Abercrombie & Fitch Co. History

Address:

4 Limited Parkway East
Reynoldsburg, Ohio 43068
U.S.A.

Telephone: (614) 577-6500
Fax: (614) 577-6980

Public Company
Incorporated: 1904
Employees: 9,500
Sales:$1.04 billion (2000)
Stock Exchanges: New York
Ticker Symbol: ANF
NAIC: 44811 Men's Clothing Stores; 44812 Women's Clothing Stores; 44813 Children's and Infants' Clothing Stores

Key Dates:

1892:: Company is founded in New York City.
1917:: Abercrombie & Fitch relocates to flagship store on Madison Avenue in New York.
1977:: Chain is bought by Oshman's Sporting Goods.
1988:: The Limited takes over Abercrombie & Fitch.
1992:: Brand is repositioned towards casual apparel.
1999:: Abercrombie & Fitch becomes an independent company once again.

Company History:

Abercrombie & Fitch Co. is a retailer of casual clothing marketed toward young people, predominantly college students. The company oversees about 250 stores nationwide, mostly in shopping malls, and also markets its clothing on the Web and in catalogues. The company's style has become identified with the more risqué aspects of upper-middle-class youth culture, lifestyle, attitudes, and music. In the year since gaining independence from its erstwhile parent, The Limited, Abercrombie has continued its gently provocative ways. This brand image represents a drastic change from the company's origins. During the first half of the 20th century Abercrombie & Fitch Co. was the definitive store for America's sporting elite, outfitting big-game hunters, fishermen, and other adventurers ala Ernest Hemingway. After the chain went bankrupt in 1977, Oshman's Sporting Goods revived the Abercrombie & Fitch name but shifted its focus to more contemporary sporting goods and a wider array of apparel for men and women. The Limited, Inc., after acquiring the company in 1988, eliminated sporting goods entirely.

The Early Years

Abercrombie & Fitch Co. was founded in 1892 in New York City by David T. Abercrombie and Ezra H. Fitch. Abercrombie, a former prospector, miner, trapper, and railroad surveyor or engineer, owned a small shop and factory producing camping equipment in lower Manhattan. Fitch, one of his customers, was a successful lawyer in Kingston, New York, but the outdoors was his chief interest.

The men opened a sporting goods store. Fitch was the visionary of the two, anticipating a clientele far broader than merely those who camped out in the course of earning a living. The partners proved ill-matched, and both men were hot-tempered. Following the latest of many long and violent arguments, Abercrombie resigned in 1907 to return to manufacturing camping equipment. Retaining the company name, Fitch continued with other partners. In 1909 he mailed out 50,000 copies of a 456-page catalogue. Since they cost a dollar each to produce, the catalogues almost bankrupted the company, but the subsequent flood of orders justified the expense. In 1917 Abercrombie & Fitch moved into a 12-story building on Madison Avenue at East 45th Street, a location the advertising department described as 'Where the Blazed Trail Crosses the Boulevard.' It included a luxuriously furnished log cabin that Fitch made his town house, with an adjoining casting pool.

By this time Abercrombie & Fitch's reputation as purveyor to the sporting elite already was well established. It had equipped Theodore Roosevelt for an African safari and also outfitted, or was soon going to outfit, polar expeditions led by Roald Amundsen and Admiral Richard Byrd and flights made by Charles Lindbergh and Amelia Earhart. Ernest Hemingway was a customer. Every president from Roosevelt to Gerald Ford eventually would buy something from the store.

Roaring 1920s and Depression 1930s

Fitch retired in 1928, selling his interest in the company to his brother-in-law, James S. Cobb, who became president, and an employee, Otis L. Guernsey, who became vice-president. In his first year at the helm, Cobb acquired a similar New York business, Von Lengerke & Detmold, respected for its European-made sporting guns and fishing tackle, and Von Lengerke & Antoine, the Chicago branch, which became a subsidiary of Abercrombie & Fitch but continued until 1959 under its own name. In 1930 Cobb bought Griffin & Howe, a gunsmith shop. The merchandise that Von Lengerke & Detmold and Griffin & Howe had in stock was added to the Madison Avenue store.

