All right. Good morning, everyone. On behalf of the Abercrombie team, welcome to our 2022 Investor Day. We're thrilled to be here live with you all in New York City. For those who are unable to make it in person, today's conference is being webcast and recorded. Earlier this morning, we issued a press release, which is available on our company website at corporate.abercrombie.com in the investor section. Also available on our company website in the investor section is today's presentation. Please keep in mind that any forward-looking statements made by the company today are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on information available to the company currently and are subject to risks and uncertainties that could cause actual results to differ materially from the 2025 and long-term targets, goals, expectations, and assumptions we mention today. A detailed discussion of these risk factors and uncertainties is contained in the company's annual report on Form 10-K and our other reports and filings we may make with the Securities and Exchange Commission. In addition, we will be referencing certain non-GAAP financial measures during this presentation. Additional details and a reconciliation of GAAP to adjusted non-GAAP financial measures are included in the appendix to the presentation. With that, just wanna take a moment for a few housekeeping items. This morning, we're very excited to talk about our Always Forward Plan.
As the vast majority of the second quarter is still ahead of us, you all know how important back to school is, we're not gonna be commenting on intra-quarter trends today. From an operating segment and reporting perspective, when we discuss Abercrombie brands, it does include Abercrombie Adults and Kids. Hollister, as a reminder, includes Hollister, Gilly Hicks, and Social Tourist. We'll be discussing Gilly Hicks separately today as well, which I know you're all excited about, and then providing annual revenues on Gilly at the end of the year. Social Tourist, talking about it today, but it's currently immaterial to sales. For the purpose of brand conversations this morning, when we mention Hollister, it's going to be focused on the Hollister brand. Now, walking you quickly through the cadence of the day.
In the back of your name tags, you see a QR code that provides today's schedule. It also has the Wi-Fi passcode for the event. We're gonna be kicking off this morning with our CEO, Fran Horowitz. From there, you're gonna hear other senior leaders in the organization tell you all about what they do. The presentations are scheduled to last until noon. There's gonna be a few breaks throughout the morning to refresh, recharge, check out our store build-outs. We're really excited about those. They have recently updated elements for Abercrombie, Hollister, Gilly, Social Tourist, kids, all our brands are there. You also have the opportunity to meet the leaders who make it all happen. Make sure to talk to our merchants because you don't get that opportunity very often. Following the presentations, we have a Q&A session.
We do ask that you hold all of your questions for our presenters until then. Then after that, we have some lunch for you all as well with our senior leaders. I know you love seeing Fran and Scott, and we haven't had a chance to be in person that often, so we've seen a lot of you virtually. This is also a really great chance to interact with our other senior leaders and meet additional members of our team. With that, let's get started. It's my absolute pleasure to introduce our very first presenter of the day, Chief Executive Officer, Fran Horowitz.
Thanks, Pam, and good morning, everyone. What a time to come together. It has been a little over four years since our last Investor Day, and during that time, the world and our company have changed significantly. Today, we are fundamentally different than we were just a few short years ago, having transformed who we are and how we operate. While some of these changes were planned, some of them were clearly unexpected, reflecting the many unprecedented challenges and associated opportunities that have certainly come our way. Standing before you today, I wanna be clear, our eyes wide open. We understand that the world, the economy, the customer, retail has changed tremendously. We're at a crossroads again in retail, and the global economies are moving in very different directions.
Over the past few years, we have consistently proven our ability to navigate through unprecedented challenges while maintaining a focus on making progress on our long-term goals. I'm excited today to share our Always Forward Plan. We have targeted $4.1 billion to $4.3 billion in revenues with an operating margin at or above 8% by the end of fiscal 2025. Longer term, our aspiration is to be a global omnichannel retailer with $5 billion in revenues and an operating margin at or above 10%. For the purpose of this morning's discussions, we will focus on how we are going to achieve our 2025 target through our powerful family of brands. Our Always Forward Plan reflects the current dynamic environment with an expectation, to be clear, for the known and the unknown consumer pressures that will emerge.
This provides us, which is very important to realize, multiple avenues to achieve our goals, giving us the confidence that we can meet our 2025 term—2025 and longer term goals while continuing to deliver very strong shareholder returns. Before we go forward, let's go back quickly, and let's look at all the accomplishments since our last Investor Day, from 2017 through 2021, and what we have been able to accomplish. We've evolved the purpose and positioning at each of our brands, executing a turnaround at Abercrombie Adults that many, many thought was impossible. We grew our U.S. Hollister business at a 4% CAGR when the teen market has been declining, slightly declining since 2018. We've increased our digital penetration to 47% from roughly a third pre-pandemic. Digital sales are $1.7 billion.
We reduced our occupancy costs by $200 million, removing roughly 1.6 million underproductive sq ft. We generated $780 million of free cash flow, roughly returning $640 million to shareholders through share repurchases and dividends while maintaining our strong balance sheet. Today, we have purpose-led brands and a solid underlying foundation and a clear vision of who we are and who we want to be. We can adjust to the environment faster than ever before. That is why when our customer invests in apparel, they will continue to choose us. As we look forward, our Always Forward Plan is targeted, is anchored in three key strategic principles. We're gonna execute focused brand growth plans, an enterprise-wide digital revolution, and we will continue to operate with financial discipline.
Over the next few hours, you'll hear from our team on the specifics of these principles, and needless to say, they will inform on how we invest, how we grow, and how we engage. We'll also discuss our key assumptions around the global consumer and inflation and how we will be agile with our investments and growth with the underlying assumption that we will continue to adapt to our customer and the broader environment. Our strategic principles are rooted in our corporate purpose. We are here for you on the journey to being and becoming who you are. Because we believe that when people are free to be who they are, truly are, they can reach their full potential, and each generation brings an opportunity to change the world for good.
We've worked hard on that purpose, and I love what that stands for. Each brand must exemplify our corporate purpose and in turn in their unique brand purposes. While fashion trends come and go, the best retailers intimately know their customer. That informed view is woven into the DNA of the company and its brands. It is the focus that keeps customers coming back season after season and generation after generation. Our corporate purpose is especially meaningful given our customers range from age five through the millennial. We are truly with them through their formative years as they physically and mentally grow with us. They are change agents of the world, and we learn so much from them, and we strive to support the causes that they collectively care about.
These center around inclusivity, mental health and wellness, being your authentic self, and making the world a better place, all of which ladder back to our purpose. Our customers and our beliefs are partnerships such as the SeriousFun Children's Network, The Trevor Project, GLSEN, The Academy Group, The Steve Fund. Our relationships with our partners are not transactional. I'm very clear with the team when we make these relationships that they need to be engagements, and they need to have volunteerism supported with them, and that's what we have created with all these long-term partnerships. We also use these partnerships to help inform our lens for our influence and affiliate partnerships. Our beliefs must align and track to our purpose. Our purpose is not only about our customers, it's about our associates.
We take great pride in our associate engagement opportunities, including our highly competitive leadership development program, where recent undergraduates participate in a multidimensional rotational experience. In addition, we have created associate resource groups for our BIPOC, LGBTQIA+, women's and family team members so that we can better support each of them. We actively solicit feedback from our store employees who lead our customer interaction day in and day out, and collectively, this information is invaluable. Our culture and associate focus are key components of our foundation and what positions us for ongoing success. Last year, an incredibly proud moment, we were named Fortune one of Fortune's best places to work in retail. It was also our 16th year being an HRC Best Places to Work for LGBTQ+ Equality. Super excited and very proud of that.
Today, we have a purpose-led company and powerful family of differentiated brands, which is something I couldn't say when I joined this company in 2014. We cater to kids through millennials, and we tailor our product voice and experience to appropriately connect with them at the different stages of their lives. We authentically speak to and listen to them, and we've gained their trust and respect, and we do not take that for granted. The benefit of having that diversity of brands is that we are not dependent on just one customer, economy, or fashion cycle for us to be able to achieve our long-term goals. Purpose interacts how we interact with our customers and communities and engage with our teams and partners. It also applies to how we approach our brands as each is on its unique journey.
Let's take a few minutes and dive into each one of our principles, and we're gonna start with execute focused brand growth plans. Our Always Forward Plan 2025 targets a 3.5% sales CAGR off 2022 levels, with Abercrombie Adults, Hollister, and Gilly Hicks serving as our main opportunities for growth. Let's start with Abercrombie Adults, which we currently view as our largest growth story. At Abercrombie Adults, we believe every day should feel as exceptional as the start of a long weekend. We introduced our updated brand positioning and purpose in early 2019, and we bring that to life every day through our commitment to outfitting the young millennial for their busy and active lives, both on social media and in real life. Our updated positioning and purpose is truly resonating with our target customer. We have received accolades.
Abercrombie is back, and we could not agree more. What the Abercrombie team has accomplished is truly phenomenal and rarely seen in retail. There's also been commentary on our past practices, and you know what? We own our past, but I wanna clearly state in front of you all that we are fundamentally different company today with a focus on inclusivity and belonging. Since the day I joined, we have worked to change the present and positively impact the future, and that is a non-negotiable. Since the turnaround first began to gain traction, Abercrombie Adults has outpaced the broader U.S. apparel market, with women's growing around 60% since 2019.
We currently have significant momentum at Abercrombie Adults, and this is very important because our sales and margin perspective as Abercrombie Adults carries the highest growth and operating margin of our brands, reflecting its above company average digital penetration and AUR. It also caters to the highest income demographic of all of our brands, with almost 30% of its customers coming from households making over $150,000 per year. Our Always Forward Plan assumes that we grow total Abercrombie sales, which includes kids, to a 6% to 8% sales CAGR, 2022 through 2025. We expect Abercrombie Adults to grow at a rate above the total brand sales CAGR, adding $300 million to $450 million of revenues by 2025. Where is this growth gonna come from?
First, building on momentum in the key women's categories and franchise collections that have been driving results, including jeans, Best Dressed Guest, and our newest, YPB, Your Personal Best. Second, opening smaller, more omni-enabled locations globally. These will continue to look different than the past as we lean into data and analytics to dictate an ideal size, location, and product offering for each market. Like our recently opened store, Southport location in Chicago, which is already one of our most productive locations. We will also continue our industry-leading efforts in digital marketing and social selling, which our teams have won multiple awards over the past few years. Okay, let's turn to Hollister. Hollister targets the Gen Z consumer with the purpose liberating the spirit of an endless summer inside everyone by offering an optimistic California-inspired assortment.
Over the past few years, Hollister has been the tale of two worlds, U.S. and international. From 2017 to 2021, our U.S. business has grown at a 4% CAGR, even as we have reduced our store count to a base of 351. Growth was achieved despite a deceleration in the teen apparel market since 2018. As such, we're confident that Hollister U.S. is well-positioned to sustain these levels of growth. Unfortunately, the strength of Hollister has been offset by international, which has contracted over 20% in the face of COVID-related lockdowns and restrictions, reflecting outsized exposure in EMEA and APAC relative to our other brands.
As we look to 2025, we're forecasting total sales CAGR in the flat to +2% range for just the Hollister brand, adding up to $100 million from 2022 levels. We believe it is appropriate to apply a conservative growth rate until we can gain more visibility on the impact of inflationary pressures. The Hollister brand's penetration among high-income households is significantly smaller than ANF on a percent to total basis, with almost 45% of this customer at a household income of under $75,000 per year. As we anniversary an environment that includes stimulus, we expect this cohort to be more economically sensitive, but have planned accordingly and remain confident in our ability to convert traffic based on our trend right apparel mix. For Hollister, where will we focus?
