NM Live: 2025 Predictions, Abercrombie & True Religion’s Successes, Trends & Turnarounds

Announcer

Welcome to Nerd Marketing, an original podcast for eCommerce operators and marketers looking to level up. Drew Sanocki and Michael Epstein will bring you actionable strategies from their decades of running eight and nine figure brands, along with interviews and insights from the leaders of some of the most successful brands in the world.

Drew Sanocki

Hey everybody, welcome to the Nerd Marketing Podcast. This is Drew Sanocki. Got a lot of stuff we covered today on our live. Mike and I delve into the True Religion turnaround. They're on the tail end of their turnaround. They just got acquired. We compare that to the Abercrombie turnaround, both real successful turnarounds. We introduced the idea of ecommerce benchmarks. We talk about how your store might stack up to your category and the overall DTC averages. 

We talk about our 2025 predictions, a lot of surprises there. Some that aren't so much of a surprise, but a lot of other surprises. We talk about a case study and how a killer baby apparel brand, Kindred Bravely, drove down their customer acquisition costs. All that and a lot more coming up next on the Nerd Marketing Podcast. Hope you enjoy it.

Drew Sanocki  

Hey Mike, how you doing?  

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Michael Epstein  

Good Drew, how you doing?  

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Drew Sanocki  

Good. Did you have a good break?  

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Michael Epstein  

I did, we got to see each other in cold New York. We got to break out the bunk beds again.  

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Drew Sanocki  

Had the pleasure of seeing you, and you stayed at my house. Back to the early days of PostPilot when we were in the bunk beds and talking about someday building a business. Good to have you. You were a highlight for the kids, the dog, everybody was very excited to have you in the house.  

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Michael Epstein  

It’s so nice to say, well, I had a great time and good to be back on the podcast.  

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Drew Sanocki  

Yeah, we’re firing this up again. We set these goals when you were here in New York, one of which was to do this weekly. Hopefully, we can keep this up throughout the year. We’re calling it Nerd Marketing Live. The vision is to ultimately have a live studio audience watching the podcast. Right now, we’ve got our dog and maybe your dog, but we’ve got to start somewhere.  

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Michael Epstein  

So what are we going to start with?  

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Drew Sanocki  

Let’s start with some trending topics and some ecommerce news. You and I talk a lot about turnarounds, right? Because that’s our background—turning around big busted DTC and e-com brands. That kind of thing happens every week. I think we should talk about some that are going down right now, maybe highlight some of what we see there, some of the techniques we’ve used that are working there, and develop some playbooks around turnarounds.  

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Michael Epstein  

Love it. I think it’s super relevant today because you’ve got a lot of these DTC darlings that have sort of lost their luster and are struggling. I think we can learn a lot from a couple of the ones who have done it really well, actually. One was just in the news this week.  

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Drew Sanocki  

That’s right. ACON Investments acquired a minority stake in True Religion. True Religion is an old jeans brand from when we were kids. They went bankrupt a couple of times over the past 10 years. But this was not an acquisition out of bankruptcy. They were actually growing pretty well and profitable. ACON acquired a controlling stake in them. Their sales had been growing. Last year, up 20%, $280 million, generating $80 million in EBITDA. So this was not—they are on the tail end of being turned around. This was a nice exit for many of the people there, I’m sure.  

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Michael Epstein  

Totally had my True Religion jeans growing up, and maybe they’re still hanging in the closet somewhere.  

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Drew Sanocki  

I knew you did. I’ve got mine on.  

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Michael Epstein  

Totally. So yeah, that was a great example of one that really pulled it off. And Abercrombie is the other one. Abercrombie and True Religion are two of the ones that I can tell my daughters, “Dad used to like those brands, and they’re actually still cool.”  

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Drew Sanocki  

I’m of the vintage where you went to the mall, and Banana Republic had the Jeep coming out with all the safari gear. I don’t know if you remember this. Abercrombie reached its peak after I was already aged out of it.  