By this time Abercrombie & Fitch was selling outdoor and sporting equipment not only for hunting, fishing, camping, and exploration, but also for skating, polo, golf, and tennis. The store also carried a variety of outdoor clothing, boots, and shoes for both men and women, as well as cameras, pocket cutlery, and indoor games. In the 1920s Abercrombie & Fitch became the epicenter of the burgeoning mah-jongg craze and the place in New York to thumb one's nose at Prohibition by purchasing a hip flask. Also during the 1920s, Abercrombie & Fitch opened a summer-only store in Hyannis, Massachusetts, for the yachting set. Net sales and income, rising steadily in this decade, reached a record $6.3 million and $548,000, respectively, in 1929.

These figures would not be topped in the next decade. Sales in the grip of the Great Depression fell to $2,598,925 in fiscal year 1933, when a loss of $521,118 was recorded, on top of a loss of $241,211 the previous year. During this period, Guernsey's negotiations with the firm's creditors probably saved it from collapse. Subsequent years were profitable, and in 1938 Abercrombie & Fitch resumed paying dividends. It also established golf and shooting schools in the store.

By 1939 Abercrombie & Fitch was calling itself 'The Greatest Sporting Goods Store in the World.' It boasted the world's largest and most valuable collection of firearms and the widest assortment of fishing flies obtainable anywhere (15,000 in all) to accompany its array of rods, reels, and other fishing tackle. Riders, dog fanciers, skiers, and archers all found every conceivable type of gear. Guns and camping and fishing equipment accounted for 30 percent of the New York store's sales volume in 1938. Sales of clothing, shoes, and furnishings accounted for 45 percent. Inventory on hand was valued at about 40 percent of annual sales, an extremely high ratio that reflected Abercrombie & Fitch's readiness to meet its customers' demands. Catalogue mail orders accounted for about ten percent of business.

Abercrombie & Fitch at Mid-Century

Net profit during the 1940s was highest in fiscal year 1947, when it reached $682,894, which turned out to be an all-time record. In 1958 Abercrombie & Fitch opened a store in San Francisco. Soon thereafter, it added small winter-only stores in Palm Beach and Sarasota, Florida, and summer stores in Bayhead, New Jersey, and Southampton, New York. Guernsey, who had succeeded Cobb as president, explained his firm's mission at this time in frankly elitist terms: 'The Abercrombie & Fitch type does not care about the cost; he wants the finest quality.'

The New York store remained, of course, the company's flagship. At the close of the 1950s the main floor sported heads of buffalo, caribou, moose, elk, and other big game, stuffed fish of spectacular size, and elephant's-foot wastebaskets. Here were sold a variety of contraptions for indoor and outdoor pursuits. One corner held dog and cat items. The basement was given over to the shooting range, while the mezzanine contained paraphernalia for skindiving, archery, skiing, and lawn games. Floors two through five were reserved for clothing suitable for any terrain or climate. On floor six was a picture gallery and bookstore concentrating on sporting themes, a watch repair facility, and the golf school, complete with a resident pro. On the seventh floor, the gun room, besides more stuffed game heads, held about 700 shotguns and rifles, constituting the most lavish assemblage of sporting firearms on earth. The eighth floor was devoted to fishing, camping, and boating, and reserved a desk for the company's fly- and bait-casting instructor, who gave lessons at the pool on the roof. He also handled mail and telephone inquiries on fishing, hunting, and skiing. The fishing section alone stocked about 48,000 flies and 18,000 lures.

In fiscal 1960, net sales rose to a record $16.5 million, but net profits fell for the fourth straight year, to $185,649. The next year net sales fell below $15.5 million, and net profit dropped again, to $124,097. Nevertheless, Guernsey's successor as president, John H. Ewing, saw no cause for alarm, rejecting the idea of a budget shop or 'splash ads for storewide sales.' He told a Business Week interviewer in 1961 that Abercrombie & Fitch enjoyed a special niche 'by sticking to our knitting; by not trying to be all things to all people.'

