March 11 (Bloomberg) -- Bare-chested male models and a declining dollar are boosting global revenue for Abercrombie & Fitch Co., the first U.S. teen retailer to open its own European stores. The 116-year-old company's expansion in Europe and Japan may help lift the shares 40 percent.

After only a year, the retailer's first European venture, near London's Savile Row, charges twice as much as its U.S. stores and has sales of about $4,500 a square foot, matching the main shop on New York's Fifth Avenue, Bear Stearns Cos. said. It's opening one in Tokyo and four in the U.K., and may set up more in Paris, Copenhagen and Milan as part of a plan to almost double the number of stores to 2,050 worldwide.

The company, which says overseas sales may account for half revenue in about a decade, is poised to outpace U.S. clothing companies that cater to older customers abroad. Guess? Inc.'s European revenue has risen each year since 2004, while Gap Inc.'s overseas same-store sales have fallen.

Abercrombie's ``preppy'' fashions have ``much more potential overseas than any other U.S. brand,'' said Bear Stearns analyst Randal Konik, who recommends buying the shares and doesn't hold any. Sales outside the U.S. may add $2 a share to profit in five years, he said.

Abercrombie, based in New Albany, Ohio, may climb 37 percent to $97 in the next year, on plans for growth abroad and at home, said Christine Chen, an analyst at Needham & Co. Chen recommends buying the shares and doesn't own any. The shares have climbed after five of her last seven ``buy'' ratings.

Bear Stearns predicts the stock will rise 48 percent to $105 this year, more than double the 24 percent gain estimated by analysts surveyed by Bloomberg.

Shares Rally

Abercrombie advanced $4.39, or 6.2 percent, to $75.45 at 4:15 p.m. in New York Stock Exchange composite trading, the steepest gain since July. The shares have fallen 5.7 percent this year.

``The stock price doesn't fully reflect the international potential,'' said John Delano, who helps manage $16 billion for OppenheimerFunds Inc., which started buying stock last year and now owns about 2.25 million shares.

Abercrombie, which has shirtless male models greeting customers at its New York and London stores, will open in Tokyo in late 2009 and is scouting other sites in Japan. Its U.K. expansion this year includes four Hollister Co. shops, which sell T-shirts and board shorts designed for 14- to 18-year-olds.

International Push

Abercrombie Chief Financial Officer Michael Kramer said yesterday in a telephone interview that international growth will ramp up in 2010. Abercrombie now has a total of 1,035 shops under five brands.

``Right now, you're seeing onesies, twosies,'' said Kramer, 43. ``You're going to start seeing more like 10 to 20 to 30 stores opening up internationally within a season.''

Revenue in London, Canada and from overseas Web sales totals about $200 million annually and may climb to $1.5 billion in five years, Konik said. The Abercrombie and Hollister chains may expand into at least 15 cities in Europe and Asia, he estimated.

The dollar's exchange rate, now helping boost revenue, may become a risk if the currency strengthens faster than retailers expect. Additionally, overseas rent and labor costs are often higher, and Abercrombie may have less control over its foreign operations, analysts said. To curb expenses, it is shipping clothes to Europe directly from China, Konik said.

Roosevelt, Hemingway

Abercrombie & Fitch was founded in 1892 as a purveyor of guns, fishing rods and camping gear to adventure seekers and the rich, with customers including Theodore Roosevelt and Ernest Hemingway.

The retailer's 357 namesake stores target 18- to 22-year- olds with jeans, polos and T-shirts. It also owns the abercrombie children's chain; Ruehl for 20-something shoppers; and Gilly Hicks lingerie shops.

The brand ``is known by an upscale teen audience but it's difficult to get,'' said Steven Baumgarten, who helps manage $73 billion including Abercrombie stock at PNC Capital Advisors in Philadelphia. ``There's just a huge untapped demand.''

Abercrombie opened its London store March 22, 2007, in a building almost 300 years old. The former Bank of England branch charges 45 pounds ($90) for sweatpants that cost $44.50 in New York. It generated $50 million of annual sales in its first year, Konik estimates.

London Store

Judith Maehlitz, 23, a student from Rostock, northern Germany, became familiar with the brand on trips to the U.S.

``I love the whole thing: the image, the clothes, the stores, even the music and smell in the stores!'' Maehlitz said in London after buying a pink T-shirt for 30 pounds. ``Of course it's expensive but I'm willing to pay that because I really like the clothes.''

Earlier attempts by other U.S. retailers to expand abroad have been rockier. Gap, the largest U.S. clothing retailer, has opened about 300 stores in the U.K., France and Japan since 1987. Its international same-store sales have declined as it tried to sell trendier clothes, said Bryan Roberts of consulting firm Planet Retail.

Guess has 560 shops outside of North America and plans to further boost overseas sales by expanding in northern Europe.

Abercrombie doesn't plan to change its merchandise or store design overseas.

``We're always pushing the envelope with regards to what we call that casual American sexuality,'' Kramer said. ``We're not a brand for the parents. We are a brand for the young people of the world.''

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.

Last Updated: March 11, 2008 16:26 EDT