The chains are exceeding sales expectations in a choppy market by giving young shoppers the products they want, in just the right amount.

BY CATHALEEN CHEN / Link to article

Maybe the American consumer isn’t done shopping after all.

Earlier this week, mall chains Abercrombie & Fitch and American Eagle Outfitters lifted their fourth-quarter sales guidance based on early indication of strong demand for their winter assortment.

The upgrades upended conventional wisdom that a post-pandemic spending boom was coming to an end, as rising levels of credit card debt and higher prices left less to spend at the mall. Instead, Abercrombie, which also owns the teen brand Hollister, said it expects fourth-quarter sales to grow in the high teens from a year earlier, while American Eagle said revenue in the period rose about 8 percent. Lululemon also recently raised its forecast for holiday results.

Those companies are outliers in some ways: sales at clothing and accessories stores fell by 0.4 percent in December from the previous month, data from the National Retail Federation shows. Nike, Levi’s and Coach-owner Tapestry are among retailers that slashed their sales estimates this year.

The success of Abercrombie and American Eagle in navigating a tricky holiday season is proof that even during a spending pullback, the right merchandise – in this case, baggy pants, activewear and, for Abercrombie, a viral sweatshirt – can still draw shoppers. Just as critically, the two retailers have built nimble supply chains that ensure the right products are in stock when they’re hot, with little left over once fickle teen shoppers move on to the next trend.

“We’re in a period where some [retailers] are doing well and others aren’t,” said Dylan Carden, retail analyst at William Blair, adding that retailers like Abercrombie are doing well “because they’ve gotten the product right.”

Big Pants Energy

If there’s a singular style that young consumers can’t get enough of, it’d be baggy pants, according to Rebecca Duval, retail analyst at BlueFin Research.

In its third-quarter earnings call, Abercrombie highlighted its expansion in the bottoms business — specifically non-denim pants. American Eagle Outfitters also noted strong performance in its new bottom styles in the third quarter, which included “twills, cargoes and wider legs,” said Jennifer Foyle, president and executive creative director at the company.

The wide-leg silhouette is hardly new in the fashion cycle. Skinny jeans were first unseated as the reigning top denim style in 2021, while the Y2K trend — which gave rise to cargo pants and low-rise jeans — has influenced mainstream fashion since the late 2010s. However, the popularity of loose bottoms reached new heights last year amid the quiet luxury craze, in which trousers became one of the most coveted styles on TikTok and beyond.

It takes time for new trends to trickle to the mainstream; while early adopters in fashion capitals like New York and Paris may have long donned baggy pants, the bottoms reset has finally reached the masses in recent months. This has been a boon to retailers like Hollsiter and American Eagle, according to Duval.

“The teens are just loving it, and it’s catching fire very quickly,” she said. “On top of that, when you have new bottoms silhouettes, people tend to buy new tops as well. That’s not the case vice versa.”

Both Abercrombie and American Eagle also benefited from their respective entries into the activewear category. American Eagle’s Aerie brand launched its own active sub-brand, Offline, in 2020. Its V-waisted leggings have been a best seller since 2021, while Abercrombie went viral last fall for a camouflage-printed hoodie.

Supply Chain Agility

Both Abercrombie and American Eagle operate vertically, meaning they own their manufacturing process and sell clothes through their own stores, rather than wholesale.

This has allowed them to quickly identify when a product takes off, and then order more. That increases sales while limiting the chances they’ll be stuck with unsold merchandise at the end of a season that must be discounted. Its viral camouflage hoodie, for instance, sold out through multiple drops, according to fans on TikTok. It’s currently available in only one size.

“Abercrombie is almost willing to miss a sale in favour of margins,” said Carden. “Their whole strategy is X’s and O’s — being conservative and yielding focus on inventory. A lot of unsexy stuff.”

In addition to building out an efficient supply chain, Abercrombie & Fitch, which saw its stock more than triple in value in 2023, has been able to grow its customer base and mature alongside its Millennial customers. Hollister, meanwhile, remains firmly rooted in teen fashion.

“When Fran [Horowitz] came in [as CEO] in 2017, one of the first things she did was distinguish the two brands by ageing up Abercrombie,” said Carden. “There’s a broader customer segment here now than [in the past] for Abercrombie.”