We're gonna focus first, net store openings as we fill white space in U.S. and Western European markets. Similar to Abercrombie, we'll leverage data and analytics to support our store size, location, and product mix. We're capturing a portion of lost sales in EMEA as the region works through macroeconomic challenges, and we're going to continue to broaden our Gen Z customer base. The older Gen Z customer, aged 19 to 22, loves our brand, but has told us we do not offer product that caters specifically to them. We expect to capitalize on this opportunity by offering more elevated styles that we know will resonate with this older Gen Z consumer. Gilly Hicks, our third area of opportunity. At Gilly Hicks, we strive to help our customers play happy with men's and women's active, lounge, and intimates that have a broad appeal from Gen Z through millennials.
2021 was a very important year for Gilly. We embarked on a successful brand relaunch, opened a first of its kind standalone store, and introduced a small assortment of men's product. It has been steadily building momentum since we brought back the brand from dormancy in 2016, and that accelerated last year with the brand relaunch. Gilly, we expect to grow Gilly at roughly a 15% CAGR through fiscal year-end 2025 to about $170 million of revenues from approximately $110 million this year. While off a lower dollar base in Abercrombie adults on a percentage basis, Gilly Hicks represents a significant growth opportunity. We will pursue growth by building brand awareness through marketing and store openings. Currently, product lives in all Hollister stores globally.
We also have two freestanding locations, and with a third set to open this week and 30 side-by-side locations. We are excited about the opportunity to expand Gilly Hicks beyond the walls of Hollister and have plans for additional stores this year. We, as you hear us say frequently, we are a test and learn culture. We will learn from this first wave of stores and use those learnings to inform the store growth through 2025. In addition, we'll emphasize our active assortment, which has been the top performing category since it was introduced in 2020, and we'll also continue to broaden our men's assortment. I'll quickly touch on Kids and Social Tourist to close out our brand conversation. abercrombie kids offers 5 to 16 and abides by play is life motto, always emphasizing kindness.
We view Kids as a stable business and are not assuming incremental growth in our 2025 target. Social Tourist, which was introduced just last year, caters to the older Gen Z and younger millennial by providing an edgier, more fashion-forward vibe that fits into their social-first lifestyle. At Social Tourist, we will continue to add digital and social learnings and thoughtfully apply those to all brands while leaning further into our relationships with leading social providers, including TikTok, Instagram, and Snapchat. We view growth from Kids and Social Tourist to be upside to our plan. Now, let's turn to our second strategic principle, accelerate an enterprise-wide digital revolution. The customer expectation for a seamless experience continues to rise quickly. To win in retail today and in the future, we must connect with them on all channels.
With our brand plans focused and prioritized, our digital revolution is truly the how we will evolve our company and omni experience to meet them whenever, however, and wherever they choose to shop with us. This experience is not the same for every customer or even every brand, which Kristin and Samir will discuss in more detail shortly. We are actually approaching our digital revolution from a position of strength. In 2021, our digital sales penetration rose to 47% from roughly 1/3 pre-pandemic, and digital carries a higher four-wall operating margin than our stores. Importantly, as digital demand significantly accelerated, we were able to keep pace due to the consistent investments we had made over the years. Digital goes hand in hand with the physical store experience, and balancing digital fulfillment and occupancy is critical to maintaining and expanding profitability.
As our digital sales have grown, we have been optimizing our store fleet. We removed 25% of our square footage or about 1.6 million underproductive square footage, which reduced our occupancy costs by over $200 million. As we close those underperforming locations, we improved our existing store experiences. We expanded digital capabilities by our store associates and our omni-channel capabilities to include curbside and same-day delivery. We fully integrated devices for mobile payment in stores and ramped personalization efforts, telling our digital sites to match our customer expectations. To date, our digital preparation has been a mix of what we call table stakes and innovation. In the future, we plan to accelerate our investments in innovation, digital agility, and modernizing our core platforms.
We are approaching our digital revolution in two ways. Know them better and wow them everywhere. First, while we pride ourselves on staying close to our customers through our Always Forward Plan, we will turn that strength into a key competitive advantage by knowing our customers even better. We will build on our unrelenting customer obsession through expanding and accelerating our investment in best-in-class customer analytics to determine what drives them and how they want to engage and what they want from us. Next, wow them everywhere. While in the past, we have talked about how the line between stores and digital has blurred, today there's no line. Customer engagement and commerce is not limited to two channels. It happens on social, it happens through partnerships, and it will happen through the metaverse.
As customer expectations continue to rise, we are proactively building our teams and our systems to continue to meet and exceed our customers' expectations and provide a breakthrough digital retail experience. Third, operate with financial discipline. This has been an area of focus since the day I walked onto campus in 2014. I'll underscore this by one of my favorite expressions, which is, "The only constant in retail is change." Over the last few years, that could not be more true. The moves that we have made over the past four years have fundamentally improved our operating model and shifted us to a more agile cost structure with less fixed occupancy and more variable fulfillment and marketing. We've also transformed our end-to-end product life cycle to enable agility and flexibility around the products we deliver and the levels of inventory we buy.
Our updated operating model and strong balance sheet will fuel the investments in our Always Forward Plan. Over the past four years, we've generated $1.3 billion of operating cash flow. We've invested $500 million back into the business, resulting in $780 million of excess cash flow. Free cash flow, excuse me. Going forward, we expect to continue to deliver the cash flow needed to organically fund our investments while continuing to return cash to shareholders. We are committed to maintaining our expense discipline. We'll continue to seek expense efficiencies while protecting and funding our Always Forward ambition. While we're on the topic of balance sheet, I'd like to take a moment to discuss inventory. Today is about the future, but we felt it was very important just to take a moment and talk about inventory.
It has received significant press lately, and I think the most important thing is that the headline is not the whole story. We have learned critical lessons around inventory management over the past four years, and I want to be clear that we are confident in our inventory, our strategy, and our inventory is current and balanced. In the first quarter, our inventories were up 45%, which again, I'm gonna repeat myself, that may have been the headline, but it is not the full story. Our units on hand were up just 10% following a historic low last year and remain down to 2019 and to 2020. When looking at the composition of inventories at the end of the first quarter, 93% of inventory units were current. 93%.
Those units were either new product that hasn't been set, long life product like jeans or fragrances or seasonal product. To underscore that, current product, not winter clearance, carryover that we did not sell through, and that is why we remain confident with our current inventory position. Scott will walk you through a little bit more detail about our inventory during his session, but let me assure you, we will continuously track consumer behavior and leverage all the tools in our toolkit to make sure that we manage our inventory tightly. We'll also leverage those tools in our toolkit to achieve our Always Forward Plan. We are confident in our ability to achieve $4.1 billion to $4.3 billion of revenues and an operating margin of at least 8%.
We are in a dramatically different place than we were just four years ago, and those changes have positioned us to deliver steady growth. Today, we have a family of differentiated global brands, each catering to a unique edit point. Our company and our brands are purpose-led and listening to and learning from our company, from our customers is deeply ingrained in our thinking and culture in a way that it has never been before. We are committed to constantly adapting to meet and exceed their ever-changing needs. Our operating model has evolved, and we are excited to meet our customers where they shop with new store locations and ever-improving omni-channel experience. Looking ahead, we have focused areas for growth, a clear strategy, and a team in place to successfully execute to our Always Forward Plan.
We are resilient, and after what we have conquered over the last few years, we believe nothing is insurmountable, especially with the amazing global teams that we have in place. Let's talk to some of the leaders of the teams who made it all happen and are here with us today. I'm excited to introduce Kristin Scott, President of Global Brands. Robert Zajac and Carey Krug, our Heads of Marketing for Abercrombie and Hollister. Samir Desai, our Chief Digital and Technology Officer, and Scott Lipesky, our CFO. In addition, throughout the day, you'll have the opportunity to meet with the key leaders who have also been agents of change. We are thrilled to have them here, but it's also important to recognize that we couldn't fit everybody, obviously, in this room today.
From our stores and our DC associates to those in our regional home offices, there just was simply too much talent and too many talented individuals to fit in this room today. I am incredibly proud of how we have empowered and given each and every one of them a voice where they can be heard and impact the organization regardless of title. This is what sets us apart from others and helps us retain some of the best talent in retail. Speaking of some of the best talent in retail, it is my pleasure to welcome to the stage Kristin Scott, President of Global Brands.
Thanks, Fran, and good morning, everyone. I'm really excited to be here with all of you today to share more detail on our brand positioning and our brand growth strategies that will get us to $4.1 billion to $4.3 billion in sales short term and $5 billion in sales long term. As Fran mentioned, we're gonna focus mostly today on our top three priorities, which are Abercrombie adults, Hollister, and Gilly Hicks. Before we do that, I'm gonna share a little bit about my personal journey and what actually led me to Abercrombie. I've been in retail for over 30 years now, and I've been fortunate enough to work with a number of amazing brands and leaders. I started my career at Target, and I spent 16 years there.
When I started at Target, there were only 300 stores, so this was a very long time ago. When I started at Target, they didn't even have a design team, so it was very different back then. I was very fortunate to be part of the transformation from Target to Target. When I reflect back on my career, that was such an amazing learning at such a young point in my career, and I reflect back on that frequently. We also didn't have design teams, as I said, so I had to learn product development from the ground up working with my vendors, which is very old school, and I don't think it happens anywhere anymore, but fortunate that I was able to do that.
When I left Target, I went to Gap, and I ran Gap Outlet, and at the time, they were going through a transformation as well. They were in the process of transforming from a Gap brand remake outlet model to a product development model. Naturally, my product development skills that I had learned at Target were very applicable to Gap at that point. After Gap, I went on to Victoria's Secret, and I spent about nine years at Victoria's Secret, and I did a number of different roles there. I spent most of my time, though, on what they called the emerging businesses. Those were businesses that somebody thought should be billion-dollar ideas, and me and my team actually got to figure that out. As you can imagine, some of these ideas come, and they have no history, nothing to reflect on.
My team and I got to spend a lot of time with customers trying to figure out how to drive growth in these billion-dollar ideas. I consider that time in my career as really my master's course in brand building and using customer insights to drive growth, and it was really an amazing part of my career that I reflect on all the time as well. In early 2016, I got a call from a recruiter, and it was about the job at Abercrombie as the Hollister brand president. At the time, one of my good friends and mentors was on the Abercrombie board, and she had been talking a lot about how impressed she was with what was happening at Abercrombie. The culture was amazing. The brand showed so much potential. The team was so talented.
Naturally, I was curious when I got this call. I returned the call, and after about two hours on the phone with this recruiter, he said to me, to end the call, he said, "Okay, I don't know if there's such a thing as business soulmates, but if there is, that's you and Fran." I was like, "Wow, I've got to meet this Fran. I'm really interested now." I met Fran on a Saturday. We shopped and had lunch, and I knew exactly what he meant at that point. I knew that she and I would be a great team and that I would learn a lot from her and that we would work very well together. Thankfully, she thought that too and invited me to campus to meet with some of the senior leaders to interview.
