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