Speaker 1: Bloomberg Audio Studios, podcasts, radio news, and for more.
Speaker 2: Let's continue this conversation now with fran Horwitz. She is
Speaker 2: the CEO of Abercrombie and Fitch, joining us again on
Speaker 2: open interest.
Speaker 3: It's great to have.
Speaker 2: You, and I want to go straight to the outlook
Speaker 2: because you mentioned that increasingly uncertain environment for retailers in
Speaker 2: the statement earlier today, but at the same time raising
Speaker 2: the full year sales outlook so square that circle for me,
Speaker 2: how do you plan to navigate through that period of uncertainty?
Speaker 1: Hey, Ky, you know we're going to continue to do
Speaker 1: what we've been doing.
Speaker 4: We just put up a incredible first half of the
Speaker 4: year record Q one, record Q two, double digit increases,
Speaker 4: a double digit in every month of the quarter in fact,
Speaker 4: and we're.
Speaker 1: Thrilled with the start to August.
Speaker 4: What I tell the teams all the time is we
Speaker 4: got to stay focused on the customer. Control what we
Speaker 4: can control, and that's what we've been doing. The customer
Speaker 4: always has a choice somewhere shop and they are choosing us.
Speaker 3: Let's talk about what you can control.
Speaker 2: Of course, you can't bring down the rate of inflation,
Speaker 2: but you can bring down your pricing.
Speaker 3: You can boost promotions.
Speaker 2: We've heard a lot of retailers also warn about the
Speaker 2: second half of the year and that stretched consumer. How
Speaker 2: would you characterize the level of promotions that you're planning
Speaker 2: relative to maybe past quarters in past year ends.
Speaker 4: Yeah, No, our promotions are under control. They're less than
Speaker 4: they were last year. We've had double digit increase of
Speaker 4: our au R since twenty nineteen. Our product acceptance and
Speaker 4: our inventory control is really what's driving our ability to
Speaker 4: make sure that we continue to drive the aur growth
Speaker 4: that we have seen. We do go into every quarter
Speaker 4: with the expectation of keeping it flat and then the
Speaker 4: customer votes.
Speaker 1: It helps us understand what they're willing to pay.
Speaker 4: And again, as I mentioned, do you get that product, voice,
Speaker 4: and experience lined up like we are and the consumer
Speaker 4: is ready to buy.
Speaker 3: It's fascinating.
Speaker 5: I'm really curious about your conversations with investors, Fran because
Speaker 5: if you yes, it's spent a little bit less of
Speaker 5: a gain over Nvidia over this year, but still over
Speaker 5: a twelve month basis, your stock has been expanding at
Speaker 5: a faster rate than even the most beloved tech giant
Speaker 5: out there. So you have a traditional retailer expanding at
Speaker 5: the rate of a technology company. What is it that
Speaker 5: investors really expect of you at the end of the day,
Speaker 5: and how do you really define to them what you
Speaker 5: grow as as a retailer.
Speaker 4: I think what they're expecting from us is what we
Speaker 4: continue to do, which is deliver. You know, we've spent
Speaker 4: a lot of years transforming this company and really rebuilding
Speaker 4: our operating model, and we've spent time and time and
Speaker 4: time again with the investors really explaining and helping them
Speaker 4: understand what all of that means. And they truly understand
Speaker 4: what that means. Obviously evidence in the stock prices you
Speaker 4: guys just illustrated over the past year. So what that
Speaker 4: means is staying close to your customer, making sure that
Speaker 4: we're reading and reacting to the business. Having by financial
Speaker 4: discipline and how we control our inventories. It's a new
Speaker 4: way of thinking about retail and our operating model continues
Speaker 4: to drive results.
Speaker 5: How are you also thinking about partnerships During the call,
Speaker 5: you were talking about, for example, your NFL partnership. What
Speaker 5: does this really bring to you at the end of
Speaker 5: the day. Is it new customers, is it more customers?
