00:00Abercrombie & Fitch reported a comparable sales increase at its namesake brand.
00:05It was up 4%, and you could say, well look, they cycled at 11% decline last year in the
00:12second quarter, but if you look at the three-year stacked figure, that was up 32%, 32.5% to
00:21be precise, is the three-year stacked increase, and they still delivered a 4% increase.
00:26So that was really encouraging, and when you look at the total sales, because of course
00:31they're expanding, and with some wholesale opportunities, their total sales were up 8% for the brand.
00:38Hollister, this is their Gen Z brand, that was down 4% in the quarter, and analysts were looking
00:46for sales to be down less than 1%, but they were cycling a 19% comp increase a year ago.
00:56And so really what kind of overrode that is the fact that the name brand, the namesake
01:03brand did really well, and the fact that we're seeing improving trends in the third quarter
01:08so far, starting off strong for both brands.
01:12So we could see the Hollister brand also return to positive comps, but their overall sales
01:17for Hollister were up 2%.
01:19It's kind of remarkable when you go into an Abercrombie & Fitch now how different it is
01:24from its heyday in the 90s.
01:25I mean, for one thing, the music is not like so loud that you can't hear anything, and it's
01:31a lot brighter, and it's catered to women a lot more than it ever used to be.
01:36And of course, that might reflect the sensibilities and the strategic decisions of the CEO, Fran
01:40Horowitz, as opposed to Mike Jeffries, who was, you know, really put his stamp on the company.
01:45But Mary, just talk to us a little bit about the dependence on young women, or maybe not
01:52even young women, millennial women, as the key audience for the close now.
01:59Yeah, so Scarlett, you really hit on it, and that is that, you know, going back to the
02:0590s, when it was really more of a high school, college student, now it's really, we're talking
02:12about millennials.
02:13So those are, think about customers in their 30s and 40s.
02:17That's really where Abercrombie & Fitch is going after, and that's, and it resonates.
02:23And not only is it that consumer in terms of the age demographic, but from an income
02:28demographic perspective, they tend to be higher earning.
02:32So that, that's in the $100,000 to $200,000 household income range.
02:37So that's really how that brand has shifted, just to your point.
02:42And also, they're really looking to have more of a balanced business, like half and half men
02:48versus women.
02:49And you'll see that in the stores.
02:50It's divided straight in half, men on one side, women on the other side, in terms of
02:56assortments.
02:58Promotions.
02:58How promotional were they in the quarter, and kind of what, what are you hearing from some
03:01of the other retailers?
03:03Yes, Paul, so you're bringing up a good point.
03:05They were actually able to do more full-price business in the quarter, so that helped them
03:10on the margin side.
03:11You know, within the Abercrombie brand, this is distinct and different from the story that
03:17we're talking about here with Abercrombie.
03:18If you talk about Kohl's, Kohl's delivered another comp sales decline.
03:24And this follows, you know, three-year stacked sales declines in the double digits.
03:30So Kohl's is still struggling to make a comeback.
03:34We did see some encouraging signs when we walked the stores more recently.
03:38We're seeing much better merchandising.
03:41The store is starting to look more cohesive, but we also saw that it's a lot more promotional
03:47right now.
03:47That should benefit them in the third quarter, and they might be able to inch closer to break
03:52even.
03:53But nonetheless, it just goes to show you that off-price, I think, is really making a dent
03:58in that business and why you're continuing to see declines there, despite the improvements,
04:04you know, that they're seeking to make.
04:06And if you look at SoFora, you know, which has been about a $2 billion business, their
04:11comp sales were down 4%.
04:13So here was a business that initially was showing strength, and that's a business that draws
04:20repeat customers.
04:22Right.
04:23But again, still seeing weakness there as they try to, you know, improve the assortments
04:29there, bringing in a lot more newness.
04:31Sure.
04:31It just...
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