Abercrombie & Fitch Company

Type: Public Company
Address: 6301 Fitch Path, New Albany, Ohio 43054, U.S.A.
Telephone: (614) 283-6500
Fax: (614) 577-6980
Web: http://www.abercrombie.com
Employees: 62,150
Sales: $2.02 billion (2005)
Stock Exchanges: New York
Ticker Symbol: ANF
Incorporated: 1904
NAIC: 448110 Men's Clothing Stores; 448120 Women's Clothing Stores; 448130 Children's and Infants' Clothing Stores

Abercrombie & Fitch Company is a clothing retailer marketed toward young people, from children to young adults. While Abercrombie considers its clothing a "lifestyle brand," others have railed against its often sexually explicit tees and over-the-top marketing campaigns. The company oversees more than 800 stores nationwide, of which about 175 are its children's brand, abercrombie, and 260 are Hollister Company stores. Its latest concept, Ruehl, debuted in Ohio in 2004, appealing to more mature buyers, those in their late 20s and early 30s. Once owned by fashion firm The Limited, Abercrombie gained its independence in 1999 and went public on the New York Stock Exchange under the ticker symbol ANF. Its sales soared to more than $2 billion in 2005.

Abercrombie & Fitch Company (A&F) was founded in 1892 in New York City by David T. Abercrombie and Ezra H. Fitch. Abercrombie, a former prospector, miner, trapper, and railroad surveyor, originally produced camping equipment in lower Manhattan; Fitch, one of his customers, was a successful lawyer in Kingston, New York, who loved the outdoors. The two men pooled their interests and opened a sporting goods store.

Fitch was the visionary of the two, anticipating a clientele far broader than merely those who camped out in the course of earning a living. The partners proved ill-matched, and both men were hot-tempered. Following the latest of many long and violent arguments, Abercrombie resigned in 1907 to return to manufacturing camping equipment. Retaining the company name, Fitch continued with other partners. In 1909 he mailed out 50,000 copies of a 456-page catalogue. Since they cost a dollar each to produce, the catalogues almost bankrupted the company, but the subsequent flood of orders justified the expense. In 1917 A&F moved into a 12-story building on Madison Avenue at East 45th Street, a location the advertising department described as "Where the Blazed Trail Crosses the Boulevard." It included a luxuriously furnished log cabin that Fitch made his townhouse, with an adjoining casting pool.

By this time A&F's reputation as purveyor to the sporting elite was well established. It had equipped Theodore Roosevelt for an African safari, outfitted polar expeditions led by Roald Amundsen and Admiral Richard Byrd, and provided goods to aviators Charles Lindbergh and Amelia Earhart. Ernest Hemingway was a customer; and every president from Roosevelt to Gerald Ford would buy something from the store.

Fitch retired in 1928, selling his interest in the company to his brother-in-law, James S. Cobb, who became president, and an employee, Otis L. Guernsey, who became vice-president. In his first year at the helm, Cobb acquired a similar New York business, Von Lengerke & Detmold, respected for its European-made sporting guns and fishing tackle, and Von Lengerke & Antoine, the Chicago branch, which became a subsidiary of A&F but continued until 1959 under its own name. In 1930 Cobb bought Griffin & Howe, a gunsmith shop. The merchandise of Von Lengerke & Detmold and Griffin & Howe was added to the Madison Avenue store.

Abercrombie & Fitch was selling outdoor and sporting equipment not only for hunting, fishing, camping, and exploration, but also for skating, polo, golf, and tennis. The store also carried a variety of outdoor clothing, boots, and shoes for men and women, as well as cameras, pocket cutlery, and indoor games. In the 1920s A&F became the epicenter of the burgeoning mah-jongg craze and the place in New York to thumb one's nose at Prohibition by purchasing a hip flask. A&F also opened a summer-only store in Hyannis, Massachusetts, for the yachting set. Net sales and income, rising steadily during the decade, reached a record $6.3 million and $548,000, respectively, in 1929. These figures would not be topped in the next decade. Sales in the grip of the Great Depression fell to under $2.6 million in fiscal 1933, when a loss of $521,118 was recorded, on top of a loss of $241,211 the previous year. During this period, Guernsey's negotiations with the firm's creditors probably saved it from collapse. Subsequent years were profitable, and in 1938 A&F resumed paying dividends. It also established golf and shooting schools in the store.