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Michael Epstein  

I’m a few years younger, but it was definitely cool when I was still in high school. You had the shirtless dudes standing in the entryway, hot models in all their advertisements—it was a cool brand. Then that aesthetic sort of fell out of favor, and Abercrombie basically tanked. But over the last number of years, it’s actually one of the best-performing stocks in the market. They’re up 250% over the last few years and are absolutely crushing it. My kids aren’t embarrassed if I say, “Abercrombie’s cool, right?”  

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Drew Sanocki  

Yeah. Two turnarounds, both succeeded. Abercrombie’s stock is up 250% since 2020. True Religion’s growth was 20–30%, with $80 million in EBITDA. Break it down for us. What happened at these brands?  

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Michael Epstein  

Starting with Abercrombie, I’ve read a bunch about this. Their CEO is Fran Horowitz. She’s been at the brand since 2017. This was a turnaround that took some time, but now they are just killing it. And from what I've read, It's really about knowing your lane and zeroing in on your core customer. And so when a lot of these other brands were chasing sort of that Gen Z customer, they went all in on millennials more in that like 25 - 35 year old bucket who maybe still had some memory of the brand or was familiar with the brand and plays a little bit to that nostalgia. And then really like redesigned the whole aesthetic, toned down. So again, no models, no splashing you with cologne as you walk in the store, you know, made it relevant again, but still played up that sort of nostalgic element.

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Drew Sanocki  

You and I talk a lot about turnarounds. We worked on AutoAnything, Karmaloop, right? These Web 1.0 ecommerce brands, and we've got a  bunch of tips, which we'll put in the show notes on how to turn around a company. I think a lot of our tips are operational. They're sort of like, what do do the first 30, 60, 90 days? What we're talking about here is something a little bit more strategic. Really, it's before you even begin, maybe you want to niche down your market a bit, right? And you don't want to try to be everything to everyone. I think Abercrombie at one point was trying to do, True Religion might've been trying to do. And I can think of brands, you know, not to name any names, but there's some brands that are struggling right now. Certainly like Allbirds has had a tough time, which might be trying to do too much, trying to be everything to everyone. 

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Michael Epstein  

Yeah. And I do think True Religion followed the same sort of path as Abercrombie and that they focused in on the core customer. They leaned into that aesthetic that they were sort of known for. And it happened to be good timing because fashion was sort of having this nostalgia moment and they could lean into it as opposed to trying to, as you said, be everything to everybody, diversify, find a totally new customer. That's really hard to do.

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Drew Sanocki  

The focusing of the brand, the pinnacle of that was the Chief Keef collab. 

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Michael Epstein  

You're a big  Chief Keef fan, Drew? 

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Drew Sanocki

I’m not, but I knew that he was known for stacking his True Religion jeans. I’ve seen you do the same thing.  So I think they sort of leaned into that. 

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Michael Epstein  

What do you think the move is now? What's the takeaway from this?

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Drew Sanocki  

Well, I think both of these, I don't know if this is exactly what the CEO's thought, stop chasing growth at all costs is probably my big takeaway. That is something that's universal to everybody now in 2025. You know, the days of epic VC valuations are gone, right? I mean, yes, you got to grow, but you got to grow profitably. I remember Abercrombie closed something like 20% of their stores to focus on profitability. And so you and I have been a part of these, a lot of these diligence processes that when we go to acquire a big brand, I mean, we were close to Kingswood when they were looking at a cost plus world market and a couple and a grocery chain, Save Mart they were looking at and Bonobos and a lot of the analysis at that point was like, which stores do you keep open and which do you close, right? And it's often a very simple calculation. It's like you close the ones that are not profitable because you don't need to grow that fast. You know, if you're going to be more profitable. 

