Abercrombie & Fitch is attempting to cash in on a booming lingerie market with its fifth concept, Gilly Hicks.
This story first appeared in the January 11, 2008 issue of WWD. Subscribe Today.
Inspired by the city of Sydney, the first store will open in the Natick Mall in Massachusetts on Jan. 21. The company made a presentation at a Needham & Co. investor conference Thursday, briefly mentioning the new concept.
While management has yet to reveal long-term plans for Gilly Hicks, Dana Telsey, chief research officer of Telsey Advisory Group, said during a same-store sales conference call on Thursday that she expects the company to open five of the lingerie stores in the U.S.
Abercrombie & Fitch will be up against American Eagle Outfitters’ already successful aerie business and Victoria Secret’s Pink line.
“There are few who do sexy better than Abercrombie & Fitch,” said Christine Chen, specialty retail analyst at Needham & Co. “I think it will be a store kids love and parents hate.”
In its most recent quarter, the teen retailer posted a 15 percent jump in earnings to $117.6 million, or $1.29 a diluted share, from $102 million, or $1.11, in the year-ago period. Sales for the quarter grew 13 percent to $973.9 million from $863.4 million, while total same-store sales increased 1 percent.
On Thursday, the retailer said December comps declined 2 percent.
“Our negative 2 percent comps were at full price,” said Michael Kramer, chief financial officer of the apparel company at the Needham & Co. conference. “You will never see a huge sale sign at the front of the store. We will never, ever buy short-term sales because you will get hit with it long term.”
Near term the company is banking on its Hollister and Reuhl divisions, new bath and body line and Abercrombie & Fitch’s international expansion, as growth vehicles.