When I stepped foot on campus, I knew that's where I was meant to be. There is something so special about the Abercrombie culture, and I'd been at a lot of retail, as you heard, and there was nothing like it out there. I knew I wanted this job. I also had a son at home, a teenage son at home, so I had a built-in focus group of Hollister's target customer every weekend, and I could clearly see the opportunity that we had to transform Hollister into the leading global Gen Z retailer that it is today. Thankfully, Fran hired me, and I started my job as the Hollister brand president in back-to-school 2016. At Hollister, back-to-school is like Black Friday.
I started in August, and by the second week we got a bus together, and we filled it up with Hollister associates and went to visit stores. We went from Columbus to Cincinnati and hit all of our stores just to listen to our customer. That kicked off what I would call our mission to become customer-obsessed. Fran and Scott had put the wheels in motion with the playbook for Hollister defining the purpose, and then we were able to take it to the next level and truly become customer-obsessed. For the next couple years, we saw tremendous growth, and in fact, Hollister saw its turnaround in 2017, which was very exciting. In late 2018, Fran decided we'd benefit from reorganizing how the brands were structured.
She wanted to have one leader over all brands so that we could share best practices, we could share talent more easily, we could learn from each other more easily, and really build this customer-obsessed culture across the brands equally. That's when she put me in my role, which is the President of Global Brands. I believe, without a doubt, that I have the best job in retail right now. I get to come to work every day and work with absolutely amazing people, some of whom you're going to meet today, and I'm truly surrounded by inspiration. Whether that's at the home office or in our stores, where we have tens of thousands of associates working for us who truly love these brands and help our customers fall in love with these brands at the same time.
We're lucky enough to have some of these leaders here, as Fran mentioned. I'm gonna quickly introduce them. They're just gonna wave their hands. They're in the back of the room. The leaders we have with us from the brands today are Corey Robinson. There's Corey. Corey heads up omni merchandising and design for Abercrombie Adults. You may have seen him in the pop-up shop. We have Betsy Hall, who heads up omni merchandising for Hollister and Social Tourist. Kelly Hall, who's not related to Betsy, but she heads up our kids business. Kim Dolder, who heads up our Gilly Hicks business. Lisa Lohman, who is our head of design for Hollister and Social Tourist. Over here we have Carey Krug and Robert Zajac, who lead marketing for Abercrombie brands and the Hollister, Gilly Hicks and Social Tourist brands.
I'm excited for you to spend time with them. I encourage you on your breaks, at lunch, as you go through the pop-up shops, get to know them because they and their teams are truly the magic behind our brands, and they are the ones who are gonna bring this Always Forward Plan to life. All right. Okay, for the last four years, our teams have focused on strengthening the brands by being completely customer-obsessed. We're lucky, as you heard Fran say, that we have a broad customer range. We've got a five-year-old through a millennial who shops with us across our brands. Based on that, we have amazing data and insights and just customer qualitative insights as well that we're able to share across our brands that help us anticipate shifts in customer mindset or even incoming trends.
We've become experts at immersing ourselves in the lives of our customer. What that means is that we literally show up where they are. If you're working in a Hollister, you're gonna show up at the first day of school, and you're gonna see what the kids are wearing to school. You're gonna show up at a Friday night football game and interact with the kids and watch how they're interacting with each other. If you're in Abercrombie Adults, you're gonna go on a four-day weekend with your target customer. You're gonna go, you're gonna go to happy hour, you're gonna go to brunch, you're gonna spend time with them. It's truly about getting to know them on their turf. We also collect over 6 million points of customer feedback on an annual basis through focus groups, insight labs, and surveys.
In the face of the COVID-related pressures that we saw and the disruption that we saw to our associates, to our customers, and to our supply chain, our teams stayed maniacally focused on the customer. What this did is it allowed us to really anticipate shifts in mindset. We were able to tell when they were feeling differently about going out or staying in, and we were able to change our product stories and our messaging to match what they were feeling. This allowed us to tailor all of our messaging to be at the right price and meet them where they wanted to interact with our brands as well. On that last point, we know that each and every customer journey is different.
We recently completed a major data-driven project with a third party that helped us understand these journeys and expectations at a very detailed level. As a result, we're now able to segment our customers within each of our brands based on their attitudes and behaviors. This has unlocked tremendous opportunities for us to build meaningful strategies to impact how each segment of our customers experiences our brands, both digitally and physically, at different points in their personal journey. Simply said, this allows us to know them better and wow them everywhere. Looking at our family of brands today, I couldn't be more excited about the potential and our unique positioning. Our confidence in the future is very high, and our customer obsession will fuel our ability to hit the 2025 target and beyond.
As Fran mentioned, our 2025 plan targets a 3% to 5% sales CAGR off of 2022, with Abercrombie Adults, Hollister, and Gilly Hicks being our main opportunities for growth. We are fortunate, though, to have the agility and the flexibility to shift our focus across our entire family of brands as we react to the marketplace and get new learnings and unlock opportunities from our best-in-class test and learn culture. Let's start with Abercrombie Adults, where we currently have the largest growth opportunity. As you heard, Abercrombie is focused on the young millennial, and we have a 25-year-old edit point. We know that this target customer absolutely lives for the four-day weekend, which is at the root of our brand purpose. We believe that every day should feel as exceptional as the start of a long weekend.
The response to this positioning, which we introduced in 2019, has been overwhelmingly positive. The Abercrombie turnaround first started in late 2019, and it's continued to build momentum ever since. This turn has been fueled by a global young millennial customer who overindexes in digital relative to the rest of our brands. However, there's still a misperception that Abercrombie is just another U.S. mall-based teen retailer, which could not be further from the truth. We have transformed into an agile, digitally led, customer-centric, purpose-led brand uniquely positioned for today's on-the-go millennial customer. What gives us confidence in our 2025 plan? As you heard Fran say, our women's business has grown about 40% since the repositioning and around 60% in our largest market, the U.S.
This significantly outpaced the total apparel industry, which according to NPD, has grown approximately 10% in the U.S. since 2018. From 2018, we've also added over 12 million customers. At Abercrombie today, we lead with purpose, partnering with key organizations like The Trevor Project and The Steve Fund to truly make a difference in the lives of our customers. The Trevor Project is the world's largest suicide prevention and crisis intervention organization for LGBTQ young people, and The Steve Fund is the nation's leading organization focused on supporting the mental health and emotional well-being of young people of color. Here's a short brand video that brings to life the powerful changes that we've made as we fine-tuned our brand positioning and immersed ourselves in the lives of our target customers.
Our strategy to age up Abercrombie Adults to target a 25-year-old has unlocked significant growth opportunity, as we are now squarely in the consideration set of the largest addressable adult cohort, the millennial, which encompasses about 72 million people and $76 billion in an addressable market. Our young millennial customer has their own income, and they're allocating a large portion of their discretionary dollars to socializing and travel and need to be outfitted for all their adventures, which, of course, they will be documenting on social media. For Abercrombie, we'll focus on three key areas. The first is building our momentum in the women's business, growing sales by double digits annually. Second is taking a data-driven approach to store expansion. And third is growing our brand levers through our industry-leading efforts in digital marketing and social selling.
All right, let's start with the women's business, where we plan to grow our sales double digits annually. Over the past several years, through time spent with our target customers, we've identified untapped opportunities and built key women's categories and franchises to address them. We've also been refining our existing categories along the way. Our women's business has been a clear winner among our brands and across the broader apparel marketplace. Even with our most recent growth, we know that we still have a lot of market share to gain. According to NPD, every 50 basis points in women's share would add approximately $240 million to our top line. We plan to build on our successful categories and franchises, including denim, Best Dressed Guest, and YPB, our most recent introduction, which just launched in March and is already far exceeding our expectations.
Let's drill down a bit farther on each of these, which all carry a higher merchandise margin than the brand average, and they also have attracted new customers to the brand. Okay, denim, many of us are wearing it in the room today. We have quickly become her new favorite brand, and since 2017, we've been able to grow our AUR by about 50%, and we have grown sales by roughly 2.5 times. Within denim, our Curve Love fit, which we first introduced in 2019, is now representing 50% of our denim sales. We know denim is a core part of the young millennial's outfit, and we believe that we can more than double our market share in denim as our brand awareness grows.
In addition to denim, she is loving our dresses, and since 2017, dress sales have risen almost 80%, and there's still tremendous opportunity. Last year, we introduced the Best Dressed Guest collection, which came directly from insights from our customer and long weekends spent with them. We learned that she wanted affordable, quality, stylish dresses for all of the celebrations that she was going to. Given the differentiated nature of the Best Dressed Guest collection, we believe that sales are incremental to our existing dress assortment. 2021 marked our biggest year in the history of the brand for dresses, and we are set to blow that away this year. We know there's a lot of opportunity here. Last, but absolutely not least, is YPB or Your Personal Best.
This was our recently launched performance active line that blends technical and fashion in a perfectly Abercrombie way. The reception has been phenomenal and we see tremendous upside in this category. Active is another example of product that our customers actually asked for to support their lifestyle. After countless hours of wear testing and feedback from fitness enthusiasts, we launched YPB in March. Our customers are absolutely loving the product and the compelling value. The initial launch beat our expectations, and we see a long runway of growth in active, which has been the fastest growing segment of the apparel market. For those of you who haven't seen the line yet, here is a quick clip. All of you are carrying the YPB bags, which are the best bags. They sold out so fast that we couldn't even get our hands on them, so enjoy those.
All right, next up, we have data-driven global store expansion. ANF is our most highly digitally penetrated business, as you heard, around 60%. The role of the Abercrombie store differs dramatically than our other brands and even between markets. Our customer wants this physical space, whether it's to shop, to return, or to pick up their digital orders, and we are using data and analytics to unlock opportunities on a market-by-market basis. A great example is this women's only store that you heard Fran mention on Southport Street in Chicago. Our data pointed us to this location knowing that she loved us digitally, but we didn't have a physical store for her. Although it's only been open for a few months at just 2,300 sq ft, it's now one of our most productive stores in the ANF fleet.
We'll continue to unlock similar opportunities around the world, informed by data and analytics based on the needs of the respective customer in each of those markets. With only 220 stores globally at the end of the first quarter, including about 170 in the U.S., we have plenty of white space for this brand. Our go-to-market strategy will look different than in the past as we deliver more off-mall, neighborhood, and street locations to stay close to where our local customer is shopping. We're excited about the opportunity to introduce more locations and plan to open approximately 30 to 40 new stores through 2025, with the potential for more longer term. In addition to the data and analytics, we're also using our customer journey work that I mentioned to actually enhance our store experiences.
Okay, last but not least is our third area of growth, and it's going to come from how we authentically engage with our target customers through digital marketing and social selling. I'm happy to invite up Carey Krug, Head of Abercrombie Marketing.
Thank you, Kristin. I am grateful to be a part of this team, and as a mom of two girls, I am honored to be among such incredible female leadership. I joined the company at the tail end of 2018, and prior to Abercrombie, I had the privilege to work for some quintessential American brands, including David Yurman, where I was CMO, Ralph Lauren, where I led global marketing for the Polo Ralph Lauren brand, and Donna Karan, where I had the opportunity to create and launch the digital businesses for both Donna Karan and DKNY right here in New York City. I am very happy to be here with all of you and firmly declare that Abercrombie is back, and this is only the beginning.
