1
00:00:02,440 --> 00:00:06,760
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:07,120 --> 00:00:09,320
Speaker 2: The SoC alone has just been staggering to watch over

3
00:00:09,360 --> 00:00:11,440
Speaker 2: the past couple of years. But let's talk a little

4
00:00:11,480 --> 00:00:14,280
Speaker 2: bit about the future from here, because we think about

5
00:00:14,320 --> 00:00:18,080
Speaker 2: Abercrombie and Fitch. Your market is really millennial men and women.

6
00:00:18,160 --> 00:00:21,960
Speaker 2: But are millennials alone enough to fuel future growth beyond

7
00:00:22,000 --> 00:00:22,880
Speaker 2: what you've already built.

8
00:00:23,920 --> 00:00:26,200
Speaker 3: Hey, good morning, Katie, thanks for having me and congrats

9
00:00:26,239 --> 00:00:28,840
Speaker 3: on the news show. Yeah, So, to get right to

10
00:00:28,880 --> 00:00:32,840
Speaker 3: your question, what's really exciting about the renaissance of Abercrombie

11
00:00:32,960 --> 00:00:35,600
Speaker 3: is the fact that we have really changed our addressable market.

12
00:00:36,120 --> 00:00:38,440
Speaker 3: You know, the Abercrombie in the past that people reference

13
00:00:38,520 --> 00:00:41,480
Speaker 3: was much more of a teen consumer. We really opened

14
00:00:41,560 --> 00:00:43,960
Speaker 3: up that space for Hollister and made that the global

15
00:00:44,120 --> 00:00:47,920
Speaker 3: iconic teen brand, and Abercrombie has truly aged up the

16
00:00:48,000 --> 00:00:50,599
Speaker 3: consumer Today they start to shop with us in their

17
00:00:50,600 --> 00:00:54,360
Speaker 3: early twenties, they still say well into their forties. So

18
00:00:54,440 --> 00:00:57,360
Speaker 3: that's a big shift for us that will clearly support

19
00:00:57,440 --> 00:01:01,200
Speaker 3: the sustainability of the business. Additionally, we've added so many

20
00:01:01,240 --> 00:01:04,679
Speaker 3: new categories. I like to say it is in the past,

21
00:01:04,760 --> 00:01:06,520
Speaker 3: right we were a jeans and T shirt company and

22
00:01:06,560 --> 00:01:08,760
Speaker 3: today We're truly a lifestyle brand.

23
00:01:09,200 --> 00:01:11,840
Speaker 2: And I mean it's an interesting strategy. Of course, you

24
00:01:11,840 --> 00:01:15,280
Speaker 2: think about who was shopping at Abercrombie in the early

25
00:01:15,360 --> 00:01:18,959
Speaker 2: two thousands. They're now those millennials that are shopping at

26
00:01:19,000 --> 00:01:21,040
Speaker 2: your store, and I want to talk about how they're

27
00:01:21,080 --> 00:01:23,240
Speaker 2: shopping because if you take a look at the margin level,

28
00:01:23,240 --> 00:01:25,959
Speaker 2: it seems that digital is a bit more profitable than

29
00:01:26,000 --> 00:01:28,679
Speaker 2: bricks and mortar, for example. I'm curious how you're viewing

30
00:01:28,720 --> 00:01:30,400
Speaker 2: those two different platforms.

31
00:01:31,200 --> 00:01:35,520
Speaker 3: Yeah, listen, both are profitable for us. Our most profitable consumer, frankly,

32
00:01:35,600 --> 00:01:38,360
Speaker 3: is our omni consumer. That's the consumer that shops on

33
00:01:39,480 --> 00:01:42,440
Speaker 3: each and every channel with us. You know, we have

34
00:01:42,600 --> 00:01:45,720
Speaker 3: said for many years that stores matter to this consumer,

35
00:01:46,160 --> 00:01:48,720
Speaker 3: as does digital. I like to put it as stores

36
00:01:48,760 --> 00:01:51,360
Speaker 3: plus digital equal magic. And again just to reiterate that

37
00:01:51,440 --> 00:01:53,880
Speaker 3: omni consumer is our most profitable consumer.