Abercrombie has also gained a new audience among Black consumers, a group that used to be alienated by the old Abercrombie brand, according to Duval. In a November earnings call, Horowitz underscored a recent collection with Harlem’s Fashion Row designer Nicole Benefield for resonating with new and existing customers online and on social media.

At Pitti Uomo, the Iowan with a $100 million menswear business returns to the runway for the first time in four years.

By Samuel Hine / Link to article

On Tuesday evening in Florence, Italy, Todd Snyder held the first fashion show for his namesake brand since 2020, and first ever outside of New York. As a menswear mainstay, Snyder is right at home at Pitti Uomo, the historic trade show sponsoring the night’s event. But he’s a bit of an anomaly on the European runway circuit, which opened on Tuesday with Snyder’s Fall-Winter 2024 collection.

For one, self-described haberdashers are about as common on the runways these days as canes and top hats. His brand is only available in America, at least until later this year. He is from Iowa, and his urbane outfit of a black T-shirt and jeans can’t mask some of his hokey dad energy, such as when, an hour before showtime, he described the impending production in charmingly agrarian terms.

“This just feeds the whole ecosystem” of the brand, he said, looking around backstage at a platoon of slouchy young models getting hair touch-ups. “It really waters it. It becomes the sun, it becomes the rain, it becomes the fertilizer, it becomes everything.”

I had asked him why do a runway show at all, given that he does big business selling clothes to guys who know more about Bonobos than Balenciaga. Still, even though you wouldn’t have been able to tell, the middle-aged J. Crew and Ralph Lauren alum is arguably the most important American designer in Europe this season not named Rick Owens or Pharrell.

To be fair, there’s not a ton of competition in that category these days. But Snyder is immensely influential in his own low-key way. Ten years ago, he was manning a booth at the Pitti Uomo fair, wholesaling his burgeoning line of suits and shirts to other shops. In the years since, he’s opened 15 stores, sold the line to American Eagle (2015), and blown past $100 million in annual sales.

What sets his brand apart from the hundreds of others at Pitti Uomo is Snyder’s unmatched sense of how to introduce his customer to new ideas. “I spend a lot of time in the store, and you see guys in there and it’s just like, the thrill of the hunt,” said Jim Moore, Todd Snyder’s go-to stylist (and GQ’s creative-director-at-large). “Todd loves that experience. You go in for a gray suit and walk out with a green shearling.”

It’s a subtle move, one that Snyder honed while at J. Crew in the late-aughts where he presided over the introduction of the slim Ludlow suit and the opening of the Liquor Store, a multi-brand boutique for high-end menswear disguised as a J. Crew shop. (Todd Snyder took over the Liquor Shop’s Tribeca storefront when J. Crew moved out in 2019.) He designs familiar pieces in unexpected ways—he rightly takes credit for the resurgence of the Gurkha short—and combines them so that the unexpectedness suddenly feels essential. The move is so subtle, in fact, that it leaves the customer feeling like taking a style risk was their idea, even though Snyder had been laying the groundwork all along.

He describes his process in simpler terms. “You want to know my secret of success?” asked Snyder about an hour to showtime. (I did.) “I always try to think, what would be in my grandpa’s closet, and then how do I make it cool today?”

“This is a great example.” Snyder grabs a heavy leather car coat off a clothing rack. “If I did this in wool, you’d be like, That’s so boring. But doing it in this rugged freaking stiff-ass leather and then pairing it like this—” He grabs a tube-neck cable-knit sweater and knee-length wool shorts that will be worn under the jacket. A whole bunch of classic things, remade for today. He called the collection The Modernist. “It’s a state of mind and how I think about design, whether it’s designing a beautiful house, whether it’s designing a beautiful car, whether it’s a beautiful dish, art, music,” he said. “When I design, it’s usually a culmination of all those things that I’m inspired by.” His moodboard stood by, covered in touchpoints of a tasteful Modernist lifestyle: a vintage green Porsche 911, a Unimatic dive watch, a boxy modern house, chunky Prada loafers, and vintage Giorgio Armani runway looks from the ’80s. He’s open about his references—to a point. “Erm, that probably shouldn’t be up there,” he said, folding up an Armani printout.

