flashy silicon of Nvidia’s latest GPUs? Not the stock market, apparently! In a twist fit for a Hollywood screenplay, an old favorite has been quietly making its shareholders dance all the way to the bank. And who is this phoenix rising from the retail ashes? None other than Abercrombie & Fitch.
America's Most Loathed Brand
Ah, Abercrombie & Fitch—the name alone brings back a flood of nostalgia. Those of a certain vintage will remember the vital teenage ritual of acquiring a fresh Abercrombie or Hollister polo before a junior disco. It wasn't just clothing; it was a ticket to the cool kids' table. I remember when these polos were the currency of cool in Ireland. Your 'rich mate' would return from America armed with a suitcase full of Abercrombie, turning a tidy profit as the school's unofficial apparel dealer. However, Abercrombie lost a bit of its sheen with the advent of its "rave-like" shops in Dundrum, where you were as likely to get a headache from the blaring music and overpowering scent of sandalwood as you were a new shirt.
The journey wasn't always lined with bedazzled denim and moody store lighting, though. Remember Mike Jeffries? The CEO who famously declared Abercrombie clothes weren't for "ugly people"? Oh, the irony. Under his reign, Abercrombie didn’t just walk the line of controversy—it sashayed over it in size-zero jeans. With policies that reportedly hid employees of color and those with disabilities in the back and a legal battle that went all the way to the Supreme Court over a hijab, Abercrombie became the "Most Hated Retailer in America" by 2016. Not exactly the award you want sitting on your mantle.
But what's a comeback story without hitting rock bottom? By 2017, the stock was limping below $10 a share, looking more out of style than cargo shorts at a fashion show.
Back in the Good Books
Then, a magical thing happened around 2019. A corporate Cinderella story, if you will. Abercrombie shifted gears and set its sights on an older, wiser demographic—the very millennials who had once lived for its polos and low-rise jeans. According to Corey Robinson, Chief Product Officer, these are folks "starting their life" with a penchant for long weekends, brunches, and friends' destination weddings. It’s like Abercrombie grew up with its audience, trading flashy trends for "elevated classics."
And the culture? Oh, it's had a facelift too. Gone are the days of exclusion; now, they've launched Curve Love, a denim line celebrating curvier figures, which accounts for half of the company's total denim revenue. Talk about a glow-up!
The numbers? They're as stunning as the new line. Since 2019, net income skyrocketed from $39 million to $425 million—a CAGR of 25%. Revenue upped its game from $3.6 billion to $4.5 billion, and free cash flow blossomed from $98 million to a whopping $600 million. The ROI? A jaw-dropping climb from 5% to 26%.
So, while everyone else was watching tech stocks, Abercrombie strutted onto the scene, stocks climbing an astonishing 11-fold since the turnaround. All these gains in just the last two years, proving that sometimes, the best stock on the market is the one that knows how to reinvent itself. Here's to the underdog—or should I say, underpolo? Cheers, Abercrombie, you've officially gone from zero to Wall Street hero.
Should you invest $1,000 in Abercrombie right now?
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