Teen clothing retailer Abercrombie & Fitch Co plans to ramp up its international expansion and add lower-priced items to its line-up in a bid to offset struggling domestic sales and falling profit.

"We have said for some time that the future of our business is tied to international growth," CEO Mike Jeffries told analysts during a conference call on Friday (13 November).

International sales including direct-to-consumer business were $88m in the third quarter, the company said, which comes to around 11.5% of total company revenues.

The retailer, which has only recently succumbed to cutting its prices to attract cash-strapped shoppers during the downturn, also plans to add lower-priced items to its line-up instead of relying on markdowns.

Jeffries said the new merchandise is in response "to an environment that continues to be very value and deal oriented" but he stressed: "We will do this in our own handwriting.

"Our business model was not built on running a promotional business and never will be."

He said the retailer would avoid undermining its aspirational brand positioning by improving the design and quality of its products and stores.

During the quarter, the company opened a flagship location in Italy - its first in a non-English speaking country - and its seventh Hollister store in the UK.

"The passion and enthusiasm from the international customer that greeted us at these openings encourage us in our long-term strategy of aggressively pursuing international growth for our brands," Jeffries said.

The retailer outlined its plans after posting a 39.3% slump in third quarter profit to $38.8m or $0.44 per share, down from $63.9m or $0.72 per share a year ago.

Excluding $6.2m in charges to close its Ruehl business and an $18.m tax benefit, the company said its quarterly profit was $26.3m or $0.30 per share.

Sales for the three months to 31 October fell 15% to $765.4m from $896.3m a year earlier.

Total direct-to-consumer sales increased 11% to $63.9m, but same-store sales tumbled 22%. By brand, comparable sales fell 18% at Abercrombie & Fitch, were down 22% at Abercrombie Kids, and slumped 26% at Hollister Co.

At the Ruehl chain, which caters to post-college adults and is set to be shuttered by the end of the fiscal year, same-store sales dropped 30%.

Jeffries is perhaps most excited that the "A&F story is translatable or transferable" to other cultures.

"There are Abercrombie kids everywhere, they love the brands regardless of the language they speak. We are cool, classic, casual, stand for quality, optimism, and appeal for the aspirational customer and that is translatable in any language."

Already in the pipeline for the fourth quarter are an Abercrombie & Fitch flagship store which is set to open in Tokyo in December, and five more Hollister stores in Europe.

And in fiscal 2010, Abercrombie & Fitch flagship stores are due to open in Copenhagen, Denmark and Fukuoka, Japan; and a Hollister Epic is set to launch on Fifth Avenue in New York instead of a previously planned Abercrombie Kids flagship.

Without giving details, the company also said it is "working toward a rate of international Hollister store openings in 2010 and 2011 significantly accelerated from 2009."