Abercrombie & Fitch Sees Growth Potential

New York City, Speaking at the SG Cowen & Co. investor conference here on Wednesday, Michael Kramer, Abercrombie & Fitch’s senior VP and CFO, said the company expects to expand its gross square footage by 10% in 2006. He emphasized that the chain, coming off a strong holiday season and an excellent year overall, will not settle for second best when it comes to real estate.

“We won’t go into a mall at the 20-yard line,” Kramer said. “Our brands are on fire. 2006 was a fabulous year and there is more to come.”

Abercrombie has two brand flagships in the works, one in The Grove, Los Angeles (where an existing store will be expanded) and the other in Fashion Show, Las Vegas. The units will be modeled somewhat on Abercrombie’s flagship on Fifth Avenue in Manhattan. Kramer said the chain is “very excited” about the early results of the store, which opened in November.

“We see significant growth opportunities in flagships in key areas,” Kramer said.

Kramer reaffirmed the chain’s commitment to international expansion, but emphasized it would be undertaken at a “measured pace.” The namesake brand will debut in London, in late 2006 or early spring 2007.

Kramer said the chain saw “great growth potential” in all four of its brands. He was especially bullish on prospects for Hollister and abercrombie, which is turning legions of tweens into Abercrombie fans. As for the company’s newest concept, Ruehl, it is still in the “tweaking” mode. The merchandise mix has evolved from causal dressy to more casual sportswear.

“We are very excited about the brand,” Kramer said, “and are making changes to the model before we do any massive expansion.”

As to the company’s marketing strategy, Kramer told attendees that few changes were planned.

“The majority of our marketing dollars continue to be focused on our in-store experience,” he said.

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