By  on August 6, 2007

In Tokyo, brands reach high. And Abercrombie & Fitch Co. will be no exception.

The retailer's Tokyo flagship, scheduled to open in late 2009, will be tall and imposing, like the muscular, shirtless models featured in Abercrombie's audacious advertising.

The company is creating an 11-story flagship — by far its most vertical project — on the western side of the bustling Ginza district, where the chain has just leased a site, WWD has learned. A&F is joining the rush of brands to build megastores in the Japanese capital, from Bottega Veneta to Fendi, Swatch to Giorgio Armani, which late last month revealed plans to open a 65,000-square-foot, 14-story flagship in Ginza. Gucci has an eight-story glass complex, Apple reaches seven stories high and Hermès blends right in with a 10-story flagship. And the stores are getting increasingly expensive: Swatch's unit cost a reported $140 million.

Abercrombie's flagship will cover about 22,000 square feet of selling space, and channel much of the aura and decor of its 27,000-square-foot Fifth Avenue megastore, opened in 2005, including the facade of closed window shutters and dark walls that create an air of intrigue, large murals depicting beefy sportsmen and possibly bits of A&F's heritage as a purveyor of outdoor sporting goods.

Abercrombie in Tokyo is also looking to match or beat the productivity seen at the Fifth Avenue flagship, located on the northwest corner of 56th Street, which is the prototype. According to Wall Street sources, Fifth Avenue generates sales of about $55 million annually. It's currently the chain's most vertical location, with four selling floors.

But the Ginza store marks Abercrombie's heightened ambitions in another way: it will be the brand's entry into the Far East and a big step in the Columbus, Ohio-based retailer's accelerating program of international growth via flagships in Europe and Asia. The Abercrombie brand, which targets 18- to 22-year-olds, said last month that it is working to secure flagships in Italy, France, Germany, Spain, Denmark, Sweden and the U.K., in particular Milan, Paris and Madrid. The corporation's Hollister and abercrombie chains, targeting younger audiences, are not currently part of the European or Asian expansion program.In an exclusive interview Friday, Michael Jeffries, chairman and chief executive officer of Abercrombie & Fitch, described the overseas strategy as aggressive yet carefully planned, without a strict timetable for opening stores. "We are pretty cautious," said Jeffries. "We don't embark on these things unless we have a pretty good indication that we are going to have strong support for the business. We look at our business on the Internet, and through our domestic stores, we track currencies. It's given us the courage to be aggressive overseas."

Canada, where Abercrombie launched its international expansion and currently operates three Abercrombie & Fitch stores and three Hollister units, and the U.K., where the first international flagship was launched this past March at 7 Burlington Gardens in London, have been "home runs," Jeffries said. "This is enabling us to grow faster internationally. It was kind of a no-brainer going into the U.K. We feel the same way about Japan.

"Clearly strong iconic brands are able to play internationally," Jeffries added. "We have always thought about international expansion. It was a question of when, and we had to see some success before we embarked on a major strategy. Tokyo is a market we have been eager to enter for some time. Tokyo's young, fashion-conscious consumers make the city the ideal location for our first Asian store."

Abercrombie & Fitch was represented in the deal by Hiroyuki Tanaka and his firm, Prod Co. Ltd. The store will be designed by Annabelle Selldorf, who designed the London and Fifth Avenue flagships. The store will be wholly owned and operated by Abercrombie & Fitch.

The $3.4 billion Abercrombie portrays its merchandise as "casual luxury" and boasts healthy margins. It is almost certain the Ginza store will be Abercrombie's most expensive to build, well over the $18 million to $20 million spent on the London flagship, though not over $30 million, according to industry sources. The London store, in a building that used to house the Jil Sander London flagship, has a much different configuration, with 24,000 square feet spread over a main level and a mezzanine. Jeffries is confident the Tokyo investment will be worth it. "We look for returns on our capital that are very high," he stressed.The actual address of the Tokyo store hasn't been revealed, but Abercrombie will occupy, not own, an entire building on a site where a couple of others are going up.

No additional flagship locations have been secured, and there doesn't appear to be any rush. "It depends upon our ability to find the right locations," he noted.

In Europe and Asia, the overseas strategy solely entails flagships, meaning large stores in heavy trafficked sections of major cities. Jeffries said typical mall-sized stores, which are roughly one-third the size of flagships, are not being considered right now. Aside from the Fifth Avenue and London flagships, there is one other at The Grove in Los Angeles. There has been little tweaking of the design of the three flagships, aside from some minor changes, such as adding fitting rooms and cash wraps, Jeffries said.

While many multiple-level stores see thinning traffic on the upper floors, Jeffries said that at the four-level Fifth Avenue flagship, "We haven't seen that. We've shown we can do business in a vertical way. If you go into the Fifth Avenue store, the top floor is the most crowded. I am excited about Tokyo. There will be 11 floors, and we will be merchandising most of it, probably 10. We will be using off-site stocking. I have a pretty good feeling [in Tokyo] we will move shoppers around. The Ginza district is one of the most prestigious shopping districts in the world.

"It's going to be a beautiful store," Jeffries continued. "We've already laid it out. I think it's going to be very dramatic."

He said the flagships are run as a chain, so the stores have a "huge amount in common." However, architecturally, "it's not cookie-cutter. We are in urban locations so we have to deal with different footprints."

Abercrombie & Fitch operates 355 Abercrombie & Fitch stores, 182 abercrombie stores, 409 Hollister Co. stores and 17 Ruehl stores in the U.S. The company also operates the abercrombie.com, abercrombiekids.com, and hollisterco.com Web sites.

In addition, the retailer is developing a flagship prototype for its Hollister division, which targets 14- to 18-year-olds. The first could open in Manhattan's SoHo neighborhood.

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