The Underlying Tech Driving Abercrombie & Fitch's Growth
Abercrombie & Fitch was so 2000’s. Wait, are they popular again? It sure seems like it. Abercrombie & Fitch's stock has soared in the last year.
While some of it might be due to WallStreetBets identifying them as the best cologne/perfume-filled shirtless models to back, let’s see how they have been performing and what’s been driving growth:
- Q3 2023 company net sales up 20% YoY from Q3 2022
- Q3 2023 operating income up $120MM YoY from Q3 2022
- Americas net sales are up 22% YoY from Q3 2022
Abercrombie a Tech Company?
According to Samir Desai, Executive Vice President and Chief Digital and Technology Officer at Abercrombie & Fitch, at a conference last year, Abercrombie & Fitch has been using Generative AI to help the product design process. “We feed [the tech] historical images of products that have sold really well and use prompts to iterate and refine and base a new line off of that,” he said. “It’s driving inspiration, it’s driving velocity and how quickly [the team] can produce product images.”
Abercrombie & Fitch has ambitions to be a brand that can generate $5.0Bn in net sales with 10% operating margins, and it is clear when reading the latest Investor Presentation filing that leveraging the newest technology is how to get there. Abercrombie & Fitch is focused on growing brand lovers through continued expansion and the acceleration of investments in customer analytics to improve customer engagement. In simple terms, think of this as a modern loyalty program and personalized recommendations. Other initiatives include consistent in-store and digital customer experiences, modernizing their retail ERP and data infrastructure, and faster digital product testing (see Gen AI quote above).
While Abercrombie and Fitch historically sold itself as exclusive by targeting the cool kids, they are quickly modernizing by leveraging new technology to become one of the more fashion-forward brands of today.
