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Abercrombie & Fitch is testing a Victoria's Secret and Aerie rival

Brian Sozzi
Editor-at-Large

Abercrombie & Fitch’s management team wanted to sell off the IP related to its intimate apparel label Gilly Hicks, which it decided to shutter in 2013 via the closure of 28 of the brand’s stores.

Abercrombie’s CEO Fran Horowitz — then brought in as president of Hollister in late 2014 — tells Yahoo Finance one of the first things she did when assuming that role was to ask the team to hold onto Gilly Hicks. The long-time merchant in Horowitz knew there was an opportunity to take on intimate apparel stalwart Victoria’s Secret and American Eagle’s surging Aerie brand.

But first, Horowitz had to jump-start the Hollister brand. Done. And as CEO since 2017, Horowitz has worked to reposition Abercrombie & Fitch’s customer demographic and reconfigure a store base still too reliant on massive flagships.

Now that Horowitz has successfully gotten through the toughest part of her assignment as CEO, she could focus on something a bit more fun. That is incubating a brand in Gilly Hicks that has enormous potential given the strength of the intimate apparel market and the bad fumbles of the seemingly out of touch Victoria’s Secret.

And Horowitz’s work to grow the Gilly brand is well underway.

Gilly Hicks was re-launched in January 2017 inside all of Hollister stores, the company’s California lifestyle themed apparel concept. It also landed back online. The products mainly consist of bras, underwear and sleepwear for young millennial females.

“We are excited about what the customer is responding to, they are really giving us positive feedback on our intimate apparel, our sleepwear and we look to continue our expansion,” Horowitz tells Yahoo Finance while standing in a new Gilly Hicks store at New Jersey’s Garden State Plaza mall. The location reflects how Horowitz is probably thinking about expanding the brand in terms of physical stores.

Abercrombie & Fitch eyes the intimate apparel market in 2020.

The location is adjoined to a Hollister store, it’s small and has a very edited assortment of intimate apparel. It has the same inclusive feel of an Aerie store and similar price points.

A Victoria’s Secret clone this is not — which is a good thing.

Victoria’s Secret has seen its sales dive the past two years amid a broader trend toward inclusiveness and natural in intimate apparel. That trend shift has caused Aerie — which has won shoppers as it has stressed inclusive product designs and marketing — to consistently post 20%-plus quarterly same-store sales gains amidst Victoria’s Secret period of major tone deafness.

“Women want to feel comfortable with who they are and I think we are giving them the opportunity to be who they are and dress the way they want to underneath it all every day,” Horowitz says.

Currently, Abercrombie has six stand-alone Gilly Hicks stores open across the country, six side-by-side stores and 40 “carve outs” or shops inside a Hollister with no separate entrance. Just the fact they are open suggests Horowitz has seen enough from the brand’s performance inside of Hollister the past year to believe the brand could stand alone.

Even still, Horowitz is taking it slow on opening Gilly Hicks stores. A decision on a more aggressive store rollout for the brand is likely coming in 2020.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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