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Let's get to that point, because shares with Abercromi and Fisher are just absolutely staring today, the retailer raising its full year outlook after blowing pass first quarter sales estimates. The retailer now expects net growth to rise around ten percent for the year. That's up from previous estimates of four to six percent. Joining us now is Frand Horr. What's the CEO of Abercrombie and Fitch. Friend, It's great to get this perspective from you. What drove your killer year?
I mean, you've just been delivering quarter after quarter. Can you pinpoint one or two things that have really helped drive it for you?
Sure?
So to your point, coming off of a defining year for us in twenty twenty three and then taking that momentum right into the first quarter and having a record quarter, just an incredibly exciting day to hear today today here on campus.
What drove that are a couple of things.
I think most importantly, our formula of staying close to the customer and really understanding what their lifestyle is and what they're looking for is key to our success. US that companied with a lean inventory and this chase model that we have created that helps us make sure that we're listening, we're testing, we're learning, and we're reacting to the business in real time.
It's really helping us drive these results.
We had a great line in our Bloomberg piece that said, you extended your bounce back from the teen fashion graveyard, and I thought that was a really good image and analysts responding to your quarter or asking the question, how long can you keep up this extraordinarily strong pace of growth, what do you think?
Well, the exciting thing is that we've actually separated the brands. If you go back through the history, Hollister is truly the iconic global teen brand, and we've been able to really age up Abercrombie.
We've expanded the addressable market.
I mean, the consumer now starts with Abercrombie when they're in their early twenties, they stay with us well through their forties. And additionally, we've just completely grown all the categories, no longer being a jeans and T shirt company, but caring for all their different lifestyles. It's truly a lifestyle brand. Is trying to explain today they come to us for all sorts of occasions from their wedding parties to their bachelorette parties, to where to.
Work, to going out on the weekends.
So the addressable market as well as the range of what we offer is much greater than what it used to be.
Friend, I want to talk a little bit about pricing and pricing power, if you will. I know the discounting has always been an issue for retailers. You've held the line at least for the last couple of years on that here kind of limiting those discounts in a way that certainly helped the bottom line. Do you have confidence that you can continue to limit those discounts.
Jeremy, I'm so proud of the progress that we've been able to make. If you think about the aur that we have been able to grow since twenty nineteen and both brands, double digit is done by twofold.
One is through reducing our promotions.
Right this discount to ticket for us used to be thirty forty to fifty percent. Today it makes a customer
happy at fifteen or twenty percent. As well as making sure that the inventory is lean, and that's really the other key piece to its making sure that they buy it when they see it, it may not be there the next time that they come into the store, So our expectation every season is to come in with basically I guess I would call it flat promotions to the prior year, and then the customer really tells us, you know what their appetite is, and we can flex our muscle every week and make those decisions.
As you sort of try it. Though you have to, of course, stay ahead of the trend to a certain extent in order to sort of make sure you have the right inventory for those folks when they come into the store. Has that gotten more complicated or have you found ways to make that process a little bit more efficient or at least a little bit more reliable.
Great question.
Yeah, I would tell you that with both the digital business as well as the in store business, we can test our product pretty efficiently today. And then the key is being ready with your supply chain and making sure that it's agile enough that you have your fabrics ready and that you can get the product in on a very quick basis.
When you take a look frand at the overall consumer appetite, we keep seeing lots of different signals that the consumer is slowing down. Are you noticing any of that. And if you had to predict out the next twelve months, how would you describe your consumer?
Yeah, Alex, I guess my answer to that would be if you look at the results for twenty three and you look at the results for the first quarter, clearly that's not what we're seeing from our consumer. I think the key is if you offer the consumer the right product, the right fashion component at the right value, they are responding. And the customers in any economic time have a choice on where to shop, and they are choosing us, and that is true in Hollister as well.
Are you noticing how they're paying it all? Like? I know you do the buy now, pay later stuff, Like are we seeing any more sort of on credit? Are there delinquencies on that or delay payment or buy now pay later any other read through I can get.
No, there's been no change to any of the payment That's really amazing.
And what about expansion going off forward? Frand I mean, what are you at around like seven hundred and fifty stores? Are you planning to increase account?
Yeah?
We have an opportunity both bastically as well as internationally to continue to grow our store base. In twenty twenty three, we opened up sixty five new experiences around the world. We'll open up about one hundred and twenty five this year. You know, the opportunity for us is to gain back
a lot of share internationally. We've been on quite a chair in North America for the past few years and just starting to see our playbook you know, exported internationally and really starting to work there as well.
Where internationally, because I mean, this is still a company that it's the lion's share of its sales here in the US and North America. Where internationally are the best opportunities.
I would tell you that in the Maya region, the UK and Germany are two biggest countries outside of the US.
That is what we're currently focused.
We've built a team in London that's helping us localize our assortments and localize our promotions and make sure that we deliver our product appropriately.
From a calendar and a customer wearing perspective.
All right, friend, well, we really appreciate you taking time to be with us today. Our Frand Horwitz there, the CEO of Abercrombie and Fitch, coming off of its first quarter earnings report here and some pretty decent numbers twenty one percent comp sales growth ALEX and of course the guidance that they gave going forward also pleasing investors. You see that in the share price of twenty four percent on the day