By 1939 A&F was calling itself the "Greatest Sporting Goods Store in the World." It boasted the world's largest and most valuable collection of firearms and the widest assortment of fishing flies obtainable anywhere (15,000 in all) to accompany its array of rods, reels, and other fishing tackle. Riders, dog fanciers, skiers, and archers all found every conceivable type of gear. Guns and camping and fishing equipment accounted for 30 percent of the New York store's sales volume in 1938. Sales of clothing, shoes, and furnishings accounted for 45 percent. Inventory on hand was valued at about 40 percent of annual sales, an extremely high ratio that reflected A&F's readiness to meet its customers' demands. Catalogue mail orders accounted for about 10 percent of business.

Net profit during the 1940s was highest in fiscal 1947, when it reached $682,894, which turned out to be an all-time record. In 1958 A&F opened a store in San Francisco. Soon thereafter, it added small winter-only stores in Palm Beach and Sarasota, Florida, and summer stores in Bayhead, New Jersey, and Southampton, New York. Guernsey, who had succeeded Cobb as president, explained his firm's mission at this time in frankly elitist terms: "The Abercrombie & Fitch type does not care about the cost; he wants the finest quality."

The New York store remained the company's flagship. At the close of the 1950s the main floor sported heads of buffalo, caribou, moose, elk, and other big game, stuffed fish of spectacular size, and wastebaskets made from elephants' feet. The store sold an unmatched variety of contraptions for indoor and outdoor pursuits: one corner held dog and cat items; the basement was a shooting range; and the mezzanine contained paraphernalia for skindiving, archery, skiing, and lawn games. Floors two through five were reserved for clothing suitable for any terrain or climate. Floor six had a picture gallery and bookstore concentrating on sporting themes, and there was a watch repair facility and the golf school, complete with a resident pro. On the seventh floor was the gun room with about 700 shotguns and rifles, constituting the most lavish assemblage of sporting firearms on earth. The eighth floor was devoted to fishing, camping, and boating, and housed a fishing instructor who gave lessons at the pool on the roof. He also handled mail and telephone inquiries on fishing, hunting, and skiing. The fishing section alone stocked about 48,000 flies and 18,000 lures.

In 1960 Abercrombie's net sales rose to a record $16.5 million, but net profits fell for the fourth straight year to $185,649. The next year net sales fell below $15.5 million and net profit dropped again to $124,097. Guernsey's successor as president, John H. Ewing, saw no cause for alarm, and rejected the idea of a budget shop or to "splash ads for storewide sales." He told a Business Week interviewer in 1961 that A&F enjoyed a special niche "by sticking to our knitting; by not trying to be all things to all people."

During the 1960s A&F opened new stores in Colorado, New Jersey, Florida, and Michigan. It also opened small shops in other stores. In 1968, a year in which city riots, protests against the war in Vietnam, and the assassinations of Martin Luther King and Robert Kennedy seemed to be tearing the country apart, A&F was finally ready to shake up its way of doing business by holding a warehouse sale. More than 90,000 bemused customers sifted through the Manhattan store one summer day for bargains that included pop-up tents bought so far in the past that no one remembered how to pop them up, boots made of long-haired goatskin hide, miniature antique cannons, leather baby elephants, and Yukon dog sleds.

In early 1970 the company initiated another gigantic sale. A horde of hopefuls turned up to seize such bargains as a 15-foot inoperative hovercraft for $3 and eight $100 surfboards for $17 each. An offbeat newspaper advertising campaign followed, featuring a single item, such as hunting shoes, accompanied by diagrams and copy that overwhelmed the reader with product information. If these antics indicated a measure of desperation, it was because A&F had recorded a loss of more than $500,000 in the latest fiscal year. In October 1970 William Humphreys, the new company president, said the ads would be changed and sales would cease because the people who showed up were not A&F's kind of customer.