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And I think the second big takeaway is to know your customer and serve that customer really well. True religion isn't trying to be Levi's, you know, they're they know their customer. I think Abercrombie knows its customers, defined its customer and actually as a cohort that is, that has more money, right? Than the millennials. So I think they did well there. And then I think the margins, you got to talk about the margins. 

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Michael Epstein

This is something that brands talk to us about all the time. We see this a lot in DTC is how much should I be discounting? How do I get off the discounting hamster wheel? Abercrombie is a brand that I think has done that pretty successfully. not doing these giant store-wide sales all the time on the site or in the store, but they're making more money. And other brands that we see today still are trying to hit these aggressive growth targets by slashing prices or doing these big sales. Again, I don't know if that plays out well for them in the long run when investors are focused on profitability. if you're cutting, you know, if you're just doing coupons and sales all the time to hit a growth number, not unprofitably, think you're going to run into some trouble. 

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Drew Sanocki

Every turnaround you and I have been a part of has discounted too much to too many customers. I mean, Karmaloop, AutoAnything, both classic examples, same email every day going out to a million customers with the same discount. And so I know one thing that we preach in their marketing all the time, post-pilot is like, yeah, discounts aren't, they're not evil, but you're training your customer to buy on discount. You really should use them at the point of greatest impact. And there are ways to figure that out from your customer data, but it's, you know, it's not everybody gets a discount at all times. You know, one of the things we see in January, right? Like the brands that didn't hit their Q4 targets, they're giving away inventory right now, you know, and I'm seeing it, I'm getting a lot of offers now for distressed inventory or where they've overbought or they just have too much laying around the warehouse and they want to get rid of it. All right, so to wrap this up on True Religion and Abercrombie, what's one takeaway for the DTC brand now from these two turnarounds? 

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Michael Epstein

Yeah, I think they've really identified their core customer. They've doubled down on that core customer. And then they've also focused on unit economics. And Drew, you and I talk a lot about the whale customers. I'm sure we'll talk more about it, break it out into its own segments again. But I think that is what this strategy is. They identified their core customer, their whales, they orient their business around that, and then they build their unit economics and their models around serving that market well. 

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Drew Sanocki

Love it. Okay, two turnarounds. That worked. Awesome.

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The second thing we'd like to talk about on the Nerd Marketing Lives ecommerce benchmarks, this comes from our position at PostPilot where we've got data on thousands of brands flowing into our system. And also we go out and acquire a lot of data. So we've acquired data from a ton of third-party data sources that we sort of layer on top. And we've got a really good look at what's going on in ecommerce. So if you're looking to know how you stack up or how is everybody else doing right now, that's our goal to sort of answer it in this section of the podcast. What I'm seeing, Mike, is revenue in general down 11% year over year and week over week for this week. And we're recording this on January 14th. So that's not great. 

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Michael Epstein

Not great. looks like brands had a strong holiday, strong November, December. So it's certainly possible or it might suggest that demand was pulled forward in the holiday season.

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Drew Sanocki

Right. And then we'd like to basically drill down by category and by size of brand here. And really it's across all sizes of stores, know, small stores, big stores are all sort of down about the same amount for this week. What's interesting is when I look at the category data, I would expect health and beauty to be up big. You know, it's new year, new you. It's when people try to reinvent themselves at beginning of the new year. But really I'm seeing January as flat month over month relative to December. And when I compare versus last year, maybe up 8%. So health and beauty, not really driving the way as I would expect. Some of the growth is coming from some furniture categories, baby categories, vehicles, electronics, but not from where I'd expect it. 

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Michael Epstein

Yeah, it's interesting. We'll keep an eye on the trends, keep reporting back what we're seeing. 

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Drew Sanocki

If you want to see this on a more granular level, it's all freely available through our post-pilot app. You just add the app to your Shopify store and it's going to populate with your benchmark data. Every once in a while, we'll try to highlight what we think is interesting and keep you in the loop.

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All right, Mike, how you doing? 