Snyder says all of the runway collection will be sold in his stores, and he’s clearly thinking of exactly how each piece will play commercially six-ish months from now. “There are some that are super fashion forward, and there are some that are more traditional,” said Snyder of his customers. He admits the show might be catering more to the fashion forward side of the spectrum. “I have a pragmatic approach when I design, but I also know I need to be a little bit more out there, especially during a fashion show. It’s more important to push forward than to be like, Oh, what would my customer buy? It’s more, How can I inspire my customer?”

Earlier that day, I hit the Pitti Uomo fair, where 832 brands were selling their suits and shirts and belts and ties and shoes. As the Todd Snyder show got underway, it struck me what the Iowan has really figured out. What brought him from a small Pitti booth to a $100 million business and headlining slot. At risk of being reductive, Pitti and the wider menswear world is generally aimed at guys who want to look cool for other clothing nerds. Todd Snyder, on the other hand, is for guys who want to look cool on first dates. You could call it midwestern pragmatism or commercial savvy, but it’s clearly working.

“His confidence just keeps building,” said Moore. “And I think he passes that confidence onto the consumer.”

This fall, here’s a selection of how Todd Snyder’s Romeos will be pulling up to the bar: In a dove gray sweater vest worn with languid suiting trousers. A pleasantly round velvet suit and a plain white T-shirt. A rayon camp shirt—Snyder sells a ton of what he calls “cabana sets”—printed with a Van Gogh still life in collaboration with the Met. A teal cardigan over creamy velvet pants, like he’s Jeremy Allen White. A satin overshirt with anything (there were many throughout the show). A Glen plaid blazer, an oversized contrast-collar banker shirt, wide-leg blue jeans, and chunky loafers. “This one’s very elegant, he looks like some French cool-kid taking whatever is in his dad’s closet but making it feel like weekend attire,” said Snyder.

The collection was a clear step forward, squarely in the modern-classic menswear vocabulary Snyder has been rebuilding for years. But there was a surprising first act of the show, when Snyder unveiled Woolrich Black Label, a new collection he’s designing for the Italian-owned heritage outdoor brand. “My big thing for Woolrich was taking this brand that’s been around almost 200 years—a lot of it’s a reinvention, but also an invention, because there’s a lot of things that you would think, Oh, they should be known for that.” Now, Snyder is hoping they’ll be known for things like ankle-grazing sleeping bag coats, GORP-y parachute pants, and duck boots wrapped in high-tech rubber soles.

Todd Snyder’s menswear ecosystem, already strong, just grew even bigger.

The designer has created special fabrics, silhouettes and proportions for his return to the runway in Florence.

BY JEAN E. PALMIERI / Link to article

NEW YORK — It’s been four years since Todd Snyder showed his collection on the runway but when the team at Pitti Uomo started talking to him about making his return to the catwalk during their January show, it didn’t take a lot of convincing.

Pitti remains one of the menswear community’s most respected shows and over the years only a handful of American designers and companies have been given the opportunity to be featured there, including Thom Browne, Virgil Abloh for Off-White, John Varvatos, Telfar and Brooks Brothers.

He views his show at Pitti as the first stepping stone in this journey.

Snyder admitted that it’s been a goal of his to show at Pitti for more than a decade, and “the timing is right now. We built our business here in the U.S., we’ve opened 15 stores, and we’ve got a really strong base. So now it’s time for us to go and do that in Europe and wherever else.”

Once he knew the game was on, Snyder said he spent a lot of time in Italy visiting his favorite mills, including Lyria in Prato in Tuscany, to unearth the best fabrics and patterns to make this collection especially memorable. “I really threw myself into it,” he said. “I knew this was a moment.”

Snyder has historically leaned on Italy as the key source of his collection, but it was different this time. “In a way, it’s a little bit of a homecoming for me, but it’s also an opportunity to express what I love about my craft and work with tailors at factories to recreate beautiful clothes.”

This collection will be marked by “softer, drapier fabrics, but with body because you don’t want it to be limp,” he said. “It has to have a foundation and that’s hard.”

Snyder said the collection overall will illustrate “what I am and what I represent,” which is high-quality, classic yet updated American menswear. “Snyder in Dutch means ‘cutter’ or tailor,” he said, “and tailoring is always my favorite thing to do. I used to work in a tailor shop and make my own shirts and I’m really going back to that. A lot of my inspiration has been Old World tailoring with a New York sensibility.”

