US Fashion Brand Hollister Rides the China Retail Wave

Maybe the new surfer’s paradise is the smoggy, landlocked capital of China, as surf-wear retailer Hollister opened its fifth China location on Saturday in Beijing.

The casual fashion brand, which is owned by Abercrombie & Fitch opened its first two shops in China during 2011, and seems enthusiastic about the market for beach themed attire in the middle kingdom.

“It’s very early days, but we’re very encouraged by what we’ve seen,” said Jonathan E. Ramsden, the retailer’s chief financial officer. According to the company, all four of the existing Chinese stores are performing well.

Sales bear out that judgment, company officials said. Comparable-store sales, a key indicator of a retailer’s health, rose in the Chinese stores by about 40 percent in the quarter, “even in a difficult inventory environment, which continues to give us optimism about Asia,” said Michael S. Jeffries, Abercrombie’s chairman and CEO.

While Abercrombie launched Hollister Co. in July 2000 with a southern California surfer image, the chain’s strong sales can also be at least partly attributed to the fact that it has lower prices than its older sibling.

Abercrombie officials have indicated that, based on strong performance so far, the company will open more Hollister stores in China in the coming year, but would not offer further details.

Also in the retail world last week, Swiss watch manufacturer Hublot opened a new store in Ningbo, Zhejiang province. The store at Ningbo Tianyi International Shopping Mall is the company’s ninth outlet in China.

According to analysts estimates, rising retail demand will continue to fuel the opening of more retail outlets across China with the increase in demand expected to boost prime retail rents by 10-12 percent during 2013. In a recent report by CBRE, China was found to be by far the most active development market for shopping centres last year with four Chinese cities placing in the top five in terms of the amount of new space completed.