Now, I took the call from Abercrombie mainly out of professional curiosity, which quickly turned to personal curiosity when I learned of Fran and Kristin's vision to transform the Abercrombie & Fitch brand to be relevant, inclusive, and purpose-driven. As a marketer, there is nothing more enticing than having the opportunity to reimagine and relaunch an iconic brand. It was the culture of the company that ultimately propelled me to take the plunge and make the move. Three and a half years later, I am so thankful that I did. I started at the very beginning of the brand's turning point. Kristin's purview had just been expanded to oversee all of the Abercrombie brands, in addition to her responsibilities at Hollister. Corey Robinson, who is here, had just been tapped to oversee all of merchandising, and Joanna Ewing, our creative director, had started six months prior.
The stars had aligned. Our task was not an easy one. It was to think about the brand differently and cement what we wanted Abercrombie to stand for. We aligned on the evolved expression of the brand that Kristin just walked you through and our laser focus on the young millennial target. That was the inflection point of the phenomenal growth that we are seeing today and the beginning of the next great chapter in the Abercrombie story. The challenge for my team was getting into the consideration set of a very fickle and, frankly, very jaded customer group who either had an antiquated impression of the brand or they simply didn't know we existed. They certainly didn't know the breadth of product that we had begun to offer. We knew a traditional marketing approach was not gonna be our path to success.
It is one thing for a brand to say what they are and what they believe in, but it is so much more powerful to hear that through the lens of others. Of course, we needed to show up consistently living our brand purpose across all of our customer touch points, including our site, our store, and our app. We also needed others to tell our story for us. After a significant amount of research, we discovered that the young millennial customer is most influenced by their personal network, and that virtually all of their interactions and increasingly all of their transactions are happening in the social space. That is where we immediately funneled all of our efforts into building and fostering a community of brand advocates, which includes our influencer, our editorial, and our affiliate networks, in addition to our customers and our brand partners.
As a result, this community and our business have both grown dramatically. We were one of the first to tap into the strength of this new way of thinking. As an early adopter, we have been a key partner to one of the most influential social networks, including TikTok and Instagram. Those partnerships and building that community together with our improved product and experience is how we went from being the best-kept secret to TikTok's favorite fashion brand. Today, when we say our community of brand advocates, we are referring to individuals who are talking about our brand, individuals that are advocating for our brand, and as you can see from the charts, individuals who have become a significant source of revenue from our brand, representing over 200% growth over the past four years.
This discourse and conversation is largely taking place in social media, helping to cement Abercrombie as a leader in the industry of social commerce. Over the past three years, we have received three Most Loved Product awards on LTK, which is the world's largest influencer and creator commerce platform. We received LTK's 2021 Influencer Marketer of the Year award. On TikTok, the terms Abercrombie is back and Abercrombie is trending have both been trending terms with a 96% positive sentiment last year, shattering platform benchmarks. As a result, last year, Abercrombie was the only brand invited to participate in TikTok's brand sentiment alpha. That is in addition to being invited into Instagram's affiliate alpha, where we are among the top-performing brands.
In fact, given our incredible performance in this space, we are consistently tapped by all of the leading platforms, including Google, Meta, and TikTok, to participate in their alpha and beta testing, which is when they add new capabilities and features to their platform accessible to a finite number of users, so that they can test and learn prior to them officially launching. This shows that when the leading social networks wanna innovate, they partner with Abercrombie. By participating in these, we've been able to get a taste of what the future looks like for both us and our customers. With this invaluable foresight, we're already positioning ourselves to tap into these emerging technologies and platforms to the greatest extent of what is possible.
This has equipped us to not simply be early adopters, but true pioneers that can leverage these capabilities to deliver meaningful results in the areas of sentiment, engagement, recognition, and revenue. All of the success ties back to a theme that you have heard repeatedly today, and one that you will continue to hear from us, that we are obsessively focused on our customer. We do much more than just talk at them. We converse with them. We listen, we respond, and we react. When we started seeing a groundswell of organic fashion posts on TikTok in 2020, we leaned in. Now there are more than 343 million uses of our hashtag. To put that into context, that would be similar to every single person in the entire state of New York making an Abercrombie TikTok 40 times.
There is new user-generated content being created every hour. These posts enthusiastically shout about our incredible product, but also that Abercrombie is now their go-to brand because of our incredible fit and our ability to outfit everything on their long weekend itinerary. In essence, we are ingrained into the lives of our customers and have set ourselves up to deliver everything that their life resume demands. Beyond listening and reacting, we recently co-created a campaign with our community and our long-standing philanthropic partner, The Trevor Project. The concept is a duet challenge on TikTok to show LGBTQIA+ youth just how many people out there love and support them for exactly who they are by creating a digital love chain. Because in this community, everyone belongs.
The best part was that this content has all been organically created by our community, and TikTok is boosting the campaign on their own dime in support of the cause. By leading with purpose and enabling a two-way conversation with our customers, we have created rich and enduring relationships with our community, and it is this closeness that has got us to where we are today. It is this close connectivity and the trust that we have established that will set us up for success for whatever comes next. When it comes to any challenge, they always say it takes a village. Well, we've got that in the community we have created. You know as well as we do that the only constant today is change.
We have created internal processes and a team structure that enables us to move at the pace of our customer so that we can continue to show up how and where they want us with authentic social-first content told through the lens of our customer. In short, both our growing community and the platforms that court them have all agreed that Abercrombie is back. Well, they're right, and we are only getting started. Don't just hear it from me. Let's hear what our community has to say.
We need to talk about Abercrombie & Fitch. Excuse me, when did Abercrombie become cool again? Who was gonna tell me that Abercrombie & Fitch, like, blew up? Let's talk about an iconic brand, Abercrombie & Fitch. Abercrombie is kind of back, and they're a lot more size inclusive. If you would have told me in 2007 that Abercrombie would be body positive and racially diverse, I would laugh. I love the representation of people of color and people of all sizes. Abercrombie is so good. Don't sleep on it.
Now back to Kristin.
All right. Thanks, Carey. That is so amazing. I love that video. Let's see. Okay. To sum up Abercrombie Adults, we have successfully implemented a turnaround that few thought was possible. We cemented ourselves as one of the most loved brands for young millennials, and now we call it our biggest growth opportunity. We believe that there is a clear path to achieve 6% to 8% sales CAGR for Abercrombie Brands off of 2022 levels. As a reminder, from a reporting perspective, kids rolls into adults. Looking at just adults, we expect growth above the total brand. On top of the drivers that we outlined earlier, we also have opportunities to drive additional growth, and these are not baked into our outlook for 2025.
First is men's, where we are starting to see traction in the U.S. with our evolved positioning. As we've immersed ourselves in his life, we've identified clear white space in things like Best Dressed Guest, YPB, licensed graphic tees, golf lifestyle, just to name a few. We also have additional global store expansion beyond what's currently in our model. The beauty here is that with our strong balance sheet, we can quickly react to and take advantage of opportunities as they come our way. Finally, we have further category expansion opportunities as we discover other ways to serve our customer and their busy lifestyle. Just think, three years ago, Curve Love, YPB, Best Dressed Guest didn't even exist. I'm anxious to see what our teams come up with next. All right, on to Hollister.
Earlier this morning, Fran and I both talked about why we joined Abercrombie & Fitch, and that was for Hollister, which was our first brand to turn around, and it started with our initial brand purpose, which still holds true today. At Hollister, we believe in liberating the spirit of an endless summer inside everyone, and our goal is to give our global Gen Z consumer a sense of optimism and that feeling that anything is possible. Here's a quick video that shows how our brand purpose comes to life.
To our carefree roots, our unapologetic optimism, and our how did that turn into this spontaneity. To our iconic backdrops, our OG California filter, and to unleashing the spirit of an endless summer inside everyone. You're what makes us. Had to run it back twice 'cause the vibes were right. Do what I need to, keepin' it real, keepin' it real, till it's done. Baby, keep on living, love will change your life. Open it up, feeling the love, feeling the love, feeling the love. Come now, I'ma say it real loud. It's a new day, another swing around. See the world through summer-tinted lenses with us at Hollister.
All right. This customer is smart, compassionate, educated, and vocal on the issues that they care about the most. They're the first generation to truly have grown up on social, and they are tackling many unique mental health issues as a result. We're there for them, partnering with such groups as GLSEN, which is a national network of educators, students, and local chapters working for every student to have a safe, supportive, and LGBTQ-inclusive K through twelve education. The Academy Group, which is committed to closing the opportunity gap based on the premise that with equal access to resources, students from the most challenging backgrounds will outperform those from the most privileged communities. We also created our own holiday, World Teen Mental Wellness Day, and we created a fund that monetarily fuels teens' passions and empowers the next generation of change-makers.
I love everything that Hollister stands for, and helping our customers feel confident is truly at the center of everything we do. Of the many things that are unique about Hollister, our singular focus on the global Gen Z is the most important. We know this Gen Z customer better than anyone else, and we are not trying to be everything to everyone. As a result of our laser focus since 2017, our U.S. sales have grown at a 4% CAGR, even as the teen market has contracted since 2018. We have attracted over 20 million new customers, and we've been able to grow our retention rate. We design our product, voice, and experience specifically for Gen Z, and the addressable market is large, with 67 million people in the U.S. alone and $44 billion in apparel spend.
For Hollister, we're focused in three key areas. First is data-driven store expansion. Second is EMEA stabilization and ultimate growth. Third is evolving our assortment and engagement strategies to expand our share within the older Gen Z customer. Let's start with data-driven store expansion. In 2021, roughly 65% of Hollister's revenues were driven in stores. This reflects Gen Z's preferred shopping habits as they view going to the mall with their friends as a fun social activity, even though almost 90% of initial discovery will occur digitally for this customer. As such, Hollister has a larger store base than our other brands at about 500 locations globally at the end of the first quarter. However, this is very low relative to our peers, and we're under-penetrated in the key U.S. and Western European markets.
Similar to ANF, we have used data and analytics to inform ideal locations and assortments. We have identified over 100 locations in the U.S. that we believe could support a Hollister. Some are malls that we've exited recently, well, in the past, while others are in areas with a strong digital presence where our customer has told us that they actually want a physical location. In addition, we have also identified other opportunities in Western Europe for store expansion. However, given the pressures facing our global consumer, we're going to take a disciplined approach to openings and ensure that each store has a purpose in the respective market and delivers a high return. Our 2025 target assumes that we add 30-40 net stores for Hollister.
These will have last elements of our latest format, which was also concepted based on the customer journey work I spoke about earlier. We have the flexibility to open more stores as we see the right opportunities arise globally. The next area of opportunity is EMEA stabilization and ultimate growth. Over the last few years, the Hollister brand has had an outsized negative impact from EMEA due to COVID-related restrictions and closures. From 2019 to 2021, EMEA sales have declined roughly $60 million. With only about 100 stores in that region, our brand awareness is lower than the U.S., and we are very much dependent on the mall traffic for those sales. As Western Europe has begun to open, we have experienced an uptick in the EMEA region, especially in our largest market, the U.K.
