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BRITS GET FITCHED

Saucy American brand shakes up London’s formal Savile Row

By Curt Hazlett

For two centuries London’s Savile Row has personified British style. The buttery wools and crisp styling of such exclusive tailors as Gieves & Hawkes have lent distinction to the wardrobes of countless English gentlemen and anyone else willing to pay the price — currently, about $5,000 — for a bespoke two-piece suit.

So more than a few eyebrows were arched in May, when a construction wall sprang up overnight around a building at 7 Burlington Gardens, only a few hundred yards from Gieves & Hawkes’ No. 1 Savile Row address. Emblazoned on the barricade was a two-story parade of buff young men, chests bare and jeans riding low on their hips.

London, meet Abercrombie & Fitch.

The Ohio-based retailer is entering the U.K. market with its usual flair, converting a former Jil Sander store into a flagship modeled after its new Fifth Avenue store in New York City. It will be Abercrombie’s first store outside North America, and most likely not the last. The company says Europe and Asia may be next.

Abercrombie is one of many U.S. retailers eager to cash in on new markets. One of the biggest, Gap Inc., already has stores in Canada, France, the U.K. and Japan, and it announced in April that it had sold franchise rights for stores in five Middle Eastern countries.

As brands go, Abercrombie has a leg up. Its clothing — casual cotton shirts and pricey denim, marketed with a big dollop of sex — is already well known to young people around the globe, and the retailer’s management is banking that the recognition will translate into strong sales in London.

Michael S. Jeffries, Abercrombie’s CEO, told stock analysts in May that the four-story New York store, which opened in November, has drawn “a very large percentage of international customers, a very large percentage European,” adding, “We are thrilled with what we are learning about running high-volume stores. It gives us huge confidence for the international potential of this brand.”

Indeed, Abercrombie stands out in a world where casual clothing is a commodity and expensive jeans are a rarity. “Abercrombie & Fitch is a very good success story,” said Dana Telsey, the chief executive of Telsey Advisory Group, a New York City-based research firm specializing in retail. “They’ve branded themselves well, and they are very appealing. It’s all worked for them.”

At least it has recently. Originally a seller of sporting goods and outdoor clothing with headquarters in a landmark Madison Avenue building, Abercrombie fell on hard times and was sold to The Limited in 1988. It began a long climb back by opening large mall stores selling upscale casual clothing, and in 1996 was spun off as a publicly traded company.

Abercrombie now operates 352 Abercrombie & Fitch stores and 161 Abercrombie stores aimed at children, 327 Hollister stores (designed to compete with lower-price retailers such as Old Navy) and 10 Ruehl stores, which are intended to appeal to slightly older young adults.

But like Gap, Abercrombie may be seeing limits to continued U.S. expansion. Searching for new venues, this year it opened its first Canadian stores — five of them — and created a European subsidiary to plan growth there.

“While management has taken a wait-and-see approach regarding the potential store base in Europe and Japan, it has already concluded that Canada can support 20 stores successfully,” wrote retail analyst Pamela Quintiliano, of San Francisco-based financial services firm W.R. Hambrecht & Co., in a research report.

The move into Canada has already paid off. Jeffries told the analysts that the Canadian stores generated three times the sales per store figures of their U.S. counterparts in the first quarter.

It’s clear that an eager international market exists for Abercrombie clothing. One sign is a thriving market for counterfeit goods bearing the Abercrombie & Fitch brand. In February the retailer announced a program to fight counterfeiting around the world with a brand-protection team headed by a former FBI agent. The company said this team “will cast a wider net around the counterfeiters by increasing staff throughout Europe and Southeast Asia, with a particular focus on covering locations such as Taiwan, China, Hong Kong, Japan and Korea.”

Another sign of its popularity can be found on the Internet. A recent search of eBay’s U.K. site turned up 4,669 pieces of Abercrombie clothing and accessories for sale, some at near-new prices — and a warning from a frequent buyer that much of the clothing, from sellers in Vietnam and Malaysia, is likely to be fake.

The decision to go international may seem clear-cut, but it caused tension within Abercrombie’s headquarters in New Albany, Ohio, near Columbus. Last August President Robert Singer, who had been hired from Gucci two years earlier, resigned after disagreements over the pace of Abercrombie’s overseas expansion. Abercrombie did not return phone calls for this story, but in a press release at the time, Jeffries said there had been “a difference in approach to the timing and extent of our expansion into certain international markets. While we are solidifying our plans to expand into Canada and the United Kingdom, our entry into other foreign markets will be at a more deliberate pace.”

Analyst Telsey predicts that the retailer will continue its cautious approach. “They first will have to see how the London store goes,” she said. “We’ll see if they go into France or Germany or Italy, but it’s one step at a time. One thing Abercrombie is very good about is staying true to its brand and making sure the location, the demographics surrounding the location and the product appeal is right before entering a new market. They do a lot of research before deciding on that.”

Meanwhile, the Savile Row store’s conversion will give it the same kind of buzz found in the Fifth Avenue emporium, complete with driving dance beats and sexy sales staff. Completion is expected early in 2007.

Though Abercrombie is not the first big foreign retailer to move to the neighborhood, its arrival has aggravated bad feelings among small businesses that fear being squeezed by rising rents. To address their concerns, the Westminster City Council formed a “strategic group” that will bring together Savile Row tailors and landlords to find ways of preserving the area’s tradition.

“Exploiting the Savile Row name to attract high-paying retailers and businesses at the cost of this world-esteemed industry is shortsighted,” said Mark A.V. Henderson, CEO of Gieves & Hawkes and chairman of Savile Row Bespoke, a group of tailors formed in 2004 to fight the neighborhood’s changes.

Thomas Mahon, a Savile Row-trained tailor who now runs an exclusive shop in Cumbria, was a bit more pointed in remarks to London’s The Times. “If the bespoke businesses were driven out by crappy retail stores selling poor-quality clothes,” he said, “then Savile Row’s name would be irreparably damaged.”