A&F’s Growing Family: Gilly Hicks Launched as Kin to Other Brands

Meet Gilly Hicks, the newest brand developed by Abercrombie & Fitch Co. that bears an Australian accent.

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Meet Gilly Hicks, the newest brand developed by Abercrombie & Fitch Co. that bears an Australian accent.

This story first appeared in the January 22, 2008 issue of WWD.  Subscribe Today.

At the prototype 10,000-square-foot store, situated in the upscale wing of the Natick Collection, 30 minutes from Boston, Michael Jeffries, A&F’s chairman and chief executive, makes the introduction. “She’s the cheeky cousin of Abercrombie & Fitch.”

He’s got a sharp take on his latest baby and it’s just for women — Abercrombie women. Gilly Hicks sells “underwear, not lingerie,” he explained during an exclusive preview two days before Monday’s opening. That’s his way to convey the laid-back and irreverent attitude of the merchandise, which is largely geared for young women who, when they get home, just want to peel off their jeans, get comfy, and don a pair of cotton boxers or gym shorts, or perhaps a T-shirt and a hoodie.

The products are playful. The character is undeniably casual, and the mood more boyish than boudoir. And compared to the competition, like Victoria’s Secret, a lot less libidinous. You won’t find teddies or black garters at Gilly Hicks, or suggestively posed mannequins. There is an ample array of romantic silk vintage undies and sexy skinny thongs displayed on headless mannequins and merchandised alongside graphic T-shirts and logoed sleepwear. The combination is calculated to create “that boy-girl tension,” noted Beverly House, senior vice president and general manager of Gilly Hicks. There’s an inherent sexy-casual duality that House regards as a different approach to lingerie, which is usually “a one-note business,” as she said.

Jeffries rejects any comparisons to Victoria’s Secret. “I don’t think that’s our customer,” he said. “I don’t view this as a competitive enterprise. We are just out to grow with our customer….We are leveraging our brand. We are going after all the female customers [shopping Hollister and A&F] and introducing three new categories — bras, underwear, lotions and potions. That is really the story.

“It’s also a store for women who love Abercrombie guys. It’s not for men at all.”

But Victoria’s Secret appears to view Gilly Hicks as competition. Last weekend at the Natick Collection, Victoria’s Secret banners were brandished in the common areas and on Friday, supermodel Adriana Lima, who will appear in a VS Super Bowl ad, made a personal appearance at the mall, drawing a line longer than a football field.

On Monday, Gilly Hicks hosted Wall Street analysts for a tour but, by and large, the $3.3 billion Abercrombie is low-keying the launch. On Feb. 2, three additional Gilly Hicks units will open, in the Mall of America in Bloomfield, Minn., the Smith Haven Mall on Long Island, and Fox Valley Center in Chicago. After that, a cautious and modest rollout will commence. “We’re serious about this business. We’re committed to 37 stores in the next two years,” Jeffries said. He also expects to be selling Gilly Hicks online in a year. He said he had no idea how much volume the Gilly Hicks store will do, and declined to project.

Asked if, at the outset, Gilly Hicks could be considered a test, Jeffries replied “Only in so much that we’ll be learning about this business. Clearly, we’re going to be there….When we open the doors, we’ll see what works and what doesn’t. At Abercrombie & Fitch, we have a saying: It’s perfectly all right to make a mistake. It’s not perfectly all right to repeat the mistake.”

Before an accelerated rollout, consistent sales and profits must be demonstrated. “No, we’re not risking the business. Our mantra is consistent, sustainable, risk-free growth, and this concept we think will help us in that regard. We’re not counting on any corporate growth in this concept yet.” Down the road, if all goes well, there will be a very different expectation. “We think we can open in every place a Hollister does,” said Jeffries. Hollister, catering to 14- to 18-year-olds, operates 447 stores and in 2006 posted $1.4 billion in volume. The A&F chain, geared for 18- to 22-year-olds, has 363 stores and posted a 2006 volume of $1.5 billion. The abercrombie chain for kids ages seven to 14 has 202 stores and surpassed $400 million in sales in 2006.

The launch of Gilly Hicks comes at a time when skepticism abounds over recent specialty store startups. Several have been disappointments. Gap Inc.’s Forth & Towne was shut down. Pacific Sunwear of California Inc. will close its D.e.m.o. stores as soon as possible, and Martin + Osa by American Eagle Outfitters Inc. has been disappointing.

A&F’s own Ruehl division hasn’t exactly skyrocketed. The three-year old division, appealing to the post-college crowd in their mid-20s, has only 21 stores and generated $34 million in sales in 2006. “It’s profitability has improved dramatically,” Jeffries said. “But we want to grow the topline productivity to the point where we can say let’s blow out a lot of stores. Ruehl is absolutely valid. It will be a growth vehicle.”

Hollister is doing “amazingly well,” he said. “It will clearly be an international growth vehicle. International [expansion] is very fundamental — there’s huge potential for all of our existing brands.”

