American fashion retailer Hollister gets ready to drop in on the local surfwear market

American fashion retailer Hollister, part of Abercrombie & Fitch, is joining the long list of international retailers headed to Australia with plans to open its first store here next year.

Mike Jeffries, chief executive of Abercrombie & Fitch, revealed the plans for the first Hollister stores in Australia and the Middle East during the annual earnings conference call for the retail giant.

Hollister now has 28 stores in the UK, 12 in Canada and 17 in Germany with plans to open 20 more international stores in 2013.

Jeffries said the rollout is still at an early stage.

“We are focused on underpenetrated markets where we expect minimal cannibalisation,” he said.

Overall, Jeffries said Abercrombie & Fitch’s results were “disappointing” and cited “cannibalisation” as a key concern where Abercrombie & Fitch flagship store, standard stores and Hollister stores cannibalise each other’s sales.

In contrast, Jeffries sees Australia as an untapped market for Hollister as Abercrombie & Fitch has not yet opened in Australia despite reports of the brand scouting for locations here.

“We are confident that the return from investment on our international rollout to date has been superior to any other allocation of capital over that period,” Jeffries said.

New stores opened in 2012 by the Abercrombie & Fitch group are expected to contribute $200 million in sales growth.

Hollister has yearly sales of $485.6 million and offers cheaper and more youth orientated fashion than Abercrombie & Fitch.

Named after a city in California, the retailer stocks surfer style fashions, making it a competitor to local surfwear retailers such as Billabong and Rip Curl.

Hollister has been steadily taking its model global by opening stores in Europe and Canada. Its biggest international push has been into Britain where it has 27 stores, followed by 13 in Germany and nine in Spain. It has also opened a Hollister in China.

While Hollister is likely to be the first store in the Abercrombie & Fitch group to reach Australia, it follows behind other international retailers, including Top Shop, Zara and Gap.

In a report into the retail sector published earlier this year, Morgan Stanley predicted that global apparel brands, Zara, GAP, Topshop/Topman, H&M, Uniqlo, Victoria’s Secret, Abercrombie & Fitch, and Forever 21 were likely to have 182 potential stores in Australia by 2016, delivering $1.9 billion in sales or 6% market share of the apparel market.