38
00:01:54,280 --> 00:01:56,320
Speaker 1: You know, this customer uses a store.

39
00:01:56,080 --> 00:01:59,040
Speaker 3: A little bit differently than the Hollister consumer does. This

40
00:01:59,080 --> 00:02:01,840
Speaker 3: consumer does a big part of the business online. The

41
00:02:01,920 --> 00:02:04,560
Speaker 3: majority of our business is digital, but it doesn't mean

42
00:02:04,560 --> 00:02:06,600
Speaker 3: that they don't come to the store to transact. That

43
00:02:06,640 --> 00:02:08,960
Speaker 3: could be to pick up something that they purchased online

44
00:02:08,960 --> 00:02:10,560
Speaker 3: and popped in to pick up. It could be to

45
00:02:10,600 --> 00:02:13,240
Speaker 3: do or return or in exchange see what's new for

46
00:02:13,280 --> 00:02:16,280
Speaker 3: the day that the house or consumer. That business is

47
00:02:16,360 --> 00:02:19,120
Speaker 3: closer to about a thirty percent digital business. You know,

48
00:02:19,160 --> 00:02:21,320
Speaker 3: he and she still see them all as a very

49
00:02:21,360 --> 00:02:23,600
Speaker 3: social place with their friends, like to come in on

50
00:02:23,639 --> 00:02:26,720
Speaker 3: the weekends and go shopping with them. So interesting difference

51
00:02:26,800 --> 00:02:27,760
Speaker 3: between the consumer.

52
00:02:28,280 --> 00:02:31,519
Speaker 4: I'm really interested franon how you're thinking also about price

53
00:02:31,600 --> 00:02:34,440
Speaker 4: points here because you have a consumer. We had inflation

54
00:02:34,560 --> 00:02:37,600
Speaker 4: data this morning showing that inflation is starting to cool down,

55
00:02:37,720 --> 00:02:42,680
Speaker 4: but you do still have many consumer focused companies feeling

56
00:02:42,760 --> 00:02:45,760
Speaker 4: that strained client. And it's interesting. Over the years, a

57
00:02:45,760 --> 00:02:48,120
Speaker 4: lot of people have gone to Abercrombie and Fitch to

58
00:02:48,200 --> 00:02:53,200
Speaker 4: do things like go shopping for bridesmaid's dresses for their weddings.

59
00:02:53,600 --> 00:02:57,240
Speaker 4: Are you finding yourself able to deliver a cheaper option

60
00:02:57,480 --> 00:03:00,600
Speaker 4: in many ways or a more affordable option at least.

61
00:03:01,800 --> 00:03:04,720
Speaker 3: To your point, our wedding shop has been a terrific

62
00:03:04,760 --> 00:03:06,919
Speaker 3: success for us, and that goes back to my point

63
00:03:06,960 --> 00:03:11,680
Speaker 3: about expanding the customer, both the age cohort as well

64
00:03:11,720 --> 00:03:13,720
Speaker 3: as the products that they are willing to buy from us,

65
00:03:13,720 --> 00:03:15,680
Speaker 3: and the confidence that they find and what we're putting

66
00:03:15,720 --> 00:03:18,320
Speaker 3: out there. What we see from our consumer is that

67
00:03:18,320 --> 00:03:22,880
Speaker 3: when you have the quality and fashion at the perception

68
00:03:23,000 --> 00:03:25,200
Speaker 3: price that they are willing to pay, they are willing

69
00:03:25,280 --> 00:03:28,280
Speaker 3: to spend. Coming off of a record Q one, that

70
00:03:28,320 --> 00:03:30,640
Speaker 3: would tell you that our product, voice and experience is

71
00:03:30,680 --> 00:03:34,560
Speaker 3: lining up really well, and that's true. In fact, what

72
00:03:34,600 --> 00:03:36,760
Speaker 3: we saw around the world right we saw a double

73
00:03:36,800 --> 00:03:37,760
Speaker 3: digit increase.

