NEW YORK ( TheStreet ) -- Abercrombie & Fitch ( ANF) is a specialty retailer that derives most of its revenues from its Abercrombie & Fitch and Hollister brands where it competes primarily against brands from Gap ( GPS), American Eagle ( AEO) and Urban Outfitters ( URBN).A&F also has two smaller brands, 'abercrombie,' that offers casual luxury apparels for children in the age group 7-14 years, and 'Gilly Hicks,' that offers intimate apparel for women, primarily in the age group 18-24 years. We estimate that Gilly Hicks & abercrombie stores together constitute 14% of the $53 Trefis price estimate for Abercrombie & Fitch's stock. The company launched its Gilly Hicks collection of intimate apparels in 2007 as it believes that there is a significant opportunity in the lingerie market for young adult women. Although we expect A&F to benefit from the growth in the U.S. lingerie market, we believe that the long-term upside for A&F's stock from the Gilly Hicks brand is limited to about 10% of our $53 Trefis price estimate for A&F's stock.
This would mean that $40 million-$50 million worth of incremental revenues will be generated by the Gilly Hicks brand each year from 2009 till the end of the Trefis forecast period, if the revenue per square feet and sqaure feet per store for this brand were to increase according to our forecasts. This indicates that the company has the potential to capture around 20-25% of the incremental revenues generated in the lingerie market, each year between 2009 and 2016. You can modify the forecast below to see how there could be 10% additional upside to our estimate for A&F's stock if the company were to reach 800 Gilly Hicks stores in operation by the end of our forecast period. You can see our
complete $53 Trefis price estimate for Abercrombie & Fitch's stock here.