When Fran Horowitz was considering a job offer to run the struggling, billion-dollar-plus Hollister clothing brand, she did the due diligence that any prospective C-suite executive would undertake—which, in her case, included a trip to the mall.
It was late 2014, and Horowitz had just come off a stint as brand president at Ann Taylor Loft after gigs as a top merchant at retailers like Express and Bloomingdale’s. To get a gut check about Hollister, she visited multiple shopping malls in New York and New Jersey to assess how the brand stacked up against the competition. Of particular interest among those other clothiers was Abercrombie & Fitch, Hollister’s corporate sister brand, which typically had stores in the same malls.
Horowitz wanted a feel for both brands’ turnaround prospects. And she didn’t feel great about what she found.
At the time, Hollister was seeking to evoke the atmosphere of a beach house in its stores, with props like potted palm trees and surfboards leaning against the wall. (Hollister’s namesake town in California is about 30 miles from the ocean, but that never deterred its board-shorts-loving clientele.) Abercrombie was much more famous, or infamous, for its own immersive store ethos. Its stores were meant to feel like dimly lit nightclubs with loud, thumping music, heavy perfume in the air, and velvet ropes outside manned by half-naked, buff male greeters— all to give shoppers the sense of being part of the in-crowd.
It’s usually a long way from the beach to the club. And yet Hollister and Abercrombie were selling almost identical sweatshirts and jeans and t-shirts, aimed at very similar young-adult clienteles, at stores sometimes separated by just a few dozen yards.
“The simple conclusion I came to was that the brands had really become melded into one,” Horowitz tells Fortune. “It was essentially the same product with just a different logo across the chest, at a different price.” That sameness, she suspected, was a recipe for disaster, and the company had some serious soul-searching to do.
More worrisome still, Horowitz was shocked by the products at both chains. “The quality was just heartbreaking. It had just really, really gone downhill.”
Revenue was going downhill, too. Sales at both Abercrombie & Fitch and Hollister were in the middle of a decline from their high-water mark of $4.5 billion in 2012; by 2016, their combined sales would sink 28% from that high. Between them, the chains, once beloved fixtures for American mall rats, were in the process of closing dozens of stores. Abercrombie in particular was on its way from cultural touchstone to also-ran.
But Horowitz still saw life in both brands, and she embraced the challenge of restoring Hollister, taking the job in October 2014. The following year, after initial success in turning Hollister around, she was put in charge of fixing the Abercrombie brand too, becoming president and chief merchant for the whole company, and in 2017 she rose to CEO of the parent company, also called Abercrombie & Fitch (hereafter A&F).
On Horowitz’s watch, the company has staged a remarkable comeback, full of lessons for other apparel companies—lessons in simpler and smarter marketing, differentiating your brands, and zeroing in on meeting the needs of your customers. Along the way, she dumped many of the symbols of the company’s early-century success and excess—including those male-model greeters.
In February, Horowitz passed her 5-year anniversary as CEO: Abercrombie sales for 2021 came within striking distance of where they were when Horowitz took over that brand in 2015 at $1.56 billion, while Hollister has rebounded nicely from COVID, with 2021 sales of $2.15 billion. Total company sales were their best since 2014, the year Horowitz went on that reconnaissance trip to the New York malls and joined the company.
The company remains smaller than it was a decade ago—but it is on a far more solid foundation. Shares have nearly quadrupled since Horowitz took over, and now A&F is firmly back in expansion mode.
Given the turnaround, it’s easy to forget how dire the company’s prospects were when Horowitz joined. Abercrombie could easily have suffered the same fate of rival apparel makers that also became estranged from the zeitgeist and faded away—including Aéropostale (much smaller now following a Chapter 11 filing), American Apparel (shut all of its stores), and the dramatically diminished Gap and Victoria’s Secret brands. So Horowitz, a 30-year retail veteran, can be forgiven for sounding uncharacteristically brash as she reassesses where the company stands.
“We came out of COVID after 2020 and we declared that we were on offense for the first time in six years,” she says,“and in 2022 we’re going to continue to be on offense.”
A cultural repair job
For most of her time as CEO, Horowitz has kept a low profile, giving few press interviews and preferring to be nose down while fostering a collaborative approach. That’s a distinct contrast with her predecessor, under whose leadership the company’s management had made headlines for all the wrong reasons.
Abercrombie’s namesake brand history dates to 1892, when it specialized in clothing and bags for travelers and outdoors enthusiasts. But it owes its modern identity primarily to Mike Jeffries, who took the helm in the early 1990s and reigned atop the company for 22 years. Jeffries remade Abercrombie as the coolest teen retailer of the 1990s and early aughts, rebranding it with logo-bedecked clothing and a hyper-sexed preppy ethos, exemplified by catalogs that were accused by some of verging on soft porn. He also launched the Hollister brand in 2000 in Ohio, very far from the Pacific Ocean, to harness the surfer-casual market; it overtook Abercrombie in sales in 2011.