Speaker 5: And what kind of cost does it come at?
Speaker 1: You know, what. It's a little bit of both. It's
Speaker 1: been very excited.
Speaker 4: I like to say we are no longer genes and
Speaker 4: T shirt company. We're a certainly lifestyle brand and we
Speaker 4: hear from our customers what is important to them. So
Speaker 4: a great example is the NFL partnership. We started this
Speaker 4: partnership about three years ago. We tend to do things
Speaker 4: small and then build on them as they work for
Speaker 4: our consumer. It's a real test and learn culture that
Speaker 4: we have here. The NFL is a fantastic example of that.
Speaker 4: We now have all thirty two teams. We've got expanded
Speaker 4: product categories. Last year mostly focused on genes I'm sorry,
Speaker 4: mostly focused on police and T shirts. Now we have
Speaker 4: outerwear and hats and sweaters. The collections off to a
Speaker 4: great start. And if you look at our Hollister brand,
Speaker 4: same thing. You know, how do we expand that consumer's
Speaker 4: product categories. And we just launched a terrific collegiate assortment
Speaker 4: over thirty universities across the United States and again off
Speaker 4: to a great start with that. It's really helping drive
Speaker 4: art strong back to school performance.
Speaker 2: And I also want to talk about geographic footprint as well.
Speaker 2: I'm taking a look at the notes you sent over
Speaker 2: to our producers. You plan to be a net opener
Speaker 2: of stores next year. What areas of the country are
Speaker 2: you thinking about there when you take a look at
Speaker 2: your map right now.
Speaker 4: Yes, so we are actually going to have almost one
Speaker 4: hundred and twenty new experiences this year, twice as many
Speaker 4: as we had last year. And to your point, it's
Speaker 4: our third year of being a net store opener. Those
Speaker 4: reference stores actually around the world, so it's our global
Speaker 4: footprint that we're looking to expand, both through the Abercrombie
Speaker 4: and the Hollister brands.
Speaker 2: And I want to talk internationally as well. There's some
Speaker 2: news on the terminal out today that Abercrombie and Fitch
Speaker 2: has plans to return to Hong Kong, eight years after
Speaker 2: you shut down your flagship store. According to people familiar,
Speaker 2: the plans are to rent two large stores in prime
Speaker 2: locations in Hong Kong.
Speaker 3: Are you able to confirm those reports?
Speaker 4: So we have stores in Hong Kong, so we saw
Speaker 4: that earlier this morning. We sent in a correction, so
Speaker 4: we're not returning to Hong Kong. We are currently in
Speaker 4: Hong Kong with several stores. We are in the APEC
Speaker 4: region as I mentioned earlier this morning, you know, we
Speaker 4: saw a three percent net growth at twenty one percent
Speaker 4: comp growth throughout that region this year.
Speaker 5: You mentioned something earlier Fran as well that I want
Speaker 5: to go back to for a second here, this back
Speaker 5: to school moment that many people are having. You were
Speaker 5: talking about the NFL partnerships. Not just back to school,
Speaker 5: it's back to watching football. I think this weekend is
Speaker 5: a lot of the first big games or next weekend.
Speaker 5: I'm still learning my football lingo. But what can you
Speaker 5: tell us about the demand that you are seeing headed
Speaker 5: into this fall season.
Speaker 1: A lot of.
Speaker 5: People out there worried about the consumer, but this is
Speaker 5: a critical time to sell.
Speaker 4: Yeah, listen, we were thrilled with the beginning of August,
Speaker 4: which I mentioned this morning. We have momentum coming out
Speaker 4: of the second quarter and it's remained into the third quarter.
Speaker 4: To your point, the NFL is certainly driving a piece
Speaker 4: of that. It's one part of our business, but it's
Speaker 4: just only one part. We're also seeing tops and bottom selling.