Reflecting on the uncertain environment, we are assuming it will take multiple years to recoup the lost EMEA sales but see upside to our outlook if the region opens up more quickly. We have spent the last three years building a team in region to help us stay close to the customer there, and we feel confident that we'll be able to use our North America playbook to drive growth and brand love in EMEA once the macro headwinds subside. Our last area of focus is growing our already robust customer file by improving engagement with the older Gen Z customer. Through customer-led research, we've identified an opportunity with the 19 to 22-year-old segment, and we're going after it. We'll focus on evolving our assortment and engagement strategies to address this segment in a relevant way.
As we introduce product and marketing strategies that appeal to the older Gen Z customer, we will retain a balanced assortment so as not to alienate our younger Gen Z customer. According to NPD, every point of market share with this older Gen Z segment, aged 19 to 22, is worth about $190 million a year in the U.S. alone. We will continue to test and learn both product and engagement strategies and anticipate driving growth from this segment of the market. A huge piece of all of this is how we engage with our customer. To discuss that in more detail, I'm excited to invite up Robert Zajac, who is our head of marketing for Hollister, Gilly Hicks, and Social Tourist, to share how we engage.
All right. Good morning. Good to see everybody here. As Kristin said, my name is Robert Zajac. I'm the Head of Marketing for Hollister, Gilly Hicks, and Social Tourist. Reiterating, please go and check out all the stores. They look amazing across all the brands. As you heard today, we take great pride in being closer to Gen Z consumer than anybody else. I, along with my team, have the great privilege of bringing that to life. I've been with the Abercrombie & Fitch Co. for just over two years now. I spent the last 20 years living and working all over the world on some amazing global brands. I started in advertising in Sydney, Australia, and then I transitioned into brand management and marketing right here in New York City for ESPN on the Upper West Side.
I spent 10 years at Nike, working on global categories like running and basketball, leading marketing for regions like Central and Eastern Europe, out of Amsterdam, and driving businesses like the Jordan Brand across all of EMEA. I spent my entire career working on brands that put the consumer at the heart of everything they do, and Hollister does exactly that. This obsession with the consumer is the foundation for innovation, and honestly, across the board at Abercrombie is the catalyst for all of our potential. That's exactly why I joined Abercrombie & Fitch. I could see the potential everywhere from untapped marketplaces to new categories to digital expansion. That wasn't all. There's also a culture that Kristin mentioned and Fran mentioned.
There's a culture that was open, supportive, ambitious, and welcoming, not just test and learn, but test, learn, and support. That to me was a winning combination. As a nice bonus, I have two teenagers at home, and I have literally spent every day of the last 15 years trying to make sure that I can remain relevant and cool to both of them. So this is a huge upside. I'm not gonna lie. Okay, so the Hollister brand has been built by relentlessly focusing on that global high school teenager. That's important, right? It has a long history, and Kristin said that we're not everything to everyone.
That focus, however, also means that this 19- to 22-year-old that Kristin mentioned is currently untapped potential for the brand, and it represents, as Kristin noted, almost $190 million of market share, of revenue for every point of market share gained. The Hollister brand actually resonates more with this consumer than some of our key competitors, but we under index in market share simply due to the fact that we have not overtly targeted this consumer yet. This consumer group also has a $19 billion addressable apparel market size in the U.S. We're attacking that opportunity by leveraging our obsession with the consumer. We know Gen Z better than anyone else. We continuously engage with this generation to understand what matters to them and what drives them.
It helps us make customer-centric decisions across brand, across products, across category expansions, and on our experiences. We're constantly learning. We're growing, we're evolving with this generation. We leverage a proprietary suite of tools to do so. We have an online research community, has over 1,500 members, and we interact with them two to four times a week. We have a brand agent program, which is a series of high school students all over the country, that give us insights from the hallways, insights from the classrooms, as Kristin mentioned, insights from Friday night football games. We work with industry-leading cultural specialists to make sure that we are right there with our consumer as trends change and as trends evolve.
Being customer obsessed also means we know how to build brand love with this generation. We've seen consistent year-over-year growth across key metrics since we started measuring them in 2019. This includes brand love, which is just how our consumers feel about us. Popularity, right? The brand's relevance and resonance with Gen Z and reflecting diversity, which means Hollister is a brand for everybody. Year to date, we've even had more dramatic increases as being seen as a cool brand and being seen as a brand that understands Gen Z and gets this generation. As noted earlier, our brand love especially is already trending ahead of some key competitors in that 19- to 22-year-old range.
We've also seen our Net Promoter Score, which is a customer loyalty and satisfaction score, trend up year-over-year since 2019, further reflecting the brand's resonance across this generation. That brand love is reflected in our customer file. We are obsessed with our customer. We've mentioned that a couple times, but the good news is that our customer is also obsessed with us. Since 2018, we've attracted over 20 million new customers in the U.S. and EMEA, and our retention rate has actually increased. We've also built an industry-best loyalty program that was just awarded an industry best award from Newsweek as well earlier this year, Club Cali. Since its launch in 2016, the program's gained 35 million members and generated $6.6 billion in revenue.
Over the last 12 months, we've seen 20% growth in overall membership. Our gold tier, which is the most valuable members for the program, has increased by over 35%. Last year, Club Cali members drove over 80% of Hollister's revenue. We'll come back to loyalty in a couple of minutes. In the U.S., the combination of accelerating brand love and an incredibly healthy customer file is translating into a business that's outpacing the overall teen apparel market. Since 2018, research shows that the overall teen apparel market is down, but Hollister's actually bucked the trend and has grown. In fact, since 2017, Hollister has seen $200 million in revenue growth and 23% increase in sales per customer. We're fueling that momentum with consumer-focused marketing innovation.
Hollister was the first teen retailer to advertise on Instagram. We're the first to advertise on Snapchat, and we've been pushing boundaries side by side with Gen Z ever since.
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I'd love to stay up here for the next 45 minutes and take you through everything that we're doing. I'm not gonna do that. What I will take you through is some of the ways that we're building on that customer obsession and building on that energy that comes through our marketing and through that knowledge of the consumer that strengthens our foundation and helps us capture that older Gen Z customer. Our focus is gonna be in three areas. We are human-powered, so influencer marketing. We're socially fueled, so how we innovate in the social space. Loyalty-driven, right? The loyalty program that we just spoke about and how we're gonna expand and strengthen that in the future.
The Hollister Collective is the very definition of influencer marketing and being human-powered. It's a diverse group of over 60 people across fashion, culture, music, art, and gaming that love Hollister as much as we love Hollister. They're long-term partners of the brand and a key vehicle to engaging with Gen Z as we move forward. We're looking to expand the collective in the future with some really groundbreaking partnerships, so stay tuned in this space also. The group includes Good Vibras, which is a first of its kind long-term creator program that we launched last year. It's focused on empowering Latinx creators that actually created quite a stir in the marketplace, expansive headlines, 20 million press impressions.
Now in its second year, the Good Vibras creators are working with us to celebrate Hispanic Heritage Month and the diversity within the Latinx community. The future's very bright for this initiative with expansion into products, collaborations, music and art. The collective also includes our gaming team. We see gaming as a massive opportunity for the brand. Over 2.5 billion gamers in the world. Industry projected to reach over $200 billion in annual revenue by 2025. Moving into this space was another example of us being obsessed with our customer. Gaming is Gen Z's number one hobby coming out of the pandemic, and we know that they all wanna look good and feel good while they're in this space.
Last year, we launched Hollister's All Day Gameplay Apparel, which is one of the best-selling collections of the year. We fueled the launch by announcing our partnership with Bugha, who's the Fortnite world champion, has over 16 million followers across all of his social platforms. The partnership actually also drove a new customer file, a new customer rate that's double our average, just showing the opportunity within the space. We're building on this success this year and as we move forward, bringing the brand deeper into the world of gaming, exposing it to a broader audience, expanding the roster of gamers and streamers that we work with, moving the brand into the competitive world of esports, and working with the community on initiatives aimed at making gaming more inclusive. Bringing our purpose into gaming.
Our consumer is inherently social, right? Pillar two, and so is the Hollister brand. 97% of Gen Z say they use social media as their top source of shopping inspiration, and they spend on average 2 hours and 43 minutes a day on social platforms. I can attest to that. I can also assure you that I and my team spend at least that much time on social media every day, productively in building the business. Building and expanding Hollister's passionate and amazing community across social today has over 18 million followers and an organic reach of 1.3 billion people. Leveraging that, Hollister is leading the way to transform that Gen Z community into social commerce with a focus on TikTok live shopping and the Hollister storefront on Instagram.
We've built an amazing relationship with our platforms that bring content, influencers, and commerce together to create an always-on presence for the Hollister brand. Since last year, we've seen over a 70% lift in overall social sales and a 30% lift in average order value on these platforms. We've also seen more than an 80% year-over-year increase in visitors to the Hollister storefront on Instagram, and almost 90% of those visitors are new to the brand. Even more exciting is what's coming next in this space. In the coming months, we'll actually be doubling our cadence to weekly, and we'll be the first brand in the U.S. to do so. We also partner incredibly closely with platforms to find innovative ways to be where our consumer is, not just to communicate with them, but to enable them to shop.
Our consumer doesn't go shopping. They're always shopping. Snapchat, which I'm sure those of you with some teenagers in the household can attest to, is one of Gen Z's favorite social messaging apps, reaching 90% of this entire demographic in the U.S., 319 million daily users, and over 5 billion snaps shared. They're a great partner of the Hollister brand. In 2021, when our stores were still shut down, we partnered with Snapchat to bring the store to our consumers during Black Friday. We were one of only six brands included in a virtual reality mall that we created with Snapchat. We saw an incredible seven-point lift in brand favorability, which is seven times the benchmark for Snapchat.
We also saw consumers clicking through our storefront at three times higher than the other brands that were included in the program. To build on that success, next month, when we watch all of our kids go back to school, we're working with Snap to create an omni experience that's gonna bring our amazing denim assortment, some of which you can see in the store in the back, to life. We're gonna do it in a way that seamlessly blends Gen Z's favorite places to shop. We're gonna blend the store with the phone. We'll be one of the first brands to leverage AR technology across our entire store fleet to bring the depth and breadth of our denim assortment to life. Be on the lookout for that. All right.
Last, and certainly not least, I wanna circle back to the Hollister loyalty program. As noted, we've seen incredible success with Club Cali on the membership side and on the revenue side. Now is the time to take it to the next level. Next month, we have plans to completely relaunch our loyalty program with the introduction of Hollister House Rewards. We spent about 24 months full of research, validation, and creation, identified opportunities to expand from a loyalty program to a modern membership program. Hollister House Rewards will have new benefits, new services, new innovations, developed to drive Gen Z membership. It'll launch by introducing early access to products, and a gold tier in EMEA. What's really exciting is what comes after.
The program is built to be iterative and responsive to changing consumer needs. We'll be rolling out new features and functionality on an ongoing basis for the program. Okay, that's just a small look at what we'll be doing to continue being the brand for all of Gen Z. There's so much excitement across the team, and as Fran noted, we're just a small slice of the amazing team that does all this work. But that collaboration and that excitement is infectious. With that, I'll turn it back over to Kristin.
