Abercrombie & Fitch to increase marketing spend in 2020

Abercrombie & Fitch Co. plans to increase marketing spend in 2020, after its marketing and loyalty investments saw "positive cross-channel traffic and support ongoing digital growth", senior vice president and CFO Scott Lipesky said during a recent earnings call. While the brand's marketing, general and administrative expense was reported to be US$465 million for financial year 2019, compared to US$485 million in 2018, Lipesky said "marketing will be up in 2020 off of an increase in 2019". He added that the company "made a really nice step-up back in 2018 with marketing". 

According to Lipesky, it is investing some of the incremental spend in international and US markets. Abercrombie & Fitch has regional offices in Shanghai and London to manage Asia Pacific and Europe, Middle East, and Africa (EMEA), and Lipesky said the company is building its marketing teams in these two regions. He added:

We are excited to feed them a little bit of marketing dollars in 2020 to get to our localisation efforts rolling.

He added that Tmall is the "biggest piece" of its digital business in China. "We are really excited about some merchandising and marketing talent that we put into the Shanghai office and really building an assortment for Tmall and building a better strategy for Tmall versus what we had in the past," he said. Abercrombie & Fitch sees China as a "huge long-term opportunity" and while it had nice growth in the country, it looks forward to accelerating that in the future.

Abercrombie & Fitch's net sales rose from US$3.59 billion during FY 2018 to US$3.62 billion in FY 2019. In Q4 2019, net sales rose from US$1.15 billion last year to US$1.18 billion. During the quarter, Abercrombie & Fitch had "adverse impacts of approximately US$4 million primarily from store closures in mainland China due to COVID-19, and about US$3 million related to changes in FX. Brands under the company include Abercrombie & Fitch, abercrombie kids, and Hollister.

CEO Fran Horowitz explained that the teams in Shanghai and London have been working with the global team based in the US, and will be responsible for their own individual local campaigns. Besides opening regional offices, the company also introduced loyalty programmes in China and rolled out personalisation of its Hollister and Abercrombie loyalty programmes in the US. 

Throughout Q4 2019, Horowitz said the company focused on speaking to core Gen Z customers across the platforms that are mostly meaningful to them, including YouTube, Instagram, TikTok, Spotify and Twitch. Meanwhile for FY 2019, it had over 30 million views of The Carpe Challenge, which is part of its YouTube Awesomeness TV series presented by Hollister. According to Horowitz, this led the company to achieve double-digit lifts in brand affinity, purchase intent and recommendation. Meanwhile on 2 March this year, it unveiled the inaugural World Team Mental Wellness Day, dedicated to raise awareness of teen mental health issues. In conjunction with this, it introduced the Hollister Confidence Project, a global year-round initiative designed to promote teen confidence.

"Over the past two years, our teams have made great strides in refining adult and kids brand purpose and shifting product, voice and experience more closely aligned with the needs of its target customers to offering relevant fashion at a compelling value," Horowitz said.

In February this year, the Abercrombie & Fitch brand launched the 2020 #FaceYourFierce campaign, which featured a cast of 24 members known as the "Fierce Family". The cast is comprised of activists, dancers, authors, community trailblazers, actors, performers, models, entrepreneurs, comedians amongst others, and the brand deemed the campaign to be "groundbreaking". 

The chosen personalities which include athletes Megan Rapinoe and Kyle Kuzma, who not only personify the brand’s portfolio of six different Fierce fragrances, but also embody what it truly means to “Face Your Fierce".

Throughout the year-long campaign, cast members will share their experiences of body positivity, self-empowerment, determination, LGBTQ+ equality, gender equality, overcoming obstacles, and more, all to inspire customers to explore the unexpected and emotional aspects of inner strength – a far cry from its usual campaigns which in the past, featured provocative models with its sexualised marketing tactics.