In the ensuing years, Humphreys, a former Lord & Taylor executive, concentrated on cutting the company budget, improving inventory control and credit practices, and expanding into the suburbs. A new A&F store opened in Oak Brook, Illinois, west of Chicago. To win a broader range of clientele, the New York store moved its expensive sailboats upstairs from the main floor, expanded its gift and sportswear lines, added a discount clothing shop on the tenth floor, and hired new buyers for women's wear. Nevertheless, the company continued to lose money under Humphreys and his successor, Hal Haskell, its chief stockholder.

In August 1976, after a year in which the company had lost $1 million, Abercrombie filed for Chapter 11 bankruptcy. When it closed its doors for good in November 1977, postmortems pointed out the obvious: the company had failed to make the transition from supplying fat-cat sportsmen of the old school to the skiers, bikers, and backpackers of the 1970s. One advertising man described management as "ossified," and another said company officers had no faith in television's ability to draw in customers even after its first TV commercials, in 1969, filled the store.

Oshman's Sporting Goods, a Houston-based chain, bought the Abercrombie & Fitch name, trademark, and mailing list in 1978 and opened a store in 1979 under the A&F name in Beverly Hills, California. With a 52-page catalogue and eclectic merchandise, including exercise machines, Harris-tweed jackets, and $70 pith helmets, the company gained attention by outfitting actor Jack Lemmon for an Alaskan fishing trip and Dodger baseball star Steve Garvey for grouse hunting in Minnesota. A bigger Dallas store opened in 1980, complete with $40,000 elephant guns and an Abercrombie Runabout sports convertible for $20,775.

Abercrombie returned to New York City in 1984, opening in the renovated South Street Seaport area of lower Manhattan. By the end of 1986 the chain had grown to 26 stores, including a second Manhattan outlet in midtown's glitzy Trump Tower. Net sales reached an estimated $40 million in 1985. The Oshman-owned A&F chain stocked relatively few hunting and fishing supplies or exotic items, concentrating on exercise machines, tennis rackets, golf clubs, and other paraphernalia of more contemporary interest, much of it designed exclusively for the chain. Men's and women's clothing departments featured business and casual dress as well as sportswear, and the gift departments offered an array of goods, including gourmet edibles.

An upbeat assessment of the new A&F by Chain Store Age Executive in September 1986 was followed by a more skeptical appraisal by Forbes six months later, which described the chain's merchandise as a hodgepodge of unrelated items and concluded, "Sometimes it is better to bury the dead than to try reviving them." Forbes estimated sales for 1986 at $48 million and profits at "a so-so $1.5 million."

In January 1988 The Limited, Inc. acquired 25 of the existing 27 A&F stores from Oshman's for about $45 million in cash. The organization was moved to corporate headquarters in Columbus, Ohio, and the inventory was cleared out. A stronger emphasis was placed on apparel, with 60 to 65 percent of the merchandise men's sportswear and furnishings, 20 to 25 percent women's wear, and the remaining 15 to 20 percent gifts, including grooming products and nature books. "We can't get caught up in guns and fishing rods," the chain's president, Sally Frame-Kasaks, told a Daily News Record reporter. Nearly all the goods were mid-priced and bore an A&F label.

When Frame-Kasaks left to head Ann Taylor in February 1992, she was succeeded as president of A&F by Michael Jeffries, an executive at Paul Harris Stores. At this time the chain had 36 stores credited with annual sales of about $50 million. From the outset, Jeffries focused on transforming A&F into the retailer of choice for American youth, a demographic said to be growing the fastest during that time. He replaced conservative clothing lines, primarily for men, with high-priced casualwear for both young men and women à la Ralph Lauren.

Soon A&F had a corporate and retail culture all its own, one dedicated to youth, good looks, and fun. Jeffries ensured that the company kept in touch with the demands of young Americans by hiring executives and designers in tune with their preferences in clothing, music, and entertainment. The company also began publishing its own catalogue/magazine, A&F Quarterly, featuring its clothing lines as well as articles on pop culture, sex, music, and other teen topics. Photographer Bruce Weber imbued the catalogue and A&F's advertising with an open sexuality, which appealed to target customers but concerned some parents and their legislators. The changes initiated by Jeffries began paying off; sales increased to $85 million in 1992, $111 million in 1993, and $165 million in 1994. There were 67 A&F stores at the end of January 1995, compared to 49 a year earlier. Moreover, the A&F division established new records for merchandise margin rates and profitability for its parent, The Limited, in 1994.