74
00:03:37,440 --> 00:03:41,040
Speaker 1: In our brands, our regions, our channels, so all in

75
00:03:41,120 --> 00:03:42,800
Speaker 1: it was really a terrific quarter for us.

76
00:03:43,000 --> 00:03:45,680
Speaker 4: The other area that investors and clients are both really

77
00:03:45,720 --> 00:03:49,640
Speaker 4: watching pretty closely is your expansion and active where what

78
00:03:49,800 --> 00:03:53,839
Speaker 4: is the size today of the YPB business and who

79
00:03:53,880 --> 00:03:56,640
Speaker 4: is it taking share from? Is it grabbing share from

80
00:03:56,640 --> 00:03:59,560
Speaker 4: the likes of a Lululemon or a Alo for Examps,

81
00:03:59,640 --> 00:04:01,240
Speaker 4: yp the Athletics.

82
00:04:01,240 --> 00:04:04,680
Speaker 3: So YPB is our Yeah, it's our performance brands. It

83
00:04:04,720 --> 00:04:07,000
Speaker 3: stands for your Personal Best. It's something that we launched

84
00:04:07,000 --> 00:04:10,000
Speaker 3: in Abercrombie Adult about two years ago. And you know,

85
00:04:10,200 --> 00:04:12,800
Speaker 3: it's a great question to not because the reason that

86
00:04:12,840 --> 00:04:15,960
Speaker 3: we created that brand, that sub brand for us was

87
00:04:16,000 --> 00:04:18,960
Speaker 3: because we focus on the long weekend for our consumer.

88
00:04:19,120 --> 00:04:21,400
Speaker 3: That is what our whole mindset is about what is

89
00:04:21,440 --> 00:04:24,000
Speaker 3: that consumer doing on their long weekend. And they said

90
00:04:24,040 --> 00:04:25,440
Speaker 3: to us, you know what, one of the things that

91
00:04:25,440 --> 00:04:28,359
Speaker 3: we're doing is we are being active with our friends.

92
00:04:28,400 --> 00:04:31,400
Speaker 3: We're working out, we're hanging out, and we actually leave

93
00:04:31,440 --> 00:04:33,640
Speaker 3: your store, go down the mall and buy this product

94
00:04:33,640 --> 00:04:36,200
Speaker 3: from somebody else. So we know you can do it

95
00:04:36,279 --> 00:04:38,400
Speaker 3: just as well, if not better. So we put together

96
00:04:38,400 --> 00:04:40,599
Speaker 3: a test about two years ago. We saw a strong

97
00:04:40,640 --> 00:04:44,240
Speaker 3: result from it, and we've seen terrific growth from it

98
00:04:44,320 --> 00:04:45,880
Speaker 3: for the year over year.

99
00:04:46,600 --> 00:04:50,480
Speaker 5: Friend, one of the things that led to your success

100
00:04:50,640 --> 00:04:53,839
Speaker 5: is you used to have sizes that were just for

101
00:04:53,960 --> 00:04:56,680
Speaker 5: teens or people who are in incredibly good shape. And

102
00:04:56,720 --> 00:05:00,560
Speaker 5: as you said, you've become more inclusive and we've at

103
00:05:00,640 --> 00:05:04,120
Speaker 5: least i've read with you know, good fabrics, a great

104
00:05:04,120 --> 00:05:08,320
Speaker 5: price point, design obviously are all important. But the stories

105
00:05:08,560 --> 00:05:12,880
Speaker 5: today about weight loss drugs lead me to wonder about

106
00:05:12,920 --> 00:05:15,520
Speaker 5: a resizing in the other direction. Obviously, it's not going

107
00:05:15,560 --> 00:05:17,039
Speaker 5: to be so fast that you can't keep up with

108
00:05:17,080 --> 00:05:20,200
Speaker 5: it in terms of your product mix, But do you

109
00:05:20,320 --> 00:05:25,120
Speaker 5: see that actually making an impact the we go vis

110
00:05:25,240 --> 00:05:29,960
Speaker 5: and ozempics or does it not really make a big

111
00:05:30,080 --> 00:05:32,200
Speaker 5: enough difference for you to notice in terms of the

112
00:05:32,240 --> 00:05:33,200
Speaker 5: sizes that you're selling.