He said in his opinion, “American fashion is almost like a melting pot of all the different trends that are out there. I just fell in love with the idea of reinventing the leisure suit,” he said, pointing to an updated pinstripe model. “And that for me is what American style is — reinterpreting the classics and thinking about them in a different way, similar to a lot of midcentury architects who reinvented thinking about space and lines and going after them in a very meaningful way. It really reinforces a message that came from Europe, but with an American lens on it.”

It’s this sensibility that will also make an appearance in the Woolrich Black Label collection, he said. Although the line will officially make its debut during Milan Men’s Fashion Week, Snyder plans to tease around 20 looks during his show in Florence.

“There’s obviously a perception that I’ve done lots of collaborations,” he said, “but this is really a partnership. It’s me working as a creative director, changing the logo, changing the labels, rethinking how the brand was interpreted and how people perceive it. I’ve seen some great things in their archive, but how do you bring it to the new person and make them think, ‘Oh, that’s really clever.’ That’s always kind of how I’ve designed: make it new without completely forgetting about where it came from.”

With both Woolrich and his own collection, Snyder said he’ll be working down to the wire to ensure everything is perfect before the lights come on. “As a designer, you never know what you’re going to get until a week before,” he said. “So it’s nerve wracking, but it’s what drives me. What’s important about the process is pushing myself, pushing proportions, pushing fabric, pushing silhouette. Those are the things that are really painful to get through. But when I get through to the other side, I’m like, ‘OK, I did something different.’ Art and creativity is what drives me.”

PITTSBURGH–(BUSINESS WIRE) – American Eagle Outfitters, Inc. (NYSE: AEO) today announced that fourth quarter-to-date revenue, through Saturday, December 30, 2023, is up approximately 8%, with American Eagle tracking up high single digits and Aerie up in the low teens.

The company is raising its fourth quarter outlook for revenue to be up low double digits, including a four point positive contribution from the 53rd week, as previously discussed. Operating profit is now expected to be approximately $130 million, up from previous guidance of $105 to $115 million. This guidance excludes potential asset impairment and restructuring charges. The improved outlook is a result of record holiday sales and strong merchandise margins. 

“This holiday season we executed with confidence and precision, delivering winning product assortments and an exciting customer experience which showcased the strength of our brands and operations,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer. “As we build on our strategic priorities, I am incredibly pleased with the momentum we are seeing across brands, which has continued into early January. Looking ahead to 2024, we remain confident in our ability to deliver healthy earnings growth and operating rate improvement as we maintain inventory and promotional discipline, prioritize expense control and benefit from ongoing work on our profit improvement initiative.”

Bye bye Instagrammable walls. Retail stores are ditching immersive experiences for good old customer service.

BY ELIZABETH SEGRAN / Link to article

When you visit a Boll & Branch store to pick a new set of sheets, the staff will ask if you would like them to come to your house to make your bed for you. And they’re perfectly serious.

For some customers, it’s not an appealing request, but for others, it’s a dream come true: Around two dozen people a month take up the offer at each of the brand’s seven stores. “One customer was just moving into a new house,” says Scott Tannen, Boll & Branch’s founder and CEO. “Her house was in total chaos, so the idea of coming home to a beautifully made bed really appealed to her. We were happy to accommodate.”

A decade ago, thousands of stores a year were shuttering in the “retail apocalypse” as customers increasingly shopped online. In those years, brands felt like they had to come up with entertaining retail experiences to woo customers into their brick-and-mortar locations. But in the post-pandemic years, consumers were eager to return to physical stores and more than 16,000 stores opened in the previous two years. Last year, retail sales hit $6.183 trillion, up 11% from the year before.

As retail comes back, brands appear to be moving beyond entertainment and are focused, instead, on offering highly personal customer service, designed to make an impression. At a Todd Snyder store, you can have your clothes altered by an in-house tailor while you drink a glass of Scotch. At outdoor retailer Orvis, you can take a free fly-fishing class in local waters, so you can learn how to use your new fishing gear. At Converse’s holiday pop-up, you can have your sneakers embroidered with your initials. And Ikea is launching smaller stores, which have fewer products on display, but will have designers on hand to help you design your dream home.

In many ways, these high-touch customer service experiences return to the traditional, old-fashioned ways that shopkeepers have built relationships with their clients. But in a world where consumers increasingly interact with brands online, these personalized interactions with a brand feel novel and special.