Jeffries’ top-down management approach worked well…until it didn’t. By the 2010s, his my-way-or-the-highway approach meant the company was missing important cultural shifts and falling out of step with its consumers, who were becoming less interested in company logos and airs of exclusivity. And the CEO eventually became notorious for his imperious management style.
According to mid-2010s news reports, his excesses included questionable use of company funds on travel, a big role for his spouse in running the business, and most bizarrely, a manual with detailed instructions on how Jeffries was to be addressed by staff on the corporate jet and how those staff should dress, down to their underwear.
Jeffries was finally pushed into retirement in December 2014. As it scrambled to reorganize itself, the company was run for more than two years by an “Office of the Chairman,” consisting of top executives, including Horowitz, and the chairman—Horowitz quickly found herself facing the task of reassuring a shellshocked and demoralized staff.
Kristin Scott, whom Horowitz hired away from Victoria’s Secret in 2016 to oversee Hollister as brand president, recalls a bus trip on which A&F executives visited stores in Cincinnati. She found store workers initially hesitant to share candid feedback, so accustomed were they to obeying diktats that came down from up on high. “They were used to somebody coming in and it being about an audit,” says Scott, who is now president of global brands for A&F as a whole. “It took years, really, to get everybody comfortable reporting back what the customer was really asking for.”
Jeffries’ approach, as Horowitz learned, had led to turf wars and big silos within the company. Horowitz still sounds amazed years later when describing a dinner at the end of a store visit trip in Los Angeles in early 2015, just after she joined Hollister.
The dinner included people from different departments such as merchandising and design, and Horowitz was struck by how much employees were estranged. “I am maybe two months into this job, and I am introducing people who had been at the company for over a decade, working on the same campus, but didn’t know each other,” she recalls.
Horowitz has taken an entirely different tack. Pre-COVID, she would walk to the cafeteria in A&F’s New Albany, Ohio headquarters near Columbus two or three times a day, so people could see her and to talk with her in impromptu meetings. She now tries to meet as many people as possible via Zoom.
The previous regime’s top-down approach to employees was echoed in its approach to customers, essentially telling them what they should wear to fit in. Jeffries repeatedly labeled Abercrombie a brand for “the cool kids,” and infamously said at one point that he didn’t want fat or unattractive people wearing A&F or working in its stores. “It was Abercrombie saying, ‘This is the way you should look, and this is what you should buy’,” says Carey Krug, the current head of marketing of the Abercrombie brand.
Would-be fashionistas might have put up with that in the 1990s and 2000s; by the time Horowitz joined, the ground was shifting, as mass-market apparel customers began eschewing elitist cachet. That meant dropping some of the decorative touches for which the brands were most notorious—touches that analysts and customers alike increasingly believed had become a distraction.
Stacey Widlitz, president of SW Retail Advisors, recalls visiting a Hollister store in London in 2014 and being put off by the night-spot ambience and the clutter, including a chandelier that protruded upside-down from the floor rather than hanging from a ceiling. Horowitz, she recalls, “was the one who was literally responsible for flicking [on] the light switch, and removing the palm trees that were hitting you in the face, and taking away the darkness and the overwhelming smells.” Indeed, Horowitz also ditched many of the very things that had made Abercrombie a headline-magnet—the sexy photos by Bruce Weber, the prominent logos, and above all, the six-pack-sporting male models.
“That was a big bold move,” Horowitz recalls. “And I’m not going to tell you there weren’t moments where I needed to take a deep breath.”
Today, Abercrombie stores are better lit than in the soft-porn era and have a warmer, more grown-up feel, with elegant wood shelving for clothes and leather couches—the vibe is more parlor than discothèque. Meanwhile, in contrast to their former ersatz beach shack look, Hollister stores today have no props and instead showcase clothing neatly stacked and organized in a way to make shopping easier; there are no palm trees in sight or surf music to be heard.
On a more fundamental level, Horowitz started to put distance between Hollister and Abercrombie & Fitch so they weren’t interchangeable and didn’t risk being seen by shoppers as commodities, something that was draining their pricing power. “We had an opportunity to separate the brands and get them each on their own path,” she says.
The problem was that for years, the two brands had shared a merchandising and design team, so the products were very similar. For instance, a Hollister parka and one at Abercrombie would have almost the same design, with only tiny touches—a difference in color, say—to set each brand apart. So Horowitz gave each brand its own dedicated teams.
She also zeroed in on making sure they served different markets. For Hollister, based on data drawn from tons of in-person consultations with shoppers, the company determined that the target customer would remain a 17-year-old looking for clothes that invoke the feeling of a carefree, endless summer. Abercrombie, meanwhile, would “age up” and look to cater to 25-year-olds looking for casual, quality clothing. (But 25 is an average: A&F does carry items aimed at an older shopper, including $40 Def Leppard men’s t-shirts.)
That delineation justified the company operating two separate brands and stopped them competing with each other; it’s analogous to the way that Old Navy is clearly different from The Gap and Banana Republic.
“They each stand for themselves, nobody feels like they’re knocking off anybody else at the moment,” says Wendy Leibman, CEO of WSL Strategic Retail. “The portfolio became much more clear.”