Okay. Thanks, Robert, and I agree the excitement and collaboration is amazing and has been amazing. That, along with all the other initiatives that I shared earlier, are what gives us confidence in the ability to deliver our flat to +2% sales CAGR for the Hollister brand. As you can see, we have upside identified but not built into this outlook. Reflecting the outsized impact of inflationary pressures on the Hollister customer, we believe in planning conservatively but can react quickly if we see the macro environment shift in favor of this customer segment. On top of the near-term opportunities we addressed in our 2025 plan, we also have additional longer-term opportunities which are not currently baked into our outlook. First is continued store expansion, especially in the U.S. and in Western Europe.
We also have further category expansion based on our customer insights to gain even more wallet share from our total Gen Z customer. Okay, now let's talk about Gilly Hicks. In 2016, we reintroduced Gilly, and at that time, it was a female-based intimate sub-brand that was offered within all Hollister stores and online globally. We saw great traction with that, and we knew there was an opportunity to think about it much bigger. Over the years, we began to build out a team, gain customer insights, and put many tests to work to help us understand the true potential for Gilly as a standalone brand. In 2019, we hired Kim, our GM, and built a team to support it as a brand separate from Hollister.
Based on aggressive customer insights and market research, we identified how to bring the new Gilly to life in a unique way and fill white space in the market. Last year, we relaunched the brand with a focus on being the world's happiest active lifestyle brand, with an emphasis on dual gender, active lounge, and intimates. We also created a standalone digital presence, opened the first of its kind standalone store, and re-skinned our side-by-side stores globally to reflect this new positioning. Since then, we've learned a ton, and now we're ready to accelerate our growth. Our customer is definitely responding to our optimistic take on life. Research has proven that 10 minutes of movement a day can make you happier, and we're embracing that with our updated Gilly brand purpose, which is as simple as play happy.
Let's take a look at the video that brings this brand to life. When we relaunched the brand, we learned something really interesting, and that was that when we separated Gilly from Hollister, it appealed to an almost ageless audience. In our standalone stores, we had male and female customers, ages 13 to 40, that were shopping the brand and loving it. We also learned that active lifestyle and lounge lifestyle were highly productive, and that our female and male customers were embracing the value they were getting for the quality, comfort, and versatility of the product. With our new positioning, we see the opportunity to deliver a 15% sales CAGR through 2025 off of a planned base of $110 million in 2022. To do that, we're focused on three key strategies.
One is further driving brand awareness through marketing and opening freestanding and side-by-side stores. The second one is our assortment architecture, where we will be leaning into active lifestyle. Third is growing our men's business. First up is brand awareness. We believe that Gilly is truly a global opportunity. Last year, we launched our first standalone store of its kind in our own backyard in Columbus, Ohio. At just 2,500 sq ft, it's a great representation of the brand, and it's attracted customers of all ages. Last month, we opened a store in Germany, and this month, actually this week, we're going to open a store on Carnaby Street in London. Opening stores in two of our largest international markets speaks to the customer demand and brand awareness in Europe. Locals already know us and are embracing our brand.
This is tremendous because we're not limited to the U.S. for our growth. We currently plan to open 30 to 40 standalone Gilly Hicks over the next few years and will continue to open side-by-side stores where appropriate. We have the customer insights and data to tell us where to expand more quickly around the world, and we'll be able to react to those learnings and open more stores globally if performance exceeds expectations. Longer term, we believe that Europe and the Middle East, in particular, will be key differentiators and accelerators for us. We already have a presence in both regions, and the customer response is quite strong. In addition to the buzz surrounding our stores and side-by-sides, we've also attracted new customers with our standalone digital presence, which we introduced at the same time as the brand relaunch last year.
Previously, Gilly lived on Hollister's social channels, and we're currently ramping up our marketing efforts on all the social media platforms. Our second focus is on assortment architecture. As we listen to our customer and analyze their shopping behaviors, we realize that we have significant untapped opportunity, especially in active lifestyle and loungewear. Across genders, we will drive an even deeper emphasis on our active lifestyle and loungewear collections, both of which are relative outperformers and carry a higher AUR and margin than intimates. By offering these incremental categories, we have attracted new customers, increasing the frequency and size of purchase while maintaining a base level of intimates sales. Taking a moment on each of these, for those who are less familiar with the term active lifestyle, it combines an active aesthetic and a low-impact performance component.
This is very distinct from YPB, which you may have seen in the Abercrombie build-out, which is really a performance, high-intensity workout. Our active offers great fashion, versatility, and value that's differentiated in the market. Since its launch in 2020, active has continued to be our top-performing category. Active, as you know now, is the fastest-growing segment of the apparel market, and we're excited to use our unique happy positioning to take our share. Looking ahead, we expect the active lifestyle category to represent about 50% of our total Gilly Hicks business by 2025, and that's from current 30% of our business. We'll do this through the expansion of our key franchises, Recharge, Energize, and Boost. In lounge, we're quickly becoming known for our incredibly soft and cozy fabrics. The quality, comfort, and value is a definite competitive advantage for us.
We've also just introduced our signature Everybody Collection, which is a gender-inclusive knit collection with our signature smiley face, which you can see in the picture and in the shop when you go through there. When we reintroduced our brand last year with its new positioning, our customers loved all the happy product and the smiley face. We've created a franchise around it that truly brings the brand purpose to life. Looking forward, we expect loungewear to represent 30% of Gilly Hicks' business, up from 20% today. Our third area of growth is men's. We successfully rolled out our initial men's assortment last year when we relaunched the brand. Ahead of the launch, we spent a lot of time with male customers to understand where the white space was.
We discovered that he was looking for active lounge and underwear product that was comfortable, versatile, and offered a great value. We also learned that he wasn't hung up on Gilly being a female-only brand, so this represented a unique opportunity for us. Based on selling in our freestanding and side-by-side stores, we now believe that men's could account for 20% of our sales by the end of 2025, with upside longer term. Reflecting on our early learnings and our market trends, we're going to focus that business on active and loungewear as the destinations, with underwear being a smaller piece of the business. To round out Gilly, we're really excited about what's ahead and confident in our ability to deliver a 15% sales CAGR off of 2022 levels as we continue to expand globally, build brand awareness, shift to active, and grow men's.
As I mentioned earlier, while not in our 2025 target, we can look to accelerate our store growth as we get learnings from the new stores that we're opening. Okay, before we go to break, just a quick moment discussing abercrombie kids and Social Tourist, which are two brands we're very excited about that will provide upside to our outlook in 2025. At Kids, we see the world through their eyes, where play is life, and every day is an opportunity to be anything and better everything. Our edit point of a nine-year-old is used to make all of our decisions around product, voice, and experience, and it's also a differentiator for us in that it's older than most of our competitors in this market. Our kids love a mini-me look, and they love to emulate their older siblings.
We have the unique advantage of being able to read trend cues from both Hollister and Abercrombie adults and apply those quickly to our kids' product, which we've seen tremendous success with. We plan to continue to lean into our strength in the U.S. and build on our franchises that have been quite successful, the Everybody Collection, Cool Stuff, Essentials, and our active line. Now on to our newest brand, Social Tourist. Social Tourist caters to the older Gen Z and young millennial by providing an edgier, more fashion-forward vibe that fits into their social-first lifestyle. At Social Tourist, we will continue to take learnings from product as well as our digital and social engagements and thoughtfully apply those to our brands while leaning further into our relationships with leading social providers, TikTok, Instagram, and Snapchat.
As I mentioned before, growth from both kids and Social Tourist provides upside to our outlook. To finish up our brands, our ability to achieve our Always Forward plan is rooted in our purpose and in our ongoing commitment to our customer to know them better and wow them everywhere. I'm so proud of the positioning of our brands and what they stand for, and we truly live our purpose each and every day. Let's take a quick 15-minute break before Samir joins us on stage to talk about our enterprise-wide digital revolution. I'd encourage you during your break to swing through the shops if you haven't already, where you can meet with the key brand leaders that I introduced you to earlier. We'll see you back up here in 15 minutes.
Everyone. Hopefully you grabbed some snacks, walked through, got some refreshments ahead of our next exciting speaker. Really thrilled to introduce Samir Desai, who's our Chief Digital and Technology Officer, and is gonna talk to you about all the amazing things that we are doing. Come on up, Samir.
All right. Technology 101, you got to have the clicker. All right. Good morning, everyone. My name is Samir Desai, and I joined the company about a year ago in the newly created role of Chief Digital and Technology Officer to further capitalize on our opportunity to be the leading global omni-channel retailer. I'm responsible for our digital experience, our data and analytics, and our technology teams. Prior to joining ANF, I spent about 15 years at Equinox. I was fortunate to join Equinox at an early stage of its growth trajectory and really helped scale and grow that business into the portfolio of global brands that it is today, including SoulCycle, Blink Fitness, Equinox Hotels, and most recently, a technology business that brought to market the Equinox+ app and the SoulCycle at-home bike.
In a world where fitness at home was really the growing trend, I actually spent a lot of my time thinking about the omni-channel experience here between fitness and lifestyle. Really delivering that experience at home, in the studio, on the go, across the board. It's really this omni-channel experience opportunity that got me super excited about ANF. A heavily digital business, plus a large global footprint of stores powered by some of the world's most iconic brands, felt like the perfect opportunity to build the world's leading always-on shopping experience at scale. Today, I'm gonna give you some visibility into our enterprise-wide digital revolution and how we're using data and technology to build an even more profitable and scalable ANF. To start, I wanna provide a little bit more detail on what I meant by a heavily digital business.
Across all of our brands, we're seeing our customer engage with us digitally, but in different ways based on the brands. At Abercrombie Adults, we have a young millennial customer that prioritizes speed and convenience. In this brand, we see almost 60% of our revenues coming from our digital channels, so there's clearly operating efficiency there, but the bigger opportunity is all the rich customer data that we're capturing on every one of those transactions. I'll speak more to how we're unlocking value from all that data in a little bit. In Hollister, we have a Gen Z customer that loves the experience of going to the mall and shopping in person with their friends. That said, this brand sees the highest level of digital engagement up front in the product discovery process.
We're seeing more than 300 million visits a year across our digital channels from this customer. These teenagers are doing their research upfront, and when they come into the store, they're looking for an experience. They know what they wanna buy, and ultimately, we're there to support them through that full journey. Finally, we're putting a lot of effort behind our mobile apps because we know this creates a sticky experience, and it's also the place where we can deliver the most personalized experience. Our strategies are working here, and we're seeing more than 20% of our digital business coming from our mobile apps, and this is gonna continue to be a big growth area for us as we scale. Looking forward, both Fran and Kristin mentioned this morning, our strategy is built on the two pillars of know them better and wow them everywhere.
We're enabling and activating these pillars through our enterprise-wide digital revolution that's touching every part of our organization. We're moving away from how a traditional retailer operates and more towards how a tech company operates. This means we're empowering our teams to move fast and make decisions, be customer-obsessed, and focusing on continuous delivery. I'll walk through each of these in the subsequent slides. Let's start with what we mean by know them better. As you've heard throughout this morning, we are customer-obsessed. Over the last 18 months, using artificial intelligence and machine learning, we've analyzed tens of millions of customer records, organized them into segments based on behaviors and attitudes, and we now have a rich 360-degree view of each of these customers.