When The Limited spun off Abercrombie in February 1999, headquarters moved from Columbus to nearby Reynoldsburg, Ohio, and Jeffries continued to helm the operation. By this time competition had heated up, particularly from American Eagle Outfitters, which began offering similar merchandise, marketed in a similar manner, and for lower prices. A&F sued American Eagle for violating its trademarks, but the lawsuit was dismissed when a judge determined that clothing style and image were not copyrightable. Amid reports that the company's growth might be slowing, its stock dropped but rebounded again after the 1999 holiday selling-season produced satisfactory results: net sales had reached $1.03 billion for the fiscal year with net income topping $149 million.

Continuing its provocative advertising methods, A&F had issued a Christmas catalogue featuring nude models and overt sexual content in 1999; a predictable outrage ensued and proof of age was required to purchase it thereafter. While A&F continued to have record sales and a loyal following, the company decided to broaden the scope of its clientele by opening a children's and preteen store, abercrombie, in 1999 and planned to launch another chain geared toward West Coast surfer types the following year.

True to its word, Abercrombie launched its latest "lifestyle brand," Hollister Company, in Columbus, Ohio, in 2000. While the store's theme was surfing and fun in the sun, Hollister carried the same cheeky t-shirts and sexy clothing that had made its sibling famous. Ironically, few realized the new company was a part of the A&F empire and many considered Hollister a rival to A&F. As more stores opened in California, Georgia, Kansas, and New Jersey, buyers bought into Hollister's surf chic, with some believing they were snubbing A&F, and the company's executives laughed all the way to the bank. By the end of the new millennium's first year, Abercrombie had 275 A&F stores, 44 abercrombie stores, five Hollister Company stores, and net sales of over $1.23 billion with net income of over $158 million.

For 2001 A&F continued to roll out its Hollister stores, opening shops across the country for a total of 32 by the end of the year. Both its original A&F stores and the abercrombie kids' stores also grew, with the former occupying 485 mall stores and the latter climbing to 144 shops nationwide. Despite more venues, however, sales began falling mid-year and the company's stock tumbled to under $10 per share, when it had traded as high as $50 two years before.

While the A&F legend for sexually charged advertising and daring or barely there clothes drew in young buyers, the pricing often sent them to buy imitation tees from rivals American Eagle and Aéropostale. Despite some lackluster same-store sales during the year, A&F finished 2001 with net sales of just under $1.4 billion and net income up slightly to $168 million. In the following year as A&F moved to its new headquarters "campus" on 300 wooded acres in New Albany, Ohio, the company was once again courting controversy. This time A&F drew the ire of Asian Americans with a perceived racial slur ("Wong Brothers Laundry Service, two wongs make it white"), parent and advocacy groups for the latest edition of the A&F Quarterly, and practically everyone with the introduction of thongs for young girls. Though the company quietly withdrew the suggestive thongs from its abercrombie kids' stores, they remained a staple in its A&F and Hollister locations.

In 2003 A&F managed to anger folks again: this time it was residents of West Virginia, with a t-shirt that read "It's All Relative in West Virginia." The stink went as far as the state's governor, who demanded A&F pull the shirt from store shelves; Jeffries refused. His next battle was a proposed boycott of all A&F labels over the increasingly racy A&F Quarterly. This time Jeffries capitulated, shelving the periodical in late 2003. Despite or perhaps because of the continued controversy, sales reached $1.7 billion for fiscal 2003, with net income rising to over $205 million.

By early the next year, Hollister had become the company's fastest growing segment, expanding to 177 shops nationwide and overtaking its younger sibling abercrombie's 170 stores. A&F still operated the lion's share of stores, however, with over 700 shops featuring a seasonal range of clothing from bathing suits and flip flops to its trademark hoodies and racy tees. While retail pundits had considered A&F in a slump for several years due to its same-store sales, Jeffries decided to make over the company's image by channeling one of its founders, Ezra Fitch. The new A&F was a casual luxury clothier, a step up from its previous incarnation, with the launch of the Ezra Fitch line and the arrival of Bob Singer as A&F's new president and chief operating officer. Formerly of the Gucci Group, Singer understood luxury brands and brought considerable panache to A&F's transformation.