Less is more
One common thread unites Abercrombie and Hollister, during and after the Jeffries era: They have protected their pricing power better than their direct rivals.
Hollister, for example, sells well-made basics that are clearly targeted at teen boys and girls, but are pricier than fare at fast-fashion retailers like H&M or the Gap or Forever 21. It also sells $65 reversible fleeces and $50 hoodies.
Sustaining those premium prices has posed Horowitz with another urgent mission throughout her tenure: She has raced to improve the quality of A&F products to justify their margins.
At the time that Horowitz took over, A&F was hardly the only apparel retailer looking to protect profits by compromising on quality. The sector faced enormous pressure to discount, discount, discount due to intense competition from fast-fashion players like Zara, H&M, Uniqlo. But it was clear there was no saving Hollister and Abercrombie without raising quality again.
At the Abercrombie brand, that quality push has meant incorporating softer materials that give an almost luxurious feel to items like hoodies and sweatshirts. In a show that Abercrombie’s more chaste ethos doesn’t mean there can be no fun, it has named that segment of its business “Soft AF,” a play on Abercrombie’s initials and of course, an expletive-laced way of expressing “very much.”
GlobalData managing director Neil Saunders says Abercrombie has rebuilt its reputation for good quality in relation to price with touches like those. He points to another telling detail: improved stitching on shirt buttons that attaches them more securely, something that can seem banal but are decisive in getting a customer to shell out $60 for a dress shirt rather than $45 at Old Navy, a highly popular but lower priced brand.
“Suddenly, there was a marked improvement,” Saunders says.
Abercrombie also has shown it knows how far it can go with more trend-forward products, such as its highly popular vegan leather pants for women, and higher quality touches such as zippered pockets for its men’s joggers.
“One of the things they’ve done right is inject just enough fashion for it to be interesting without going so far that it becomes very exclusionary,” Saunders says.
Horowitz also had to reposition Abercrombie so it didn’t overlap with and cannibalize Hollister. A case in point: how the two brands tackle denim. While Hollister teen customers might focus a bit more on cut and style and rise, says Kristin Scott, Abercrombie’s 20-something-and-up clientele put more emphasis on things like wash and fabric—so each brand’s offerings cater to those sensibilities.
The last major prong in Horowitz’s turnaround has been to rethink store strategy. The company now gets almost half of its sales online, and Abercrombie & Fitch and Hollister have each closed dozens of stores in the five years since she took the reins.
There are now a total 729 stores worldwide, compared to 868 five years ago, leading to a reduction in square footage of 23%, with the closures most pronounced at Abercrombie in the U.S. Still, the company is by no means done with physical retail, it’s just adapting it to new realities.
And absent stores with a very splashy look and personality that had long given A&F much of its sizzle, the company has come up more inventive ways to market itself. A few years ago, Hollister began piggybacking on big cultural events favored by its clientele, such as Sneaker Con, a skateboard-centric cultural event that attracts just the demographic Hollister covets. Last year, to tap into shoppers interesting in gaming, Hollister launched a limit-edition apparel set with a Fortnite world champion who goes by the name Bugha.
The company also listened more closely to what customers had to say, convening focus groups, and building an in-house sounding board of employees who match its shoppers’ ages. To be sure, these are in every retailer’s toolkit. But under Horowitz, Abercrombie & Fitch and Hollister do more with those insights.
A case in point was the marketing campaign in 2021 for Abercrombie’s “Denim Your Way.” Krug, the brand marketing head whom Horowitz poached from jeweler David Yurman in 2018, points out that customers themselves, including a number of plus-size shoppers and a man in a wheelchair, were the models for that campaign and there was lots of engagement on TikTok and Instagram. The campaign coincided with Abercrombie’s biggest push yet into larger sizes, a category WSL’s Liebmann says the brand had been a bit late to compared to some other brands.
“Some people still think of the chiseled torso of the past, but anytime they experience our brand now, they immediately realize this is a different, different place,” Krug says.
A&F has staged the rare comeback in apparel and fashion history. There are indeed few other examples. Coach, whose parent company Tapestry is run by former A&F CFO Joanna Crevoiserat, is one. Archrival American Eagle Outfitters is another. But Horowitz knows apparel shoppers can be fickle.
For all of the progress the brands have made, the company is still below the sales level it reached a decade ago. Overall, according to Euromonitor International, A&F has only about 1% of the U.S. apparel market, and that market has shrunk 17% since 2015.
Yet that means there is still lots of upside, all the more so since A&F is stable, with its two pillar brands back in growth mode. The company continues to gingerly test the waters of newer product categories, including clothing for events like bachelorette parties or even weddings—such as the dresses and blazers sold under the rubric “Best Dressed Guest,” an idea launched in 2020.
That combination of new ideas leaves Horowitz in an enviable position at her five-year mark— facing new challenges, but able to look back and call the rehabilitation of Abercrombie the greatest success in her career so far. “We have been from the beginning a show-me story. And that has not ended,” she says.
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