WHAT YOU NEED TO KNOW
Abercrombie & Fitch isn’t your father’s—or grandfather’s—brand anymore. Founded as a hunting-and-fishing-supplies company in 1892, A&F is now an aggressively teen-focused retailer that promotes itself through edgy, suggestive ad campaigns. Some of its T-shirt slogans have even provoked boycotts.

WHERE THEY CAME FROM
The brainchild of wealthy outdoorsmen David Abercrombie, this venerable retailer started out selling high-end fishing rods and safari gear. Abercrombie founded the company in 1892 (Ezra Fitch, a devoted customer, came on board eight years later) to supply skilled gamesmen with tools for camping, fishing, and hunting. Among the early expeditions A&F outfitted were Robert Peary’s trip to the North Pole and Theodore Roosevelt’s African safaris. For decades, Abercrombie & Fitch was synonymous with high-quality gear.

Over the years, however, A&F’s relevance dwindled, and the company closed all its stores and filed for bankruptcy in 1977. A year later, Oshman’s Sporting Goods (now Sports Authority) bought the Abercrombie & Fitch name for $1.5 million. They expanded the company but barely turned a profit. Oshman’s sold A&F to the Limited for $47 million in 1988.

Under the Limited, everything changed. Abercrombie’s focus shifted from sporting goods to men’s and women’s casual clothing. But the trendy Abercrombie of today didn’t come into its own until 1992, when A&F installed a new C.E.O., former Paul Harris executive Mike Jeffries, who brought with him a vision to totally revamp the brand. (With his ever present tan, bleached hair, gleaming teeth, and hipster clothes, Jeffries is not your typical executive. He looks more like one of his customers.) By 1996, the year it went public, Abercrombie & Fitch had 105 stores (some of them cost nearly $1 million to design) and annual sales of $236 million, compared with about 25 stores and sales of $50 million in 1988. A&F’s initial public offering brought in $112 million.

WHERE THEY ARE NOW
The company has successfully increased price points—which now exceed those of competitors such as the Gap—and has seen revenues grow: Between 2005 and 2006, sales increased 38 percent, to $2.8 billion. Such success has led Abercrombie to spin off three other brands: Hollister Co. (380 stores), which caters to teens; Abercrombie Kids (175 stores), which caters to seven-to-14-year-olds; and Ruehl no. 925 (15 stores), which caters to the postcollege crowd. Abercrombie as a whole is valued at $7 billion.

The key to Abercrombie’s success is its focus on logos, status, and looks—exemplified in the catalog’s high-quality images of the young and attractive, shot by legendary photographer Bruce Weber. The company’s headquarters, a campus in New Albany, Ohio, has been likened to a cult compound. It’s dotted with summer-camp showpieces like faux canoes and porches and its attractive staffers wear the latest Abercrombie fashions.

WHAT THEY GOT WRONG
Although Jeffries’ smart positioning and good timing (he revamped the company just as Gen Y was exploding into the retail market) have led to huge successes, some of his other initiatives as C.E.O. have been distinctly unfashionable—with moms and dads, anyway. In 2003, A&F Quarterly, the racy, Weber-photographed catalog, was discontinued after parents and the American Decency Association, a religious advocacy organization, called for a boycott of Abercrombie. They cited what they called indecent material, such as images suggesting group sex, in the magazine.

Abercrombie’s image-obsessed business model hasn’t won over everyone in the company, either. In 2004, A&F paid out $40 million to settle with nonwhite employees who had filed a class-action suit claiming they had been discriminated against on the basis of race and given backroom jobs while white employees were placed in more prominent positions. And the company has come under fire for producing T-shirts with controversial slogans such as “Wong Brothers Laundry Service—two Wongs can make it white,” which angered Asian Americans.

WHAT’S NEXT
The company is looking to expand globally. Abercrombie & Fitch and Hollister stores are already open in Canada, and stores will appear in Europe in 2007 and in Asia by 2009. And the company plans to grab another slice of the under-30 market with a new brand known as Concept 5. Details of the line have yet to be revealed, but Abercrombie has already spent up to $50 million on its development. —Sophia Banay