Abercrombie's comeback can be traced to marketing

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Credit: Abercrombie & Fitch

In the high school hallways where Abercrombie & Fitch enjoyed its 90s heyday, the brand might have a new label: comeback kid. On Friday, the once-beleaguered New Albany, Ohio-based apparel chain reported another solid quarter of sales increases, and executives said improved marketing was a key reason.

"The brand health continues to improve," CEO Fran Horowitz said on a conference call Friday with investors, adding that the "most exciting thing is our effective marketing."

In the first quarter of the year, net sales at Abercrombie grew 11 percent from the quarter a year earlier, to a total of $739.9 million. One quarter after reporting the brand's first comparable sales lift in five years, first-quarter comparable-store sales grew 5 percent.

The chain lost $41.5 million all the same, but that was less than the $61 million loss in the quarter a year earlier. Marketing, along with general and administrative expenses, totaled $124.9 million for the period, up $109.9 million from the first quarter of 2017.

One analyst noted that Abercrombie has changed its tone.

"It has moved from a brash brand to a somewhat confused brand to a brand with a much clearer and more focused identity," wrote Neil Saunders, managing director at GlobalData Retail, in a recent research report. "While we would argue that this reinvention is still a work in progress, we think that the more authentic tone and the coalescing around an effortless American casual theme has paid dividends." Saunders noted more comprehensive marketing efforts that use platforms such as Snapchat and app-based games to build affinity.

Abercrombie is making inroads with new collections such as its unisex kids line, unveiled earlier this year, and growing loyalty program, which has nearly tripled in accounts, executives said at an event in April. Campaigns like "Carpe Now" for Hollister and the anthem "This is the Time" for the namesake label have helped to re-position the retailer with shoppers. While Hollister is targeting teens, Abercrombie has shifted to the 21-to 34-year-old demographic.

However, with the crucial back-to-school season on the horizon, Abercrombie is making a marketing shift. While the company had tapped Dallas-based the Richards Group for its Abercrombie label late last year as agency of record—Richards worked on the anthem spot—the contract concludes as of June 1 and Abercrombie is taking the work in-house, according to a spokesman for Richards. An Abercrombie spokeswoman declined to comment on its agencies.

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