Denim Specialty Retailers Motivated by Consumers’ Taste for Variety

Angela Velasquez
·3 min read

Denim specialty retailers anticipate brighter days ahead.

Abercrombie & Fitch Co. said it is prioritizing growth opportunities at Abercrombie & Fitch and Hollister. Last week, the company reported a Q4 2024 net income of $158.5 million, up from $38.3 million in the year-ago period. By brand, Abercrombie sales rose 35 percent to $755.2 million. Hollister sales increased 9 percent to $697.7 million.

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Fran Horowitz, Abercrombie & Fitch Co. CEO, credited the strong performance to the company’s long-term growth strategy that encompasses new store experiences, improved consumer-facing technology and a dedicated team of sales associates that are “aligned and executing a focused playbook” on matching consumers’ needs with products.

“For us, 2024 should be a proof point of our ability to balance pursuit of new growth opportunities, while also maintaining strong financial discipline,” she said.

Though evolving Abercrombie beyond “a jeans and T-shirt company” into a true lifestyle brand is behind its growth, Horowitz said bottoms continue to be a driver of sales for both Abercrombie and Hollister. For Hollister, diversifying the men’s denim assortment has resulted in “green shoots” in the business, she said.

“Denim is working. There are some exciting new things happening in denim. It’s certainly cleaning up…The rise now is starting to go back down. The wide leg and the baggy [are] working both in men’s and women’s and girls’ and boys’,” Horowitz said. “But the real key here is keeping a balance in the bottom of the store and making sure that we continue to mine for new things out there like utility and cargo and non-denim bottoms which are working for us.”

Jeans remain a priority for American Eagle (AE). The brand’s spring campaign is built around head-to-toe denim looks.

As the number-one denim brand 15-25-year-old consumers and the “go to for women of all ages,” Jen Foyle, president, executive creative director, AE and Aerie, said there is huge potential for AE to capture new customers. Brand loyalty within jeans and bottoms overall is also “very sticky” and is the brand’s best retention business across genders. The brand is making every effort to maintain that trust.

“We are upping our focus on test and scale, innovating in new fabrications, and ensuring that we’re offering the very latest and trends while balancing our tried and true,” she said during the brand’s Q3 2023 earnings call last week. “The acceleration we saw in the second half of the year is a great proof point.”

Parent company American Eagle Outfitters (AEO) reported that American Eagle’s (AE) quarterly sales rose 11 percent to $1.1 billion, with a 6 percent gain in comparable sales. The company is looking to push total revenues to $5.7 billion or $6 billion in the next three years.

When it comes to new denim fits, Foyle said the brand is ahead of the curve and is planning new assortments based on fashion silhouettes. “We were ahead of the cargo trend… and the teams did a great job, testing and scaling and wider legs,” she said.

The relaunch of AE77 as a capsule collection offering more premium fabrics allows the company to offer more competitive price points. A pair of AE77 jeans averages $130 compared to the $250-plus market for premium denim.

“With our four focus areas—everyday casual, social casual, men’s active, and a broader demographic—we have a clear merchandising strategy moving forward and multiple avenues to drive growth,” Foyle said.