113
00:05:34,440 --> 00:05:37,039
Speaker 3: Yeah, I mett today, we really haven't seen a difference.

114
00:05:37,040 --> 00:05:39,440
Speaker 3: I understand your question is a little bit more long term.

115
00:05:39,680 --> 00:05:41,160
Speaker 3: I think the way that we think of it. I

116
00:05:41,200 --> 00:05:42,800
Speaker 3: think the way that we think about it is that

117
00:05:42,839 --> 00:05:47,480
Speaker 3: the consumer shops when they have the need for something right,

118
00:05:47,560 --> 00:05:49,920
Speaker 3: and then whether that's an increased size or a smaller size.

119
00:05:49,960 --> 00:05:53,400
Speaker 3: I'm excited today that Abercrombie offers an entire wide range

120
00:05:53,400 --> 00:05:58,240
Speaker 3: of diverse sizing, different fabrics and quality of things. We

121
00:05:58,360 --> 00:06:01,520
Speaker 3: launch something called curb Love a few years ago in

122
00:06:01,560 --> 00:06:03,880
Speaker 3: our denim area for women's it's almost half of our

123
00:06:03,920 --> 00:06:04,719
Speaker 3: business today.

124
00:06:05,200 --> 00:06:06,600
Speaker 1: That's just a curby individual.

125
00:06:06,680 --> 00:06:09,840
Speaker 3: It doesn't necessarily mean you know what particular size that

126
00:06:09,880 --> 00:06:12,760
Speaker 3: they might be. So there's always an opportunity for the

127
00:06:12,760 --> 00:06:16,240
Speaker 3: consumer when they see again, you know that price, I'm sorry,

128
00:06:16,279 --> 00:06:19,080
Speaker 3: the product voice experience lining up and a product that

129
00:06:19,080 --> 00:06:22,800
Speaker 3: they're enjoying and needing, they're shopping with us and Farren,

130
00:06:22,880 --> 00:06:23,200
Speaker 3: I want to.

131
00:06:23,160 --> 00:06:26,240
Speaker 2: Talk a little bit about inventory because a lot of retailers,

132
00:06:26,240 --> 00:06:28,839
Speaker 2: a lot of apparel makers in particular, learned a lot

133
00:06:28,839 --> 00:06:32,600
Speaker 2: of hard lessons about inventory during the pandemic It's interesting

134
00:06:32,640 --> 00:06:35,520
Speaker 2: if you take a look at Abercrombie, you actually place

135
00:06:35,560 --> 00:06:38,279
Speaker 2: your orders a few months or weeks in advance for

136
00:06:38,360 --> 00:06:41,480
Speaker 2: some of your categories, that compars to an industry strategy

137
00:06:41,760 --> 00:06:45,039
Speaker 2: about nine months ahead of time. Do you see that

138
00:06:45,360 --> 00:06:48,839
Speaker 2: potentially becoming a risk again if we saw another shock,

139
00:06:48,920 --> 00:06:51,720
Speaker 2: I mean, how vulnerable does that sort of short lead

140
00:06:51,720 --> 00:06:55,360
Speaker 2: time on inventory potentially leave you?

141
00:06:53,880 --> 00:06:57,200
Speaker 3: You know, Katie, like at anything, we have to strike

142
00:06:57,240 --> 00:06:59,240
Speaker 3: a balance in our business, so we don't run all

143
00:06:59,320 --> 00:07:00,799
Speaker 3: of our business that tight.

