Abercrombie & Fitch

Abercrombie & Fitch is a specialty retailer encompassing four concepts: Abercrombie & Fitch, abercrombie (Abercrombie Kids), Hollister Co., and Ruehl no.925. The merchandise is sold in retail stores throughout the United States, in catalogs, and online. As of 2006, the company operated 351 Abercrombie & Fitch stores in all U.S. states (except Wyoming) and in the District of Columbia, and 3 stores in Canada.

History

During the beginning of the 20th century, Abercrombie & Fitch Co. was one of the most popular retail stores for America's sporting elite. The company's clientele consisted of mainly big-game hunters, fishermen, and outdoorsmen. Abercrombie & Fitch not only outfitted wealthy people, it also outfitted some of America's most influential leaders and celebrities on their excursions. Every president from Theodore Roosevelt to Gerald Ford is said to have been outfitted by the company in some capacity (Teddy Roosevelt was an especially enthusiastic outdoorsman and Abercrombie & Fitch customer, and he frequently visited the store in preparation for his famous African safaris). Other famous people to pass through Abercrombie & Fitch's doors include Charles Lindbergh, Amelia Earhart, Greta Garbo, Katharine Hepburn, Clark Gable, and author Ernest Hemingway, who killed himself using a shotgun purchased at an Abercrombie & Fitch store.

Abercrombie & Fitch began as a small waterfront shop and factory in lower Manhattan in June 4, 1892. David Abercrombie, born and raised in Baltimore, Maryland, was a former trapper, prospector, topographer and railroad surveyor. He was also an inventor, an ingenious designer of tents, rucksacks and other camping equipment. It was his love of the great outdoors that inspired him to begin Abercrombie & Co., a shop dedicated to selling only the highest-quality camping, fishing and hunting gear. His clientele consisted mostly of professional hunters, explorers and trappers. In 1900, Ezra Fitch, a wealthy New York lawyer and loyal customer, expressed a desire to buy into the growing company. Abercrombie accepted his offer, and Fitch joined as a partner. Soon thereafter, the shop moved to a larger location at 314 Broadway St. In 1904, the store became incorporated and the official name of the company was changed to Abercrombie & Fitch Co.

The partnership, however, was ill-fated. David Abercrombie and Ezra Fitch were stubborn, hot-tempered men, and both had vastly differing opinions on how best to run the establishment. Abercrombie was more conservative, content to continue the store as it was, selling professional gear to professional outdoorsmen. Fitch, on the other hand, was more of a visionary. He was positive that the future of the business lay in expansion, selling the outdoors and its delights to more of the general public. The two quarrelled frequently, often violently, even as the company grew increasingly successful. In 1907, Abercrombie sold his share in the company to Fitch and returned to manufacturing outdoor goods. Fitch continued the business with other partners and was, for the first time, able to direct the company in a manner to his pleasing.

Fitch determined that the store ought to have an outdoor feeling. Stock was not hidden behind glass cabinets. Instead, it was displayed as if in use. He set up a tent and equipped it as if it were out in the middle of the wilds of the Adirondacks. A campfire blazed in one corner, where an experienced guide was always in attendance, imparting valuable information to interested customers. Part of Fitch's strategy to expand the company was the creation of a mail-order catalog. In 1909, Abercrombie & Fitch mailed out over its 456 page catalog, which included outdoor clothing, camping gear, articles, and advice columns, to 50,000 customers worldwide. By 1913, the store moved to a more fashionable and easily accessible midtown address just off Fifth Avenue, expanding its inventory to include sport clothing. A&F became the first store in New York to supply such clothing to women as well as men. In 1917, Abercrombie & Fitch Co. moved yet again to a twelve-story building on Madison Avenue. The store occupied the entire available space, making it the world's largest sporting goods store. Outside, a sign proclaimed, "Where the Blazed Trail Crosses the Boulevard."

The flagship store included many different amenities. In the basement there was a shooting range, on the mezzanine there was paraphernalia for skiing, archery, skin-diving, and lawn games. The second through the fifth floors were reserved for clothing that was suitable for any climate or terrain. On the sixth floor, there was a picture gallery and a bookstore that focused on sporting themes, a watch repair facility and a golf school, fully equipped with a resident professional. The seventh floor included a gun room, stuffed game heads, and about seven hundred shot guns and rifles. The eighth floor was dedicated solely to fishing, camping, and boating. It also included a desk that belonged to a fly- and bait-casting instructor who gave lessons at the pool, which was located on the roof. The fishing section of the store alone was stocked with over 48,000 flies and over 18,000 fishing lures. The clerks hired at Abercrombie & Fitch were not professional salesmen, but rugged outdoorsmen. Talking was their pleasure and selling was performed only at the customers' insistence.