Today, we're able to understand what our customers are telling us, whether that's on the social channels like Instagram or TikTok, through our ratings and reviews from our product pages, or the customer service chats our customer service team receives. Even more importantly, we're able to understand what they're not just telling us, but rather showing us through their behaviors. How many times do they open up our app to browse products? How many times are they buying multiple sizes of something and returning the ones that don't fit? What type of marketing creative are they clicking on more than the rest? All of this data helps us better triangulate what type of customer they are, so we can deliver the most personalized experience and predict and prevent future pain points and friction points before they happen.
Now we're leveraging this rich customer data not only to drive the customer experience, but also to inform decisions across our entire business and fundamentally changing how we operate as a company. Our merchants are using Google search trends data and digital product testing tools to help them better predict fashion trends and how to build their seasonal strategies. We're using advanced text analytics to process the millions of ratings and reviews we receive each year to surface relevant product feedback and insights back to our merchants. Our merchandise planning teams are moving away from manual tasks and more towards automated algorithms and AI to help them make decisions based on data. A great example of this is how we've evolved and advanced our product testing capability.
For this upcoming fall season, we used our digital platform to predict which fall styles will resonate the most with our customer, and based on that data, we sized our inventory buys for the fall season accordingly. This capability is also helping us better allocate inventory across our store fleet. It's driving up store productivity because we have the right assortment in the right stores, and it's allowing us to deliver the product to the customer as quickly as possible because the product is close to where the order is coming from. When it comes to the customer experience, this is where we're seeing the most opportunity to unlock value from data. Knowing the customer so much better allows us to anticipate their needs and serve them the best experience possible.
Whether that's on Instagram or TikTok, where they're discovering our products, on our website or apps, where we are able to build the right assortment based on who they are, and in our stores, where associates have better tools to manage and understand customers' order history, customer preferences, and things of that nature. Lastly, our real estate teams are using data science to help them understand which locations will drive the most omni demand and which store formats will perform the most and the best. We know that we're able to drive a lot more digital demand if the customer knows that there's a store available to them within 15 minutes of where they live, where they can pick up an order, exchange an order, or perhaps return an order.
This predictive digital demand data will continue to play a big role as we establish new doors and become a net store opener. Our last two Chicago stores that Fran and Kristin mentioned this morning are a great example of this. The data told us that we had a strong women's customer and very strong digital demand coming from downtown Chicago. You can see that on the map there with the dark blue circles. We opened our first ever women's-only store on Southport Street and a smaller footprint dual gender store on State Street that serves as an omni hub. These two stores together will now add $ millions of incremental sales to the Chicago market. This is a playbook that we've applied clearly here in Chicago and are now applying it to new markets as well.
As I said earlier, this digital revolution is cutting across our entire enterprise and in the end will position us to operate much more like a tech company than a traditional retailer. This means we're making decisions across our organization using data and in the context of real customer problems and customer value, not just based on gut intuition or solely based on senior executives' ideas. We're empowering our teams closest to the work to validate those ideas through a robust test and learn process versus spending months and months debating ideas and decisions in a conference room. We're building internal expertise in areas like digital and data to give us real differentiation versus outsourcing this important work to agencies or partners. This all starts with our people.
As we continue to build out our internal teams, we're recruiting top talent from some of the world's leading companies like Microsoft, Amazon, and even NASA. I'm a big believer that a team with a diverse set of backgrounds, not just from retail, is critical for us to solve the same problems all the other retailers are facing, but in unique and different ways. In the last six months alone, we've added an additional 75 people, so clearly our vision and strategy is resonating with top talent in the market. The majority of these people are experts in things like omni customer experience, data science, and modern software development. These are the skills that are required to operate any modern company, both today and definitely tomorrow, irrespective of the industry. Hiring the right talent is not enough.
As I said earlier, this revolution is cutting across our entire enterprise and not just focused on the tech team. This means all of our associates globally are adopting new ways of working. To facilitate this, we've built an internal digital academy that our associates are going through to learn and build new tools and skills. A great example of this was with an associate in one of our distribution centers. She went through a robotic process automation training and then was able to apply what she had learned through that training back in her day job. She automated a series of manual tasks known as waving, where she had to allocate inventory in batches for stores. This work was not only tedious, but it also required her to be available at odd hours of the day based on when orders came in.
Automating this obviously drove up productivity, but it also delivered a much better associate experience overall. We know today that virtually any decision a human can make in under two seconds can already be automated using AI or bots. Just imagine how many of these types of decisions we're making across our organization every single day, and you can appreciate how much time we're already starting to save here. This all builds up to our wow them everywhere pillar. Before I talk about the customer experience as part of wow, I wanna share what we're doing underneath the hood from a foundation and infrastructure standpoint, because ultimately that's what enables the customer experience.
We're proactively modernizing a significant number of our key systems to unlock the full potential of this digital revolution. The big pieces here are our core ERP platform, our database infrastructure, and our supply chain systems. These investments are already contemplated in our capital plan for digital and technology. I cannot underscore how critical these investments are to realize the full potential of this digital revolution. Finally, I wanna finish by speaking about how all of this translates into our ability to deliver an unparalleled customer experience. I truly believe that the future of retail is retail everywhere. This doesn't just mean buying online and picking up in store or curbside or ship from store. All that stuff is table stakes at this point.
We're thinking about the shopping journey as a sequence, not just as a sequence of events of buy, browse, deliver, but rather deconstructing the shopping journey into a set of retail services that are seamlessly woven together through the thing that we all use every single day more than anything else, our phone. One really good example of this is how we're helping our customers browse our products better. We're testing a couple of different experiences in this space. Through technology in our stores, our app can actually understand whether the customer is inside of the store or not when they open it. If they are, the experience automatically adapts accordingly. The first phone here on the left shows what the menu would look like if they opened the app inside of one of our stores.
Let's say they're in the store and they want more information about a pair of ultra-high rise straight ankle jeans. They open up the app, they click Scan to Shop, and using the camera on the phone can scan the label on the product, and immediately the ratings and reviews for that product will show up inside of the app. Now, typically, this kind of information is only available when you're browsing online. When you're in the store, you don't have access to that, or it's really hard to get to. Why not make it extremely easy for the customer to be able to get the ratings and reviews that we already have available for them in store? That's one experience.
Another experience is if they're at home and they're browsing on our app, and they wanna get a better sense of how a product will fit or look on them, they can again open up the app and click virtual try-on. You can see that on the third phone there. Again, using the camera, can scan their body and they will see how the product looks on them and how it will size on them. Again, using AR technology. This ability to meet the customer where and when they need a service is part of our customer obsession. In summary, I'm incredibly excited about the team that we've assembled and our opportunity to know them better and wow them everywhere through our enterprise-wide digital revolution.
Now it's my pleasure to introduce our Chief Financial Officer, Scott Lipesky, who will walk you through our financial discussion. Scott.
All right, great to see everyone in person. It's been a long, long time since I've seen so many of you, and it's great to be here. Thank you, Samir, our newest member of our senior leadership team. Great to be here. All right, so let's finish up. I'm gonna tie together the themes that you heard today from Fran, Kristin, and Samir. I'll hit one point that Fran mentioned early on. Definitely an interesting time to have an Investor Day in light of the macro-related environment. We manage this business day to day, week to week, and we have to remain focused on the long term, and that's what we're here today to talk about. All right, our targets today, they reflect assumptions around inflationary pressures on both our business and the global consumer.
We're gonna assume that the Abercrombie adult customer is the most insulated, as they have the highest income across brands, and the Hollister customer is the most exposed. There are a lot of unknowns, but we have all lived through many, many cycles in this industry, and we believe the strategies and tactics we're gonna present today can have us be a winner in a down cycle and a winner in an up cycle. We're also gonna make our company stronger year in, year out, as we move forward. All right, so let's start at the top. How do we expect to drive value as we go through our 2025 plan? By fiscal year-end 2025, a 3% to 5% CAGR off of 2022 levels, a sustainable operating margin at or above 8%.
We're gonna maintain a disciplined investment plan, and we're gonna focus on driving growth across digital and stores. We're gonna generate steady free cash flow to have consistent shareholder returns. Confidence in this plan is rooted on the progress we made over the past four years, since the last time we were up here talking to you. At that point, we wanted to double our 2017 operating margin from around 3% to around 6%. We did just that. We delivered a 9.2% reported operating margin in 2021, as well as a 9.6% adjusted operating margin. Compared to 2017, you know, how did we do it? We delivered low single-digit sales CAGR with outperformance in the U.S., offset by underperformance internationally. We exceeded our gross margin expectations, rising 260 basis points.
That includes 350 basis points of freight pressure last year alone. We saw similar outperformance in our operating expense leverage. Biggest driver, taking out $230 million of occupancy expense, as well as seeing the benefit from the shift to digital, which carries a higher operating margin. Finally, we put excess cash to work. Returned $642 million to shareholders through dividends and share repurchases, and those repurchases reduced our outstanding share count by over 20% since the end of 2017. All right, that brings us to today. Our 2025 target of $4.1 billion to $4.3 billion in revenue and a sustainable operating margin at or above 8%.
Based on the global pressures on both the consumer and our business. Similar to the ride from 2017 through 2021, we don't expect it to be a straight line. As you've heard already today, we have many paths to achieve our goals. For operating margin, we expect to take a step back in 2022, but longer term, we see this range of 8% or above as sustainable based on the cost structure of the business and all the opportunities we have to drive growth across our portfolio of brands. Our target does assume partial normalization of the freight rates, which I'll get into in a couple of minutes. Longer term, our aspiration is to be a $5 billion global family of brands with operating margins at or above 10%. All right, so let's start on the key financial principles at the top.
Top line, you heard from Kristin, we have focused brand growth plans, focused around our largest opportunities, Abercrombie adults, Hollister, and Gilly Hicks. As Samir noted, we are dramatically changing how we approach digital. We expect this to result in digital growth, slightly outpacing store growth, while holding close to that 50% digital penetration going forward. For investments, we'll focus on those strategies we've covered a lot today, knowing them better and wowing them everywhere, you know, mainly in digital, technology, and targeted store growth. Over the period, we'll continue to focus on returning excess cash to shareholders, primarily through share repurchases. Finally, we're gonna make certain assumptions on inflation and consumer health. All right, so a few cuts on the 2025 sales plan. Again, you've heard from Kristin and Fran, but quick summary of the highlights.
Let's start with Abercrombie brands, where we expect 6% to 8% CAGR off of an estimated 2022 sales level of $1.7 billion. Again, includes both adults and kids, but adults will serve as the primary driver here. Updated assortments and customer positioning is working. Again, I hope you all got to see some of the updated product that we have here, live today. This business is highly digital, around 60% digital penetration. In response, we have dramatically evolved the store fleet in Abercrombie. Over the past four years, we've closed around 35% of the store base, including 12 flagships around the world. These stores were oversized and underproductive relative to the fleet. Today, much cleaner position.
Roughly two-thirds of our stores are in A malls, and our adult stores are the most profitable among our brands. We expect to grow the space about 30-40 stores from current levels. You've heard about our Chicago stores today, but we're gonna bring to life our Abercrombie stores a little bit different in the future. We're gonna build on the success we've seen in some of these off-mall and neighborhood locations, so it will look different and very exciting. We'll also continue to leverage our award-winning marketing that Carey covered to find new brand lovers across our key social platforms. Finally, we'll get that added benefit from Abercrombie Adults being our outsized growth vehicle as we have the highest operating margin in that brands. All right.
