A&F is building its third mall-based store in China
Less than nine days before the opening of the first Abercrombie and Fitch in the Netherlands, we bring you this piece of news: there will be NO abercrombie kids available at Leidsestraat 34 on opening day Thursday, December 13. The childrenswear will be in absence at A&F Amsterdam for an indefinite amount of time until future notice. Sales floor space has been reserved for abercrombie kids merchandise at the fourth and fifth level, but there has been no shipment of a&f kids goods. For now, the staff has only been settting up the sales floors with Abercrombie & Fitch merchandise on the ground floor and the subsequent upper two levels. Basically, only three sales levels – all Abercrombie & Fitch – will only be available for customers on opening day and onward for the time being.
Abercrombie and Fitch UK is currently in 'scale-back' mode as it looks to close underperforming stores in the U.S., which should help the company meet its 3% same store sales growth target for next year. Over the longer term, Abercrombie is leaning on its women's branded outlets Gilly Hicks, with plans to open stores through the U.K. and Germany. Abercrombie is one of the small cap stocks that hedge funds love.
We agree that Abercrombie UK should be Tudor's top pick given its growth prospects and valuation, and are also intrigued by Tiffany given its ability to perform well in a down economy due to its insulated customer base. For Tudor's other three holdings - the healthcare-related companies - Cardinal's market leading position will help the company perform well, but would prefer the high-growth opportunities that CR and Allergan provide.
Second, all the product descriptions are a bit off, such as “Abercrombie and Fitch Outlet mswe29 Dimgray Sweaters” and “Abercrombie & Fitch mout14 Dark Tan Outerwears,” not exactly the kind of slick marketing speak used by a savvy retailer like Abercrombie, even for an outlet store.Besides, the retailer details on its actual website how “No other website [other than Abercrombie.com] is authorized to sell Abercrombie & Fitch merchandise. Don’t be fooled by the counterfeiters that attempt to copy the look of our website by stealing our images and content or by including our name within their domain address.”
I find very interesting the international expansion strategy that ANF is pursuing. In Europe, the company's key area of international expansion still moves forward as ANF reported a solid revenue growth of 85%. Hollister brand continues to report strong sales as it covers two-thirds of the company's business in the continent. The company is also expanding in Aisa. A&F is building its third mall-based store in China, as Chinese customers learn to familiarize themselves with the products of the company. Abercrombie plans to open five Abercrombie & Fitch stores in flagship locations including Hamburg, Hong Kong, Munich, Dublin and Amsterdam as well as an Abercrombie kids store in London. In addition, the company plans to open about 40 international Hollister stores in fiscal 2012.