A Disastrous Decade: 1968-77

During the 1960s Abercrombie & Fitch opened new stores in Colorado Springs; Short Hills, New Jersey; Bal Harbour, Florida; and Troy, Michigan, a suburb of Detroit. It also opened small shops in other stores. In 1968, a year in which city riots, protests against the war in Vietnam, and the assassinations of Martin Luther King and Robert Kennedy seemed to be tearing the country apart, Abercrombie & Fitch was finally ready to shake up its way of doing business by holding a warehouse sale. More than 90,000 bemused customers sifted through the Manhattan store one summer day for bargains that included pop-up tents bought so far in the past that no one remembered how to pop them up, boots made of long-haired goatskin hide, miniature antique cannons, leather baby elephants, and Yukon dog sleds.

In early 1970 the store held another sale. A horde of hopefuls turned up to seize such bargains as a 15-foot inoperative hovercraft for $3 and eight $100 surfboards for $17 each. An offbeat newspaper advertising campaign followed, featuring a single item, such as hunting shoes, accompanied by diagrams and copy that overwhelmed the reader with product information. If these antics indicated a measure of desperation, it was because Abercrombie & Fitch had recorded a loss of more than $500,000 in the latest fiscal year. In October 1970 William Humphreys, the new company president, said the ads would be changed and sales would cease because the people who showed up were not Abercrombie & Fitch's kind of customer.

In the ensuing years, Humphreys, a former Lord & Taylor executive, concentrated on cutting the company budget, improving inventory control and credit practices, and expanding into the suburbs. A new Abercrombie & Fitch store opened in Oak Brook, Illinois, north of Chicago. To win a broader range of clientele, the New York store moved its expensive sailboats upstairs from the main floor, expanded its gift and sportswear lines, added a discount clothing shop on the tenth floor, and hired new buyers for women's wear. Nevertheless, the company continued to lose money under Humphreys and his successor, Hal Haskell, its chief stockholder.

In August 1976, after a year in which the company had lost $1 million, Abercrombie & Fitch filed for Chapter 11 bankruptcy. When it closed its doors for good in November 1977, post-mortems pointed out the obvious: the company had failed to make the transition from supplying fat-cat sportsmen of the old school to the skiers, bikers, and backpackers of the 1970s. One advertising man described management as 'ossified,' and another said company officers had no faith in television's ability to draw in customers even after its first TV commercials, in 1969, filled the store.

The Oshman Decade: 1978-87

Oshman's Sporting Goods, a Houston-based chain, bought the Abercrombie & Fitch name, trademark, and mailing list in 1978 and opened a store in 1979 under the Abercrombie & Fitch name in Beverly Hills, California. With a 52-page catalogue and eclectic merchandise, including exercise machines, Harris-tweed jackets, and $70 pith helmets, the company also outfitted actor Jack Lemmon for an Alaskan fishing trip and Dodger baseball star Steve Garvey for grouse hunting in Minnesota. A bigger Dallas store opened in 1980, complete with $40,000 elephant guns and an Abercrombie Runabout sports convertible for $20,775.

Abercrombie & Fitch returned to New York City in 1984, opening in the renovated South Street Seaport area of lower Manhattan. By the end of 1986 the chain had grown to 26 stores, including a second Manhattan outlet in midtown's glitzy Trump Tower. Net sales reached an estimated $40 million to $45 million in 1985. The Oshman-owned Abercrombie & Fitch chain stocked relatively few hunting and fishing supplies or exotic items, concentrating on exercise machines, tennis rackets, golf clubs, and other paraphernalia of more contemporary interest, much of it designed exclusively for the chain. Men's and women's clothing departments featured business and casual dress as well as sportswear, and the gift departments offered an array of goods, including gourmet edibles.

An upbeat assessment of the new Abercrombie & Fitch by Chain Store Age Executive in September 1986 was followed by a more skeptical appraisal by Forbes six months later, which described the chain's merchandise as a hodgepodge of unrelated items and concluded, 'Sometimes it is better to bury the dead than to try reviving them.' Forbes estimated sales for fiscal 1986 at $48 million and profits at 'a so-so $1.5 million.'

