Abercrombie & Fitch plans to expand its new Hollister division and believes that it has the potential to overtake A&F over the next few years, a report in Women's Wear Daily said.

The Hollister stores were introduced in July 2000 and sell surf and skate wear to 14-18 year olds.

A&F chief executive Michael Jeffries told analysts at the company's annual meeting that Hollister store openings would rise from 20 to 25 this year, with 50 units planned for 2002 and greater numbers projected for subsequent years.

"Sales are way ahead of where we projected," said Seth Johnson, chief operating officer. "We're comparing Hollister to a business we've been running for nine years, and even we didn't know how well it would do."

WWD reported official projections that the Hollister chain could eventually number 800 stores, outnumbering A&F, which is expected to top out at 400.

The first five Hollister stores have been a runaway success, with them generating 90 per cent of the sales of A&F stores located in the same malls despite being smaller and carrying apparel with lower prices.

"Over time, Hollister will exceed the dollars-per-square-foot of Abercrombie," Jeffries concluded.

The Reynoldsburg, Ohio-based retailer reported net sales of $73.8m for the four week period to the end of June - a 25 per cent increase over last year's net sales for May of $59m. In the year to date, the company has reported a net sales increase of 28 per cent to $337.5m from $256m last year.