Jeffries' gambit worked as A&F sales began climbing across the board in 2004, topping $2 billion with net income reaching more than $216 million. Jeffries also announced the company would introduce another lifestyle brand, one directed to an older clientele. To A&F, "older" was a relative term, meaning post-college buyers in their mid- to late 20s and early 30s. The new concept, called Ruehl, opened its first prototype in Columbus, Ohio, resembling a Greenwich Village brownstone more than a store. A&F planned to build several hundred Ruehl stores over the next few years, while continuing to expand its core brands as well.

By 2005 A&F's image took a few serious hits. The first was the settlement of a lawsuit the previous year amidst complaints of racial discrimination. Though the company admitted no wrongdoing, it did alter its hiring and promotion policies. Next came questions about Jeffries and his compensation packages, including an investigation into A&F's corporate governance in 2005. Jeffries gave up a number of perks and slashed his compensation to appease shareholders, though many believed his rapid concession had more to do with preventing further investigation than anything else. Then came the resignation of President and COO Singer, who left due to disagreements with Jeffries over A&F's international expansion. Singer walked away with a compensation package rumored to be worth more than $13 million, Jeffries offered little comment and concentrated on the company's expansion into Canada and the United Kingdom.

Entering 2006 A&F continued to provoke mainstream America, selling the company's oversexed ideal of casual and luxury clothes to kids, teens, and young adults through its four "lifestyle" brands, A&F, Hollister Company, abercrombie, and Ruehl.

Principal Operating Units

A&F; Abercrombie; Hollister Company; Ruehl.

Principal Competitors

Aéropostale, Inc.; American Eagle Outfitters, Inc.; Gap, Inc.; The Limited, Inc.; The Buckle, Inc.; Urban Outfitters Inc.

Further Reading

"A&F," Fortune, July 1939, pp. 124+.

"Abercrombie's Misfire," Time, August 23, 1976, p. 55.

Bailey, Lee, "The Abercrombie Effect," Daily News Record, September 26, 2005, p. 20.

Berner, Robert, "Flip Flops, Torn Jeans--And Control," Business Week, May 30, 2005, p. 68.

------, "No Longer Big Brand on Campus," Business Week, September 29, 2003, p. 90.

"Caterer to the Outdoor Man," Business Week, December 16, 1961, pp. 84-86, 89.

Derby, Meredith, "Abercrombie's Singer Exiting," WWD, August 30, 2005, p. 3.

Frazier, Mya, "Hot Retail Concept: Ruehl," Advertising Age, July 11, 2001, p. 12.

Goldstein, Lauren, "The Alpha Teenager," Fortune, December 20, 1999, pp. 201+.

Kestout, Brian P., "Fashion Pizazz," Kiplinger's Personal Finance Magazine, January 2001, p. 68.

Lockwood, Lisa, "Edgy Ads," WWD, January 14, 2000, p. 16.

Marcial, Gene G., "Shoppers Bonanza at the Limited," Business Week, September 23, 1996, p. 142.

"Minorities Win Bias Lawsuit," Jet, December 6, 2004, p. 36.

Palmieri, Jean E., "A&F Aim: 100 Units; $300M Sales," Daily News Record, June 14, 1991, p. 7.

Paris, Ellen, "Endangered Species?," Forbes, March 9, 1987, pp. 136-37.

Perman, Stacy, "Fashion Forward: Abercrombie's Beefcake Brigade," Time, February 14, 2000.

"Robert Singer," Chain Store Age, October 2005, p. 22.

Sayre, Joel, "The Twelve-Story Game Room," Holiday, December 1959.

Stringer, Kortney, "A&F Best of Best," Cleveland Plain Dealer, June 22, 1999, p. 1C.

Wells, Melanie, "Anticlimax," Forbes, March 20, 2000.

Zimbalist, Kristina, "Mike Jeffries: 61, CEO, A&F," Time, September 13, 2005, p. 76.

— Robert Halasz