Exclusive: A&F’s New Ruehl

A&F chief executive officer Michael Jeffries lays out the strategy for Ruehl, the firm’s latest chain aimed at post-college shoppers, set to open next...

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The core A&F brand, with 360 stores, is close to maxing out on expansion. Only about 40 additional stores are envisioned, for a ceiling of around 400 units, including one at 720 Fifth Avenue where Fendi is moving out. However, Jeffries said there is no new urban strategy for A&F involving seeking additional highprofile, prime locations. The company has not adopted a flagship strategy, which isn’t surprising since Jeffries is a confessed “mall rat” and he believes malls are still drawing the hordes.

At the other divisions, abercrombie has over 170 units operating and a perceived ceiling of 400 units. Hollister, however, has a longer way to go before max-ing out on expansion, and is performing the strongest. Hollister has almost 200 units and 600 to 800 are contemplated. Hollister has a loyalty program, rewarding good shoppers with concerts, whereas the other divisions haven’t developed loyalty programs yet.

“The in-store experience drives our marketing more than other marketing,” said Tom Lenox, director of investor relations and corporate communications. “It’s the merchandising, the images, the smell, the music. We’re putting palm trees in some stores. Hollister, at six stores, is also experimenting with live Web cams of a pier at Huntington Beach in California showing the surfers.”

Online is an opportunity, with Internet sales currently representing about 5 percent of the business, with 30 percent of that conducted through overseas sales. Last year, the company reported an 8.8 percent gain in sales to $1.77 billion and a 6.1 percent increase in earnings to $209.2 million.

Despite the increased complexity of the company, Jeffries said it’s not really harder to manage. “I don’t think you can say that. We don’t operate our brands in silos, in terms of control. Casual trends transcend age,” so trends in one division can be applied to others.

“Many parts of our business are integrated, that is different from Gap, Old Navy and Banana Republic. It’s a different strategy that enables us to have a lot of control.”

It’s Jeffries’ key ingredient to building brands. “I never imagined the potential here. It keeps opening up. We’ve always got something in development.”
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