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Michael Epstein

Good, Drew. How you doing?

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Drew Sanocki

Good. All right, today we're going to talk about a baby brand, Kindred Bravely. 

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Michael Epstein

Yeah, so brands are always asking us, how should I be using direct mail in ways that I'm not currently? And in particular, how do I use direct mail to acquire new customers? And so a couple of big advancements we've made over the last year, we'll get into how this has worked for Kindred Bravely and how brands can apply this going forward. Couple things. So we have AcquisitionAI. This is our new technology that we've been building for over a year with our data science team and the biggest and most powerful data set ever created for direct mail. Basically, it's like Meta for Mail. We take your brand, we find people that look like your best customer, we layer on tons of proprietary signals that we have that suggests that they are in market or good for your brand. And then we can send acquisition campaigns, just like Meta, for your brand, acquire net new customers. With brands like Kindred Bravely in the baby space. We even know things like this is an expectant mother in their third trimester, or this is a mother that had a baby in the last six months, has a six month old at home. We can get that precise as well as thousands of other attributes. And that's what's driving the performance for brands like Kindred Bravely. And these are some examples that you're showing on the screen of a campaign that they ran, what we call solo acquisition campaign. It's for their brand only. But then they also leaned into another new tool that we built, another new product that we built, and that's our Shared Mailers. So a lot of brands are thinking, how do I test into acquisition and how do I do it with low risk, low cost? Because the reality is to send a direct mail acquisition campaign and get enough volume to get enough statistical significance and move the needle. Like you do need to make a bit of an investment to do that.

But Shared Mail is an awesome tool that allows you to test into a highly targeted direct mail acquisition campaign at a lower cost. With our Shared Mailers, instead of like the Valpak-style mailers where it's a coupon book and you're stuffed in this envelope with Instacart and a credit card and a mattress company and a whole bunch of other stuff and you're just targeting females 25 to 45, these are targeting very specific personas. So with our mothers shared mailers, again, it's new or expecting mothers, we can be very precise in that. And then we curate brands that have that ICP, that ideal customer profile, and we can pair them together and send this out so that you're splitting the cost among multiple brands. And for a few thousand bucks, you can test into acquisition in a very targeted and performant way.

And so that's what we see here on the screen. The example of brands from apparel brands to strollers and toys and other things are curated together. We send it out to these expectant mothers and new mothers and brands, you know, are seeing fantastic returns. You have to set some sort of expectations. A lot of brands are targeting sort of a one to 2X ROAS on cold, you know, pure net new acquisition. Kindred Bravely was getting over a three when they sent their individual campaigns and over a five as part of our shared mailers. And these are, again, pure net new customers they've not acquired before. 

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Drew Sanocki

We obviously know it's new customers because we, in their case, like we work with their Shopify install to screen out existing. Yeah, it's awesome. And that copy and creative is really fun. It's a great way to really drive down your customer acquisition costs, get something physical and tangible in the hands of prospective customers when they're ready to buy. 

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Michael Epstein

Yeah, and we're doing a whole bunch of shared mailers with different core targets. If you want to learn more and see if you're a fit for something that's coming up, just reach out. We can also tell you if you're better off doing individual prospecting for just your brand. 

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Drew Sanocki

Awesome. Great case study.

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Drew Sanocki

All right, Mike, it's the beginning of the new year. Everybody wants to talk about their ecommerce predictions and what's going to happen. I'm curious what's going to happen in five days with TikTok. 

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Michael Epstein

I was wondering the same. 

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Drew Sanocki

Let's work that in. You and I have come up with four predictions that we see being very relevant for DTC CEOs and CMOs this year. The first one, it's going to come as no surprise, but AI-driven personalization and customer experience. 

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Michael Epstein

I haven't heard much about AI. It doesn't seem to be on many radars and I don't know. 

