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Controversial millennial clothing brand becomes greatest stock market rally of 2024 as price continues to soar
Just two years ago the headstones were being etched for Abercrombie & Fitch.
Shoppers had deserted a retailer that was white hot in the early 2000s, the stock price was low and the retailer was being excoriated in a Netflix documentary.
Bosses had recruited only skinny, white people - and models and staff wore few clothes as the brand sold sex to 15 to 22-year-olds.
In a stunning reversal, anyone checking its stock chart this year will see a green line that has risen even more steeply than Wall Street darling Nvidia.
Shares of Abercrombie & Fitch have skyrocketed over 400 percent in the last year, far outpacing the chipmaker's 210 percent gain in that time.
Since Abercrombie & Fitch's multiple controversies, the brand has gone through a major refresh that has made them popular with millennials and Gen Z
Abercrombie & Fitch was the mall hot spot in the 2000s, famous for its perfectly preppy, tanned, and well-coiffed employees
So, what changed?
The first traces of a true departure from its racy, provocative image throughout the tenure of prior CEO Mike Jeffries came when Fran Horowitz took the chief executive role in 2017.
To get an idea of the difference between these two leaders, Horowitz sits on the board of a corporate responsibility organization that advocates for companies to do good for the world, not just make profit.
Jeffries, who is widely credited with growing the brand initially, is more known for his brash, offensive statements.
The company undoubtedly began its decline under Jeffries, who stepped down in 2014 after 11 straight quarters of shrinking same-store sales.
Seven years after Horowitz's appointment to the top job, Abercrombie & Fitch put up its strongest quarterly numbers in its 132-year history.
In the three month period that ended in May, it had $1 billion in sales, up about 22 percent from a year earlier. Not only that, earnings grew 22 percent, far higher than analysts expected.
The story of how this remarkable turnaround was executed starts with how Abercrombie & Fitch overhauled its entire image from top to bottom.
A 2022 Netflix documentary called 'White Hot: The Rise & Fall of Abercrombie & Fitch' catalogued exactly how the brand used to market itself.
In the early 1990s and 2000s, it ran ad campaigns chock full of sex appeal primarily featuring attractive and in-shape white models. In some of the ads, the models were practically wearing nothing at all.
Their ads also had incredible star power, featuring Taylor Swift, Karlie Kloss and Jennifer Lawrence early on in their careers.
A quick glance at Abercrombie & Fitch's website today shows a much more inclusive picture. Models of all races and sizes are prominently pictured for it's summer promotions.
That's a far cry from 2002, when the company proudly sold a line of T-shirts with Asian stereotypes and caricatures.
One of the offending shirts featured the slogan 'Wong Brothers Laundry Service — Two Wongs Can Make It White' with two caricatures of Chinese men.
In the early 1990s and 2000s, Abercrombie & Fitch ran ad campaigns chock full of sex appeal primarily featuring attractive and in-shape white models
In some of the ads, such as this one promoting boxers, the models wore practically nothing at all.
Taylor Swift and Karlie Kloss modeled for Abercrombie early on in their careers
Jennifer Lawrence remembered her 2006 shoot in an interview: 'They wanted natural pictures, so they made us play football on the beach. The other models played football in a pretty way, but not me. My face was bright red, and I was sweaty with flaring nostrils'
The brand's controversies weren't limited to the clothes themselves. Their stores, just as much as their ads, were committed to the idea that sex sells.
That meant rejecting people applying as in-store models who didn't fit a certain 'look,' which allegedly included minorities.
Subsequently, nine people of color filed a class-action suit against Abercrombie & Fitch for alleged discrimination against African Americans, Latinos, and Asian Americans. It was settled for $40 million in November 2004.
Mike Jeffries, former chairman and CEO of Abercrombie & Fitch, was known for making brash statements some found offensive
Attitudes have certainly shifted since the days of 2006, when then-CEO Mike Jeffries told Salon: 'We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don't belong [in our clothes], and they can't belong.'
'Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: young, old, fat, skinny,' he added.
Fitting with image of their in-store models being skinny, the brand also got endless criticism for not selling clothes for people sized XL or XXL.
But now that Abercrombie & Fitch has widened its customer base, it's flourishing with Gen Z and millennial professionals, according to data from QuestBrand.
Both demographics surveyed in 2023 were far more likely to describe Abercrombie & Fitch as a 'hip' and 'stylish' brand than they were two years earlier.
The company's net favorability among millennials pierced a record high in May 2024, according to Morning Consult.
A model is pictured in a recent Abercrombie & Fitch summer promotion on the company website
The brand is also much more active on social media, selling products through affiliates on Instagram and other platforms
But of course, in a world full of competitors, Abercrombie & Fitch isn't destined to be the top dog forever.
Other brands that also suffered similar declines as malls and in-person shopping waned with the rise of ecommerce are revamping themselves as well.
American Eagle and Gap, which owns Banana Republic and Old Navy, are making their own moves to position themselves as the premier clothing option for young professionals, Business Insider reported.
But for now, investors are celebrating an unlikely winner in the market that isn't a tech giant or an AI startup.