144
00:07:01,279 --> 00:07:02,320
Speaker 1: We strike a balance.

145
00:07:02,400 --> 00:07:04,960
Speaker 3: But one of the biggest lessons that we learned from

146
00:07:04,960 --> 00:07:07,200
Speaker 3: Covid to your point, is that you can do a

147
00:07:07,240 --> 00:07:09,840
Speaker 3: lot more with a lot less, and keeping lean inventory

148
00:07:09,920 --> 00:07:11,800
Speaker 3: and making sure you're on top of listening to the

149
00:07:11,800 --> 00:07:14,040
Speaker 3: consumer has been a win for us.

150
00:07:14,440 --> 00:07:15,720
Speaker 1: Over the past few years.

151
00:07:16,400 --> 00:07:19,280
Speaker 3: Our logistics team has figured out how to make sure

152
00:07:19,320 --> 00:07:21,520
Speaker 3: that they get the product to the consumer at the

153
00:07:21,600 --> 00:07:25,200
Speaker 3: right time. So we have a playbook that we continue

154
00:07:25,240 --> 00:07:27,480
Speaker 3: to exercise, and I'm excited about the agility that the

155
00:07:27,520 --> 00:07:28,920
Speaker 3: team has built into the process.

156
00:07:29,480 --> 00:07:31,080
Speaker 2: And Faran, we don't have much more time left, but

157
00:07:31,120 --> 00:07:33,120
Speaker 2: I do want to talk about promotions. We've seen a

158
00:07:33,120 --> 00:07:35,280
Speaker 2: lot of your peers turn to promotions. If we take

159
00:07:35,280 --> 00:07:37,720
Speaker 2: a look back to your first quarter earnings, you actually

160
00:07:37,720 --> 00:07:41,920
Speaker 2: reported fewer promotions. When you think about pricing in this environment,

161
00:07:42,000 --> 00:07:46,160
Speaker 2: a weakening consumer still high prices. How does your promotional

162
00:07:46,200 --> 00:07:47,040
Speaker 2: strategy fit in.

163
00:07:48,440 --> 00:07:50,680
Speaker 1: A way that we talk about our promotions. We've talked

164
00:07:50,680 --> 00:07:52,720
Speaker 1: about this for years, is that we focus.

165
00:07:52,560 --> 00:07:55,680
Speaker 3: Inwardly on what our consumer is reacting to. I work

166
00:07:55,680 --> 00:07:58,480
Speaker 3: with the teams literally every Monday, we have our business

167
00:07:58,480 --> 00:08:00,640
Speaker 3: review and we go through what's working, it's not working,

168
00:08:00,720 --> 00:08:03,200
Speaker 3: and we react to the business as such. We do

169
00:08:03,240 --> 00:08:06,000
Speaker 3: not get influenced with what's happening around the balance of

170
00:08:06,040 --> 00:08:08,120
Speaker 3: them all with other retailers. We really have to focus

171
00:08:08,640 --> 00:08:12,000
Speaker 3: individually on what's working for our business, and back to

172
00:08:12,040 --> 00:08:14,560
Speaker 3: the prior question with the leader inventories and making sure

173
00:08:14,560 --> 00:08:17,240
Speaker 3: that we're testing and we're reading and reacting. It's a

174
00:08:17,280 --> 00:08:19,280
Speaker 3: matter of just trying not to get too long on

175
00:08:19,400 --> 00:08:21,200
Speaker 3: things that you don't know a lot about

176
00:08:22,520 --> 00:08:25,480
Speaker 4: Our Thanks to Abercrombie and Fitch CEO fran Horowitz, thank

177
00:08:25,520 --> 00:08:27,880
Speaker 4: you so much for joining us, of course talking us

178
00:08:27,880 --> 00:08:30,720
Speaker 4: through the strategy on what has been a very high

179
00:08:30,760 --> 00:08:31,680
Speaker 4: flying stock