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Drew Sanocki

Yeah, no, it's here. You and I play with this all the time with AI. I think it's gone for me personally, it's gone from being kind of a nice to have bolt on to it's got to be core to your business in probably a matter of two months. 

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Michael Epstein

It's going to apply to every aspect of the business from the content generation to analysis, to recommendations, to everything. And it's going to be the difference. Again, I don't think this comes as any surprise. You're probably hearing this from a lot of folks. It's going to be the difference between the companies that ultimately are successful going forward and the ones that aren't because the ones that understand how to embrace it, use it as a tool, not to replace their entire teams, but to act as a tool and an accelerant for their teams are going to be the ones that I think thrive going forward. They're going to improve their OpEx. They're going to improve their efficiency and velocity. 

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Drew Sanocki

Yeah, I think everybody's always talking about AI for product development and engineering and for software companies, but for DTC in particular, I mean, what you can do with recommended products, predictive analytics for inventory management, personalized and perfectly timed marketing messages. They always ask like, when's the AI program that's going to come out that's just going to like dial in all my marketing. So you just put dollars in and get dollars out. But what all that does, I think this, this will be the year you probably start to see these large eight and nine figure DTC brands that are driven by teams of like 10. 

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Michael Epstein

Yeah, I agree. And then going sort of the other way, digitally native brands, DTC at heart are now going into retail stores. So the thing that felt like it was the thing of the past is actually now becoming the thing of the future as all these eight and nine figure brands are either exploring or growing their retail presence. 

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Drew Sanocki

Yeah. I mean, I walked my kid to school the other day, I go right by the new Jones road beauty store over on Madison Avenue. And it's just, you and I joke that every time we walk through a mall, it's like half the DTC brands we know are there. And I think there's something to that. I mean, Bonobos probably pioneered this, what, like 10 years ago, but they figured out that you put a store in front of your best customers and it essentially can drop your customer acquisition costs. So a lot of these brands, when they tap out on digital channels, find that the growth is going to come from brick and mortar. 

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Michael Epstein

Yeah, they're starting to hit that point of diminishing returns from a customer acquisition perspective when only focused on digital acquisition channels. And still most transactions happen brick and mortar, and they've got to be there. They've got to be where their customers are. And to your point, Drew, not only are you servicing your good customers, but you're actually creating better customers in many cases who are buying through the retail store. What we found, I know you, did a lot of research on this years ago that was really eye-opening with Bonobos talking about how their best customers tended to buy in store first, they had higher lifetime values when they were acquired in a brick and mortar store. And people who bought across multiple channels also had higher lifetime values than people who bought on digital alone, which makes sense. 

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Drew Sanocki

Yeah. So I think as far as our predictions, let's call it like omnichannel integration is just going to reach a whole new level. Your reporting is going to be a lot more unified. You're going to be able to track better between the physical and the digital. So I think you're going to have some interesting shopping experiences, just all that around omnichannel. When you get up to that eight figure revenue size, think brands are starting to experiment a lot more or partner with other retailers or seek traditional distribution. Third trend, more channels required. I feel like that's a spin on Phil Collins, No Jacket Required, which I know was your favorite album from the eighties, but you need more channels, and you know this isn't just because we work at a direct mail company. I think it's just brands realize they can't lean in and rely on only one. They can't just put all the chips on Meta. And that's not just direct mail. Its platforms like TikTok and Instagram are opening up a lot more in terms of shopping options. Certainly direct mail is a great one. I just see more of that going forward this year as brands wise enough and diversify their marketing effort.

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Michael Epstein

To your point, brands are realizing they're hitting points of diminishing returns with some of their core channels. They're recognizing that they need top of funnel demand, generate creation and awareness. And I'm not saying that you should throw a bunch of dollars in completely unquantifiable brand marketing, but in general, these brands have to grow by growing awareness for the products and the brands, not by just capturing middle funnel, bottom of funnel traffic. So diversifying your media mix to do that and doing it through channels that are really impactful. Again, not direct mail specifically, but by just diversifying and having multiple touch points, having touch points that aren't just all fleeting in, you know, Facebook ad or Facebook feed is creating that connection. Creating that awareness and over time, obviously those folks are, nudging them towards conversion. They may not be in the market today, but you've got to create those memorable touch points across multiple touch points so that when they do become in market, you're the first one that they remember and they buy your product. 