A&F is also advancing its namesake division, focusing on overseas flagships modeled after the one on Fifth Avenue in New York, which has been highly productive and is on track to exceed over $100 million in annual sales in its 22,000 square feet. An A&F flagship opened last year in London and another is set for Tokyo.

With everything on A&F’s plate, no additional concepts are currently being cooked up. That being said, change is occurring within the existing businesses. For example, the Sessions personal care line at Hollister will go chainwide for back-to-school. Currently, it’s sold at 110 doors. And certain elements of flagship prototypes, such as the louvers on the windows of the Fifth Avenue flagship, will be seen at more A&F units in the malls to give the chain an air of mystery.

“It’s about leveraging the brand in product categories and store growth, and that will be primarily international,” Jeffries said.

The basis for Gilly Hicks comes from a character that Jeffries invented. As the story goes, Hicks, who lived in England, came to Australia in 1932 where she opened an underwear store in her family’s British colonial-style manor house in Sydney. She was ahead of her time, loved men and sketching them in the nude. The store is a representation of her home, with a 65-foot-wide facade with columns, a patio, French doors and, of course, sketches of male nudes. Inside, there’s a vestibule with a mural depicting a man in a towel, then a series of 12 split-leveled rooms of different sizes to give a residential feeling, a sense of exploration, and minimize uniformity.

The biggest room is the 1,200-square-foot “bra library” in the back. It houses 38 “everyday” [or less sexy] styles in balconet, demi-plunge, classic and other cuts. Bras are expected to represent about 40 percent of the volume. The category is the most technical part of the business and is most critical to the success of the brand. “We worked really hard to make our bras soft and supportive,” House said. “A lot of bras are very stiff and harsh.”

The second biggest area, which has a barrelled wood ceiling inspired by a room in Claridge’s in London where Winston Churchill once stayed, is the 1,000-square-foot “living room” for personal care. Products are displayed in curved glass vitrines, including five fragrances in deco-style bottles for that Thirties feeling, with names such as Tamarama and Kissing Point to evoke destinations in Sydney. A 2.5-oz. bottle is priced $54.50 and a 1.7-oz. bottle is $44.50. There are also bath and body products under the White Willow name that come in six scents, including body lotion priced $22.50 for 8.4 oz., and lip gloss, priced $9.50 or three for $27 and offered in 10 colors.

It’s the first time that Abercrombie has introduced personal care in a comprehensive way.

In the front of the store, the room to the right is filled with “at home” lounge-around merchandise. The room to the left has underwear. Among the products are garment-dyed “down undies” with white stitching and shaded elastic for an imperfect look, priced four for $26, and cotton “down undies” for $11.50. There are also flip-flops for $15.50, and high-cut gym shorts for $24.50.

The undies come in 15 colors and in various looks. For example, some are labeled “cheeky” [short in front and not much on the backside], others are “boyish” with higher fronts and greater coverage on the derriere. There are also thongs and bikinis, four for $25, selling off pegs extended from wall bays for easy access. Bras range from $29.50 in cotton to $44 in microfiber or lace.

Further into the store, there is a room featuring sexy lace underwear and vintage-looking silk underwear. Beyond those, there are logoed sweatpants for $34.50; sleep pants that resemble scrubs for $29.50, and stretch tanks in vivid colors, priced $19.50.

In one vignette, there’s a $36.50 sexy lace bra with a cotton rib band paired with a ribbed short undie with mesh, for $15.50. For a quirky contrast, the look sits next to a form exhibiting a classic lace bra and thong, priced $36.50 and $13.50, respectively.

Overall, there’s a huge amount of merchandise — 10,000 stockkeeping units on display across the 8,500 square feet of selling space. Roughly 25 percent of the inventory is logoed and it’s all designed and developed by the team at Gilly Hicks, which has been two-and-a-half years in the making.

Jeffries, considered among the industry’s top brand builders, resurrected Abercrombie & Fitch and developed Hollister from scratch in the Nineties, and catapulted them both into powerhouse global brands.

He considers building a brand like making a movie or creating a personality. “A brand is a person, a living breathing thing. I love this part of the business,” Jeffries said. “It’s a team effort. This can’t be a Mike enterprise.”

But like all the A&F brands that preceded, Gilly Hicks certainly has his touch. The store is dark though the merchandise is well lit by fiber-optic lights that don’t emit heat, and the woodsy interior furthers the ambience. It’s filled with mahogany tables and has oak floors throughout. Not surprisingly, the music is loud, and the cash wrap is a bit buried behind the bra library and only has four registers. No doubt if the merchandise is well received, there will be long lines. But Jeffries welcomes that. “He loves the crowds, the crunch,” said one employee.

“The references to Abercrombie & Fitch are very, very strong,” Jeffries said, referring to the decor and the character of the merchandise, being classic, somewhat provocative, and reflective of the beach culture. “All things play to what the Abercrombie woman is all about. We’re very much taking casual to the next level.”

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