In 1928, Ezra Fitch retired from the company. Despite the change in ownership, Abercrombie & Fitch continued to expand. In 1939, it adopted the slogan, "The Greatest Sporting Goods Store in the World." By 1958, the company operated stores in Chicago and San Francisco, wintertime-only stores in Palm Beach and Sarasota, Florida; and summertime-only stores in Bayhead, New Jersey; and Southampton, New York. The expansion continued through the 1960s, when the company opened new stores in Colorado Springs, Colorado; Short Hills, New Jersey; Bal Harbour, Florida; and Detroit, Michigan. Despite the chain's apparent success, the company began to falter financially in the 1960s and went bankrupt in 1977. Oshman's, a sporting goods retailer, acquired Abercrombie soon thereafter, but the company continued to struggle.

Abercrombie & Fitch today

In 1988, The Limited Inc. (now called Limited Brands) acquired Abercrombie & Fitch, determined to reinvigorate the ailing brand. The Limited had been successful in rolling out new concept stores, such as Express, which sold women's clothing, and Victoria's Secret, which sold lingerie and beauty products. Over the next decade, Abercrombie & Fitch was carefully rebuilt as a teen apparel merchandiser. The company began opening stores in upscale malls across America in the early 1990s, targeting teenagers and college students aged 18-24 from higher-income families.

Abercrombie & Fitch is a self-proclaimed "casual luxury" retailer. Much like Ralph Lauren (whose style is frequently evoked in Abercrombie & Fitch’s apparel), the clothing is fairly predictable: woven shirts, denim, miniskirts, cargo shorts, wool sweaters, polo shirts, and t-shirts can be found in most collections. Labels on clothing reinforce the company’s image as a casual luxury merchandiser and emphasize the quality and durability of the product. The clothing produced in the 1990s was fairly consistent with the brand's preppy image and tended to be less trend-driven than today's offerings, which bear significantly less resemblence to traditional Northeastern prep school apparel. The store quickly became successful, and by the mid-1990s, there were dozens of Abercrombie & Fitch stores in the United States. Careful marketing made the brand synonymous with wealth and status among young patrons. In 1996, The Limited took Abercrombie & Fitch public on the New York Stock Exchange and gradually phased out its ownership of the company.

The original store concept (referred to as the "chain store" concept) hearkened back to the outdoorsy image of company's early years. The store resembled a hunting lodge, with plaid carpeting, dark wood fixtures, and antler chandeliers. However, the company introduced a new store concept (referred to as the "canoe store" concept) in the late 1990s to accommodate its rapid growth. The canoe store is recognized by a white facade, navy blue awnings, and solid metal and glass doors. The interior features gray walls, white molding, polished concrete and black wood floors, metal fixtures, and large pictures of scantily-clad models. A moose head is mounted above the cashwrap and a canoe is mounted in the main room of each canoe store. Unlike the chain store, which typically has a wider storefront and two entrances, the canoe store has one main entrance and is walled off into at least five rooms. The company is in the process of converting all of its chain store concepts into canoe stores.

Abercrombie & Fitch has complete control over the design and production of its merchandise, stores, and marketing. Because it spends little on external advertising, the company depends upon the store experience to help define the brand. The company strictly regulates the store environment in an effort to provide a consistent, pleasureful experience for customers in a manner that can be replicated in each store. Factors such as visual presentation, music, and fragrance are not left to chance. The company also specifies in painstaking detail how lighting, layout, visual displays, marketing, and fixtures are to be placed and used in every store. Each store is spritzed daily with men’s cologne in order to ensure a pleasant sensory experience. Every store plays the same pre-produced music segment for a period of four to five weeks and has instructions on how loud the music is to be played at certain times of the day or week. Abercrombie & Fitch has become notorious for loud, pulsing dance music, often eliciting complaints from mall operators and tenants for disrupting other customers and stores.

Merchandising is managed in a similar fashion. Every week, each store is sent a booklet—often over 100 pages long—detailing the exact specifications for placing merchandise on the sale floor. Older merchandise is shuffled around to provide a different presentation for frequent customers each time they enter the store, while new items are generally placed out in the front rooms for display. Apparel is laid out so that customers can feel the fabrics, contributing to the sensory experience offered in-store.

