If you’ve been bored enough to venture into a mall lately (or you live in the midwest and there's nothing else to do), you might’ve noticed a surprising trend: while many stores like Sears and JCPenney have been closing doors left and right, Abercrombie is thriving. The millennial mall staple who once relied on shirtless greeters (desperate much?) is now reporting its best sales in a decade, raking in another billion-dollar quarter.

Abercrombie, once infamous for its overwhelming cologne clouds and that odd moose logo, began a complete overhaul in the late 2010s. When Fran Horowitz joined the team as CEO in 2017 Abercrombie changed their approach from tight jeans and oversized hoodies to cater to other needs in the wedding space and business casual line. In fact, their NFL partnership with players like Patrick Mahomes and Justin Jerfferson is paying off big time.

Known for its ups and downs over the years, Abercrombie managed to turn things around impressively. For Q2 of 2024, Abercrombie reported net sales of $1.1 billion, marking a 21% increase from the same period last year. So far this year, Abercrombie’s shares are up 62%, following an astounding 285% increase in 2023 (more than the stock market MVP, Nvidia). Clearly, the brand is making a Robert Downey Jr. level comeback.

However, not all news was sunshine and spray tan. On Wednesday, A&F’s stock dipped 18% despite exceeding earnings expectations. Analysts had anticipated earnings per share of $2.22, but Abercrombie delivered a solid $2.50. It’s a bit of a puzzle why the stock fell so sharply, especially considering the strong financial performance. By Thursday, the stock had rebounded by 3.3%, which suggests that investors are still optimistic about Abercrombie’s future.

Abercrombie has pulled off a major makeover, trading in its exclusive vibe for a more inclusive, on-trend approach that’s really resonating—especially with Gen Z. Turns out, ditching the old playbook and getting in on the TikTok game was a smart move. I mean, who better to lead the charge than the generation that somehow turned dancing in front of their mirrors to gangster music into a legitimate career path? They even teamed up with Gen Z icons Charli and Dixie D’Amelio to launch a new sub-brand, Social Tourist, proving that this isn’t your millennial mall’s Abercrombie anymore.

In terms of brick and mortar operations, Abercrombie ended Q2 with 757 locations, having opened 18 new stores, remodeled 30, and closed 26. The company plans to continue this expansion and remodeling trend, with expectations for around 60 new stores and 60 remodeled locations by the end of the year. This proactive approach shows that Abercrombie is not only investing in growth but also adapting to the changing retail environment.

Even with its comeback story, Abercrombie isn’t completely out of the woods just yet. Rising freight costs and slowing margin growth are still giving the brand some grief. But don't count them out—CFRA analyst Zachary Warring thinks this recent dip is just temporary. He’s eyeing a potential climb to $215 per share in the next few months. 

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Stocks.News has a position in Abercrombie.