THE POST-PANDEMIC STORE

Visiting Todd Snyder’s new store in Boston feels like stepping into a cozy, sophisticated home. The store features a pool table along with a fully stocked bar. Shelves are stacked with layers of sweaters, interspersed with coffee table books and cologne, the way they might be at someone’s home. For each of his 15 retail stores, Synder sources the pieces of furniture himself, often from vintage sellers. “It’s not meant to be dramatic,” he says. “It’s meant to make a guy feel welcome, and like they want to stay a while.”

Synder began as a digitally native brand a decade ago. But as he’s starting to expand his fleet of brick-and-mortar stores, he’s taken a different approach from many other startups, which opted for more dramatic store concepts. In the years leading up to the pandemic, many direct-to-consumer brands enticed customers into stores with immersive experiences. Casper created nap pods you could rent to get a little shut-eye during the day. Vans created a skate park in its London store. And every brand from Glossier to Perrier created spectacular pop-ups designed to be excellent Instagram backdrops.

In the post-pandemic world, many brands have scaled back on these immersive stores. (Both Casper’s and Vans’ in-store experiences have now permanently closed.) Part of it has to do with the fact that many direct-to-consumer brands have struggled with profitability, and it was hard to quantify how these experiences would translate into sales. But part of it could have been that the novelty of these experiences was wearing off.

Now, as brands are investing in new stores, they are coming up with other ways to get customers in the store and keep them engaged. And many are focused on offering experiences that are directly relevant to the customers’ shopping visit. Snyder, for instance, wants to offer more than his own products in store, so customers have more to explore. He curates dozens of products from other brands he loves, from Red Wing Shoes to Moscot eyewear to Scosha bracelets. “There’s always an element of discovery when you enter our stores,” he says.

But he wants the stores to stand out for their level of personalized service. At the back of the Boston store, there’s a tailor on hand to make on-the-spot alterations to garments while you browse the store. And this year, Synder launched made-to-measure suiting services. A tailor will measure the customer’s body to create a bespoke pattern for the suit. The customer can work with the tailor to pick the fabric and colors for the suit. The idea is to offer the kind of high-end service you might get in London’s Savile Row, but at a much more approachable price point: A bespoke Todd Snyder suit starts at around $1,000.

OLD SCHOOL, BUT NEW TECH

In many ways, the Todd Snyder store is a throwback to shops from the past, in which merchants had personal relationships with their clients. Some of the biggest brands are finding ways to create more intimate moments with their customers. Converse has invested in its customization program. In its Soho and Boston stores, customers can create an entire sneaker from scratch, picking everything from the silhouette to the fabric to the laces, which can be transformed into a shoe while you wait. At a holiday pop-up in the Boston Seaport District, Converse has brought in an embroidery artist who can create custom patterns or monograms on sneakers.

Ikea has announced it is opening eight small format stores that will be as compact as 1,100 square feet, just a fraction of its big box stores, which can be as big as 500,000 square feet. The new stores are marketed as an opportunity for customers to meet with Ikea team members to discuss products and receive guidance as they design rooms.

As Boll & Branch expands its brick-and-mortar footprint, Scott Tannen, founder and CEO, says that the most important decisions have to do with the people they hire. The brand is deploying their in-store staff in all kinds of unconventional ways. They will visit customers’ homes to set up their beds for them. When a customer orders a piece of furniture, like a bed frame or a dresser, they will ride in the delivery van, armed with treats, to surprise the customer. “The customer’s experience comes down to a few interactions with members of our team,” he says. “We work very hard to make these delightful experiences.”

Bernd Schmitt, a professor of marketing at Columbia Business School, says that while these personal interactions are a throwback to the past, it’s now easier for brands to create these experiences with the help of technology. Brands can keep track of a customers’ buying history, so they can better understand what they are looking for. They can also use texting and email to stay connected with customers after they have left the store. “There are more touch points to build this relationship with the customer,” he says. “And brands can do it more easily, with fewer people, thanks to technology.”

Tannen says these personal touches are a major investment. It takes time and effort to hire the right associates, and the company pays higher than market rates to get the best people for the job. But ultimately, he believes that these connections are valuable not just for driving immediate sales, but for nurturing long-term relationships. Boll & Branch has found that customers who shop in store tend to spend more with the brand and keep coming back in the future. “It’s something we’ve known all along in business, but somehow we’ve forgotten in the digital age,” Tannen says. “Great service is what creates loyal customers.”