The company manages merchandising, distribution, and sales by assigning each store a tier level (1, 2, 3, 4, or 5) and a volume level (A, B, C, D, E, or F). Tier level determines what selection of the current clothing line is sent to a store. Tier 1 stores receive all of the current items in all styles and colors, for example, while lower tier stores are sent less merchandise in a smaller range of sizes and colors. A store's tier level is independent of its volume, since allocation is often dependent on available area of selling space. Some small stores are relatively high volume, but lack the floor space needed to support the entire line. A store can have different tier designations for its men's and women's sides. (Women's retail normally outperforms men's by a ratio of about 2:1, though in certain markets the difference is greater or less.) The company designates Volume A stores, usually in major cities and tourist destinations, as "elite" or "super-elite." There are three super elite (AA) stores (Ala Moana in Hawaii, Aventura in Florida, and South Street Seaport in New York City) and less than thirty elite (A) stores in the chain.

The company has opted to build only large stores, averaging 8,000 to 20,000 square feet (700 to 2,000 m²) in high-volume retail centers around the country. Throughout the 1990s, Abercrombie & Fitch enjoyed sales of over $400/ft² ($4300/m²) —high by retail standards—but that number has dropped significantly in recent years. As of 2003, sales were $345/ft² ($3700/m²). The rapid expansion of the chain from 1999-2003, in addition to the introduction of the company’s more moderately-priced concept Hollister Co., arguably contributed to a decrease in same-store sales (an important measure of retail performance) across the chain during that time period. In order to fend off what analysts often called the "cannibalizing" effect that Hollister is having on the flagship chain, Abercrombie & Fitch has attempted to differentiate itself from its sister brand by raising price-points, introducing a line of higher-end merchandise called "Ezra Fitch," and establishing strategies to limit the intrusion of Hollister into key Abercrombie & Fitch markets. Such efforts appear to be working: Abercrombie & Fitch logged an impressive 29% increase in same-store sales in December 2005, while most other specialty retailers experienced only moderate advances.

In November of 2005, the company completed construction of its flagship Fifth Avenue location in New York City. The four-level store is the largest in the chain and is located on 56th street and 5th Avenue, alongside boutiques by luxury retailers such as Fendi, Prada, and Chanel. The company is currently expanding its Los Angeles flagship store at The Grove at Farmers Market. The company marked its expansion into Canada in January of 2006, opening two Abercrombie & Fitch stores and three Hollister Co. stores in that country. The company will add additional stores in Canada during the next several years and plans to open stores in Europe and Asia by 2007.

Lifestyle brand

Abercrombie & Fitch aggressively positions itself as a "lifestyle brand"—a brand that embodies the values and appeal of a desirable way of living. The stores are plastered with photos of physically attractive young models, blast loud dance music through powerful speakers, and smell of the company's signature cologne. The stores are also staffed with attractive "brand representatives", young salespeople who embody the Abercrombie & Fitch lifestyle: attractive, athletic, popular, enthusiastic, and outgoing. For years, brand representatives were required to wear only Abercrombie & Fitch clothing, but such regulations have been loosened following lawsuits.

The most conspicuous of the company's lifestyle branding efforts was its now-defunct magazine, A&F Quarterly, which the company published from 1997 to 2003. The publication was a hybrid magazine and catalog (company officials referred to it as a "magalog".) and featured advice columns, articles about college life, and—most famously—the highly sexual fine art work of photographer Bruce Weber. The racy publication made a splash with young customers and had one of the highest circulation rates among young adults of any magazine in the late 1990s. Print advertisements for the A&F Quarterly appeared in Interview and Out magazines in addition to Rolling Stone and Vanity Fair. In 1999, the company rolled out "A&F TV", a feature that spotlights young people engaged in sports and leisure activities. A&F TV was originally developed to run on cable television and on monitors in Abercrombie & Fitch stores, but currently is offered only on the company's website. The company's playful, homoerotic marketing made Abercrombie & Fitch a destination for the gay market in the late 1990s, though the company denies that it ever made a concerted effort to market to gay customers.