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Drew Sanocki

Right. How brands grow. Brand salience. Right? Exactly. Our boy, Byron Sharp. I don't know if he knows he's our boy. If he's listening to the podcast over in Australia. Our fourth prediction is that a core metric, if not the core metric for most marketers will become marketing efficiency. The idea here is that with the preponderance of channels and platforms, attribution models go out the window and you're going to have to start, CMOs and CEOs really are going to have to start with the big picture, which is how much new revenue did I make and how much did I spend to get it? You know, it's called MER in some circles, M-E-R, but you know, starting there largely for a couple of reasons. But one, if you look bottoms up, you and I are used to going to these turnarounds and siloed marketing where you add up the revenue attributed to the email team says they acquired this much. You know, the Meta team says they acquired this much, the SEO team this much, the influencer team this much affiliate, you add that all up, and it's like 300 % of the revenue of the company, right? So it's time for that to end. So that's certainly driving this. 

I think the other thing is you and I keep an eye on a lot of the public companies out there. And if we look back, you know, public DTC brands like Crocs and Lulu and Yeti, you know, and we aggregate up their price to earnings. And I look back at, you know, in 2021, a lot of these brands had just value to EBITDA multiples of 16 or higher, you know, 20. Now we're more under 10. They're in the neighborhood of eight, right? So you've just got this compression of multiples, which had a really interesting effect. VCs got out of the DTC game. And with that went the whole mentality of growth at all costs. Revenue multiples went from, you know, four to under one around one. So I don't think any DTC brands are bought or sold on a revenue multiple anymore. And certainly there's like strategic acquisitions, but you can't count those. It is just enforcing this financial discipline on companies, right? They've got to grow and they got to grow profitably, which means marketing has to be efficient. 

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Michael Epstein

Can you continue to grow your top line while maintaining the same sort of overall marketing spend, or can you grow your top line incrementally relative to your increase in marketing spend on an absolute basis, similar on a relative basis? And, you know, somebody who writes a lot on this topic that I really like is Preston Rutherford from Chubbies. His content's always great on this. Talking about the value that they created at Chubbies. It wasn't necessarily in the measurable ROAS of bottom of funnel campaigns that they were running on Facebook. It was done through strong brand advertising that manifested in large revenue growth through direct channels that were essentially unattributable. You know, things like brand search or direct traffic, it's hard to attribute, but created a ton of efficiency in that business. So overall, the actual enterprise value of that business was really high because they were able to grow their revenue significantly without growing their overall marketing budget as much or as quickly. 

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Drew Sanocki

Yeah, and I think you only pick that up if you're measuring your marketing efficiency over time. It's very difficult to measure that brand spend otherwise, right? Awesome. So four predictions for 2025. AI, omnichannel, more channels required and marketing efficiency as a core metric. Anything else that we left out? 

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Michael Epstein

I’m sure we can talk about 20 more, but we'll keep it at four for now. Yeah. These are the big ones, I think, heading into this year. 

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Drew Sanocki

Listen to the podcast because we will circle back in a year and we'll revisit each of those. Yeah. That's all we got. Thanks for joining us on the Nerd Marketing Podcast. We'll see you next week.

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Announcer

Thanks for listening to Nerd Marketing. Don't forget to check out all of the other great episodes, some of which include interviews with ecommerce marketing masters working with Mr. Beast and Joe Rogan, plus Drew and Michael's experiences in private equity, advice from VC firms on what they look for in investments, and so much more. Like, share, subscribe, and tune in every week for a new episode.