Speaker 4: Our dress business remain strong. The wedding shop that we
Speaker 4: talked about last time we were together has gained momentum,
Speaker 4: and those weddings honestly go all year round now and
Speaker 4: then as far as collegiate goes.
Speaker 1: Same thing. Exciting to see that consumer.
Speaker 4: You know, they start freshman year in high school start
Speaker 4: thinking about aspirational places that they.
Speaker 1: Want to go to college.
Speaker 4: So another good opportunity for us to connect with the consumer.
Speaker 5: Friend. The other question I have here about Abercrombie and Fitch.
Speaker 5: Of course, Abercrombie and Fitch Hollister have been two iconic
Speaker 5: brands for a very long time. You've certainly reinvigorated it
Speaker 5: in a pretty massive way. But do you see A
Speaker 5: and f having more brands? Do you see yourself expanding
Speaker 5: into even more categories, perhaps even through the means of
Speaker 5: mergers and acquisitions, given how far your stock has come
Speaker 5: as currency.
Speaker 4: You know, our focus today is on investing in the business,
Speaker 4: and that's our number one plan for our capital allocation
Speaker 4: as we continue to do. We're currently making some very
Speaker 4: big investments in the business from digital and technology.
Speaker 1: The stores piece that you asked.
Speaker 4: About earlier, investing in opening and transforming our stores as well.
Speaker 4: We will continue to stay close to that customer to
Speaker 4: understand what they're looking for. You know, YPB is a
Speaker 4: great example of a brand extension that's our performance brand
Speaker 4: under Abercrombie and Fitch called Your Personal Best, which I'm
Speaker 4: seeing on the screen right now. You're showing lots of
Speaker 4: pictures of so again it's staying close to the customer
Speaker 4: and listening to what their insights are telling us.
Speaker 2: I want to talk a little bit more about technology investments,
Speaker 2: in particular because we're all awaiting in video earnings after
Speaker 2: the bill. You can't get through a conversation without talking
Speaker 2: about AI and.
Speaker 3: When you think about your own investments.
Speaker 2: Has Abercrombie started using AI in any capacity when it
Speaker 2: comes to generate AI for.
Speaker 4: Example, Yeah, I mean AI has been a part of
Speaker 4: our business and nobody talks about it like it's it
Speaker 4: was just founded last year, but it's actually been something
Speaker 4: that we've been working with for some time now. There's
Speaker 4: lots of applications, certainly within our business that you can
Speaker 4: use AI for, so we're continuing to explore like everybody else's.
Speaker 4: We have our own you know, AI task force to
Speaker 4: make sure we're staying up to date on what the
Speaker 4: opportunities are.
Speaker 5: To that end. Also, I have to say, fran I
Speaker 5: am very very guilty when it comes to shopping on
Speaker 5: social media. My Instagram gives me something and I am
Speaker 5: going to click on it. And so has AI helped
Speaker 5: you with kind of figuring out what users want more of?
Speaker 5: Has it somehow made you more efficient? Could you put
Speaker 5: more numbers around it? And how has that kind of
Speaker 5: online channel become more important to you?
Speaker 4: Yeah, and listen, we have our marketing today is the
Speaker 4: majority of it is is digital, and I would say
Speaker 4: that we are certainly a leader in social commerce for
Speaker 4: sort for sure, and in social media and digital platforms.
Speaker 1: The data and analytics team helps us understand what the
Speaker 1: customers are looking for.
Speaker 4: They relay that to both our marketing and our digital
Speaker 4: teams to make sure that we're staying up on what's
Speaker 4: working for them and what's not working for them.
Speaker 2: All right, Fran, really appreciate you taking some time with
Speaker 2: us this morning, and also appreciate the clarification on Abercrombie's
Speaker 2: Hong Kong presence.
Speaker 3: Hope to speak to you again soon.
Speaker 2: And that is Fran Horowitz, the CEO of Abercrombie and
Speaker 2: Fetch