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Details on Industry Insight.
Abercrombie & Fitch continues to ramp up the international expansion of its surf-inspired Hollister chain, and is looking at territories beyond Europe.
During the company’s earnings conference call yesterday, an analyst asked if the company would open in China.
CEO Mike Jeffries said they are not ready to make any announcements yet. However, he did say, “We have a very strong belief that what is happening in Hollister and A&F around the world can be duplicated in many places.”
During the call, Jeffries, talked about the success of new Hollister stores in Europe. Some are so popular they require crowd control.
During the third quarter, Hollister entered Spain for the first time, opening stores in Barcelona and Madrid. Those stores are “exceeding our projections very handily,” Jeffries said.
Hollister opened a second store in Germany during the quarter, its UK Hollister stores recorded double digit comp increases and its Italian business grew “even stronger.”
Most stores meet or exceed the company’s four-wall operating margin target of 30%.
The volume levels at the international stores are “multiples” of Hollister stores in the U.S., and the chain does not discount prices in international stores except for Canada.
I should add the caveat here, not yet. The company used to preach the same philosophy in the U.S. until the recession led it to become one of the biggest discounters at the mall, particularly at Hollister.
The success of the Hollister stores in Europe are leading the company to accelerate international expansion of the chain in 2011 and 2012 beyond the 20 stores international stores opened this year. The company will detail some of the openings planned in its next conference call.
At the end of October, Hollister operated 27 international stores and 510 domestic Hollister stores.