Expansion and Independence in the 1990s

In January 1988 The Limited, Inc. acquired 25 of the existing 27 Abercrombie & Fitch stores from Oshman's for about $45 million in cash. The organization was moved to corporate headquarters in Columbus, Ohio, and the inventory was cleared out. A stronger emphasis was placed on apparel, with 60 to 65 percent of the merchandise men's sportswear and furnishings, 20 to 25 percent women's wear, and the remaining 15 to 20 percent gifts, including grooming products and nature books. 'We can't get caught up in guns and fishing rods,' the chain's president, Sally Frame-Kasaks, a former women's-wear executive, told a Daily News Record reporter. Nearly all the goods were mid-priced and bore an Abercrombie & Fitch label.

When Frame-Kasaks left to head Ann Taylor in February 1992, she was succeeded as president of Abercrombie & Fitch by Michael Jeffries, an executive at Paul Harris Stores. At this time the chain had 36 stores credited with annual sales of about $50 million. Jeffries oversaw spectacular growth, with sales increasing to $85 million in 1992, $111 million in 1993, and $165 million in 1994. There were 67 Abercrombie & Fitch stores at the end of January 1995, compared to 49 a year earlier. Moreover, the Abercrombie & Fitch division established new records for merchandise margin rate and profitability for its parent, The Limited, in 1994.

From the outset, Jeffries focused on transforming Abercrombie & Fitch into the retailer of choice for American youth, a demographic said to be growing the fastest during that time. He replaced conservative clothing lines, primarily for men, with casualwear, of a fairly high price point, for both young men and women. Soon, Abercrombie & Fitch had a corporate and retail culture all its own, one dedicated to youth, good looks, and fun. Jeffries ensured that the company kept in touch with the demands of young America by hiring executives and designers in tune with their preferences in clothing, music, and entertainment. Abercrombie & Fitch began publishing its own catalog/magazine, A & F Quarterly, which featured the company's clothing lines as well as articles on pop culture, sex, music, and other teen favorites. The company's ad agency, and photographer Bruce Weber, typically imbued Abercrombie & Fitch ads with a sexiness that appealed to target customers and concerned some parents and their legislators.

When The Limited spun off Abercrombie & Fitch in February 1999, headquarters moved from Columbus to nearby Reynoldsburg, and Jeffries continued to helm the operation. Heretofore a huge success, Abercrombie & Fitch began to draw comments from industry analysts on the likelihood of its staying-power; they suggested that, like all clothing retailers, Abercrombie & Fitch was bound to fall from favor someday, and they watched for the signs. Competition for the market had heated up, particularly from American Eagle Outfitters, which began offering similar merchandise, marketed in a similar manner, and for lower prices. The summer of 1999 saw Abercrombie & Fitch bring a lawsuit against American Eagle, claiming the latter had violated its trademarks. The suit was eventually thrown out, however, as a judge determined that clothing style and image were not copyrightable. Amid reports that the company's growth might be slowing, its stock dropped but rebounded again after the 1999 holiday selling-season produced satisfactory results.

Continuing its provocative advertising methods, Abercrombie & Fitch issued a Christmas catalogue that year that featured nude models and overt sexual content; a predictable outrage ensued, and proof of age was required to purchase it thereafter. This approach may have impressed more male than female customers, who, some suggested, were shopping more often at competitors Urban Outfitters and The Gap. Still, as it headed into a new millennium Abercrombie & Fitch was reporting record sales and a loyal following of young customers. According to one survey by Teenage Research Unlimited, reported on in Time, American kids ranked the company sixth on a list of cool brands, ahead of Nintendo and Levis. Broadening the scope of its clientele somewhat, Abercrombie & Fitch opened a children's store, abercrombies, in 1999 and planned to introduce a store geared toward West Cost surfer types in 2000.

Principal Competitors: The Gap, Inc.; The Limited, Inc.; American Eagle Outfitters, Inc.; The Buckle, Inc.; Urban Outfitters Inc.

Abercrombie & Fitch Co. History

Key Dates:

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