Controversy and criticism

A&F Quarterly

The A&F Quarterly became a lightning rod for controversy shortly after it was published. It featured photographs of attractive young male and female models, often partially or scantily dressed, posing in pairs or groups, which many likened to softcore pornography. Despite a company policy restricted sale of the publication to adults, critics charged that the publication was readily sold to minors. Several states threatened to pursue legal action, though the company was never charged with violating any related statutes. The publication was also criticized on moral grounds, for featuring sexually explicit interviews with porn stars, and articles that, according to critics, glamorized alcohol consumption, group sex, homosexuality, and self-performed oral sex. In 2003, an array of religious organizations, women's rights activists, and Asian-American groups organized boycotts and protests over the publication, and the "Christmas Edition" of the catalog was removed from stores. In 2004, "A&F Magazine", a comparatively tame collection of photos and essays about rising celebrities, replaced the publication altogether.

Products

The company's clothing has also been the subject of criticism. In 2002, controversy erupted over shirts featuring caricatures of Asians and other ethnic groups. One shirt featured the slogan "Wong Brothers Laundry Service—Two Wongs Can Make It White" with smiling figures in conical hats, a 1900s popular-culture depiction of Chinese immigrants. The company discontinued the designs and apologized after a boycott by Asian-American student groups. That same year, the children's clothing division removed a line of thong underwear sold for girls in pre-teen children's sizes after parents mounted nationwide storefront protests. The underwear included phrases like "Eye Candy" and "Wink Wink" printed on the front.

More T-shirt controversy occurred twice in 2004. The first incident involved a shirt featuring the phrase, "It's All Relative in West Virginia," an apparent jab at incest relations in the rural South. West Virginia governor Bob Wise spoke out against the company for depicting "an unfounded, negative stereotype of West Virginia," but the shirts were not removed. The second incident involved another t-shirt with the phrase "L is for Loser" written next to a picture of a male gymnast on the rings. The company stopped selling the shirt in October of 2004 after USA Gymnastics president Bob Colarossi announced a boycott of Abercrombie & Fitch for mocking the sport.

In November 2005, the Women & Girls Foundation of Southwest Pennsylvania launched a "girl-cott" of the store for selling T-shirts bearing phrases like "Who needs a brain when you have these?" The campaign went national on NBC's Today Show, and the company pulled the shirts from stores on November 5, 2005.

Employment Practices

For several years, Abercrombie & Fitch has faced accusations of discrimination against minority employees. A 2004 lawsuit — Gonzales v. Abercrombie & Fitch — accused the company of discriminating against minority employees by offering desirable positions to white employees. The company agreed to an out of court settlement of the class action suit. As part of the settlement terms, A&F agreed to pay $40 million to rejected applicants and affected employees, institute policies and programs that promote diversity in its workforce and advertising campaigns, appoint a Vice President of Diversity, hire 25 recruiters to seek minority employees, and discontinue the practice of recruiting employees at primarily white fraternities and sororities.

Other brands and additional information

Abercrombie & Fitch operates three additional concept stores: abercrombie (Abercrombie Kids), a smaller version of the original chain which aims to attract patrons ages 7-14; Hollister Co., which sells California-inspired apparel to attract patrons 14-18; and RUEHL, which sells business casual and leather goods to target ages 22-30. The company has expressed interest in developing a fifth concept, though there are no confirmed plans to introduce another brand to the market in the near future. As the Abercrombie & Fitch brand reaches its full growth potential in the U.S., the company is depending on the Hollister Co. and RUEHL concepts to act as its primary growth vehicles in the U.S. The company will also begin expanding the brands internationally, expanding to Europe by 2006 and Japan by 2007.

In 2003, the company expanded its New Albany, Ohio headquarters (a suburb of Columbus)[1]. Set amid acres of forest, the compound features rustic, farm-styled structures with elements of modern architecture, a reflection of the company's outdoorsy roots. The campus includes a mess hall, fire pits, trails, a recreational center, and an Abercrombie & Fitch store, where marketing and design elements are developed. The interior design bears a likeness to the stores, furnished with dark wood and concrete floors, leather couches, and comfortably-worn rugs.

Management

• Chairman & CEO — Michael Jeffries
• CFO — Mike Kramer
• Exec. VP of Logistics and Store Operations — John Lough
• COO — Mike Kramer and John Lough (temporary, as of August 31 2005)
• Director of Investor Relations of Corp. Communications — Thomas D. Lennox
• Exec. VP of Sourcing — Diane Chang
• Sr. VP of Stores — David L. Leino