For Hollister, targeting flat to +2% CAGR off an estimated 2022 sales level of $1.9 billion. This includes Social Tourist, which currently is immaterial to total Hollister sales. We have opportunities to enter new markets, fill in white space in under-penetrated markets, and we plan to open 30-40 net stores over the next few years. We'll also look to expand our customer in that older Gen Z range, 19-22, that Robert covered, and we expect to gradually recoup some sales in EMEA, but we're not expecting a full return to pre-pandemic levels. For Gilly, 15% CAGR off an estimated $110 million this year. We're gonna build brand awareness through marketing and opening stores. We also plan to increase our position in active and in men's.
Our target assumes 30 to 40 stores, and Kristin mentioned we can accelerate that if the brand exceeds our expectations. From a reporting perspective, Gilly will still stay in Hollister, but we'll give you periodic updates as we go through for the Gilly brand. All right. Let's go to a cut by region. Let's start with the U.S., where we're expecting a +2% to +4% CAGR off of 2022 levels. In the U.S., Abercrombie and Hollister specifically have grown 18% and 17% since 2017. This gives us the confidence that the brand positioning and the product is working. In EMEA, we're assuming a +4% to +6% CAGR off of 2022 levels.
Both brands were impacted by COVID restrictions and lockdowns over the past couple of years, and Abercrombie adults also was hit by the closure of those flagships, which is the right thing to do long term. Our plan assumes we recoup a portion, but not all, of lost sales. We expect traffic to slowly come back across the region, and we'll also have targeted marketing and targeted store openings. For APAC, we are assuming a low double-digit CAGR off of 2022 levels. We expect a continued challenging environment as that region continues to grapple with COVID. In the near term, we're flexing certain expenses down in China as we come out of the most recent wave of lockdowns. Longer term, we view APAC as an opportunity. Huge addressable market, and there's just such an increased focus on fashion from that consumer. All right.
By channel, we expect growth to be tilted towards digital, where we expect mid-single-digit growth off of 2022. Again, we expect to hold that digital penetration around 50%. For stores, we expect to drive a low single-digit CAGR off of 2022. Net store count up around 100 stores over the period, focused primarily in the U.S. and Western Europe. We will continue to focus on these smaller omni-enabled locations. On average, these new stores have been about 10% more productive than the stores that we've closed, our legacy locations. All right. Quick pause on digital. You know, over the past few years, we've invested $150 million into our capabilities in this area. We've delivered sales growth of $750 million.
Fran mentioned our digital business, $1.7 billion or around 47% of our sales in 2021, and the four-wall margin over 30%. Samir noted, digital is a place for discovery and engagement. It's also a huge part of our store ecosystem because this customer demands a seamless transition from digital into physical. Digital just isn't a sales channel anymore. Going forward, we will continue to invest in people, systems, and tools to enable us to know them better and wow them everywhere. Today, our customers' expectations change very quickly. Samir is focused on building the teams, tools, and processes to move as quickly as the customer. For stores, we've made significant progress over the past four years. Right-sizing our fleet puts us in a good position to leverage this digital data to open new stores with a high probability of success.
There is no finish line, but it's great to say that most of the heavy lifting on the fleet is behind us. All right, quick summary for stores on the progress over the last four years. Closed roughly 250 stores, tilted more towards Abercrombie Adults, including 12 flagships, and we opened roughly 120 stores. We reduced total gross square footage by 1.6 million sq ft or around 25%. The average size of the stores we've closed, around 7,300 sq ft versus the stores we've opened, around 5,000 sq ft. Decreased occupancy dollars by $230 million, which was a key driver of our operating margin improvement over the past four years.
Store four-wall margins have increased around 400 basis points to close to 20%, and that includes the lagging reopening we're seeing in EMEA and APAC. All right, as we look forward, looking to 2025, we expect around 825 stores, up from 729 today. This will be balanced across Abercrombie Adults, Gilly Hicks, and Hollister. Samir mentioned our digital-first approach to stores. Our goal is to maximize the sales and profitability in each market. Analytics has provided a new view on where to open stores, and then our digital data is telling us how to build a store. What's the size? What's the assortment? What's the range of physical and digital capabilities that we need there? But our discipline will not change. A store needs to be the right size, the right location, and have the right economics.
We will continue to focus on these smaller spaces in the range of around 2,500-6,000 sq ft, which is down significantly from the past. For Abercrombie and Hollister, we expect our new stores to deliver a four-wall margin around 25% and have a payback in the two-year range. All in, we expect the number of stores to increase low double digits over the time period, but square footage and occupancy to only increase around 3%-5% over the period. That is a very important point. We're gonna manage our square footage and our occupancy very tightly while adding additional stores. This gives us the best opportunity to drive profitable growth as we have more store locations while maintaining lean occupancy.
All right, let's move on to gross margin, a place where we've seen huge AUR growth and huge inflation over the past few years. To level set, looking backwards, our gross margins bounced around 60% from 2017 through 2020. A quick reminder, our reporting methodology differs from most of our peers. We're more of a pure merchandise margin. We don't include selling, design, distribution costs in our gross margin. As we got to 2021, we took a nice step up to 62%. We reduced inventory levels and drove AURs through reduced promotions. To be clear, we did not eliminate promotions. We reduced the depth and the frequency of our promotions. Our strategy has been clear. I've talked to many of you about that as we've gone through. We will continue to offer promotions across our brands.
That is the industry we play in, and we like to deliver value to our consumer. In 2021, our AUR increases offset the increases in freight rates that we saw throughout the year, driving that 62%. In the fall season, we nearly doubled our air freight usage. Coming out of Vietnam, we took our air freight usage up to around 30%, which is double our normal 15%. We wanted to get that inventory here for the peak selling periods. This added around a total of $50 million of gross margin pressure, split between the back half of 2021 and Q1 of 2022.
Since then, we've reverted our air freight usage back to our normal 15% because all the adjustments that we've made over the past six and nine months on our products calendar, ports of entry, our carriers, we're seeing a much steadier flow of inventory at this point. As we look to 2022, we do expect to take a step back in gross margin, where moderate AUR growth should be more than offset by the flow-through of additional freight rate pressure as well as cotton and synthetic prices. For 2022 as a whole, we expect a total incremental freight and raw material cost increase of around $300 million to pre-pandemic levels. All right, let's look forward.
On our way to 2025, we expect to deliver a gross margin rate in the low 60s%, and this is driven by a partial normalization of those freight costs. We are making the assumption that around two-thirds of that $300 million of freight rate and cotton increases stays permanent for the long term. Hopefully, that is cautiously pessimistic. Using 2021 as a baseline, we expect a hit from freight and raw material inflation, but a benefit from 2022 levels. Our expectation assumes that the supply and demand imbalance that we've seen coming out of COVID normalizes a bit. Obviously, the world was imbalanced. We had all the demand here in the U.S., which has spiked all of these rates.
As demand normalizes around the world, we're expecting some normalization of these rates. On AUR, we're expecting slight growth in AUR for Hollister and Abercrombie, and a little bit more there for Gilly Hicks as they continue to evolve that assortment towards active and lounge. We expect an outsized impact from Abercrombie growth because that brand has the highest AUR. One of the most important levers to drive AUR is to maintain our lean inventories. Fran mentioned this earlier. This has obviously been in the news quite a lot recently, so I wanna take this time to just click into our Q1 inventory for a quick minute. Fran mentioned a couple of these numbers, but I'm gonna hit on them again. We think the perception of our inventory at Q1 was mismatched to the reality. Okay?
Our Q1 ending inventory was balanced and current. 93% of that inventory was current season, long life like denim, or had not even set yet. The remaining 7% was carryover inventory that we continue to sell through our outlets and our liquidation channels like we always do. These levels are slightly incrementally better than last year, where our current inventory was around 92% of the total. As a reminder, Q1 inventory comp 45%. Fran mentioned it. Units on hand were up 10%, and that's up against last year, where units on hand were down 20% to 2020 and remained below historical levels by far as we went throughout the year due to all of those late receipts. This actually led to lost sales in our peak selling periods that we called out for Q4.
If we think about that composition, what you see here on the slide, of that 10%, 58% of the units are seasonal, 16% of the units are long life, and 19% of the units haven't even set yet. We brought them in early to make sure we mitigate some of those transportation delays, so 19% up 500 basis points to last year. To be clear, we're not sitting here saddled with tons of old inventory that represents margin and markdown risk. On the remaining 35 points we talked about on our last call, excluding these units on hand, we have an even split between higher freight costs year-over-year as well as the higher in transit year-over-year.
Really, that in transit's due to the shipping times almost doubling year over year and then our strategy of purposefully bringing in product early. All right, let's look forward. We are planning on-hand inventories to remain above fiscal 2021 levels through the December to January time period, and this is where we really caught up on those late receipts from Vietnam last year. By year-end, or we expect our on-hand inventories to be in line with prior year. Currently, our expected total unit receipts for the year are essentially flat to 2021, and we will continue to adjust our buys and our delivery schedules based on new information as it comes in week in, week out. All right, let's move on to operating margin. We expect a gross margin rate in the low 60s%. Just talked about that.
The range is relatively wide, but it's really dependent on where these freight and raw material costs settle in. For OpEx, we'll maintain our disciplined approach, and we'll focus our spend on those areas that will help us know them better and wow them everywhere, specifically on data, technology, and the end-to-end digital experience. For marketing, we expect to hold our percent of sales. Made a nice step up over the last couple years in terms of marketing versus, you know, percent of sales perspective versus our peers, and we expect to hold that. We expect to see dollars tick up with sales. What our teams showed you today, it's just awesome, and the returns that we have seen from our increased marketing spend is great.
We have driven profitable digital growth over the past couple of years due to these efforts that they're making on social. For inflation, we're assuming that the current inflation rate holds, and then we'll build 2%-3% on top of that between now and 2025, and that covers kind of the rest of the OpEx categories. All right, let's shift to capital allocation. In terms of principles, we'll continue to run our business with a minimum liquidity level. We've targeted around $700 million, and that includes cash plus ABL availability. At that level, we expect to operate in a net cash position, assuming we hold some level of funded debt over the next four years.
In the near term, we will continue to invest in the business to drive our organic growth, all the things we talked about today, and we'll also utilize excess cash for share repurchases. From there, depending on the level of cash flow, we'll be thinking about dividends or potential debt repayments going forward. Moving to capital. As we look ahead, we expect CapEx to be in the range of $150 million-$175 million annually. Over the past four years, my favorite number in the deck today, we've generated $1.3 billion of operating cash flow and invested $500 million back into the business, averaging around $125 million per year.
For the next four years, the majority of our investments will be focused on digital and technology, as Samir covered, as well as repositioning and updating our store fleet. For supply chain, we expect to use third parties as we have for capacity and speed going forward, so we don't have a huge capital draw in that area. Shareholder returns over the plan period, we expect to continue to commit a portion of our excess cash flow to shareholder returns. Over the past four years, we have returned around 80% of our free cash flow to shareholders through share repurchases and dividends. 80%. All right, to finish up, we are confident in our 2025 Always Forward Plan, our growth strategies, and the investment plan.
We're cognizant of the near-term uncertainty and the headwinds that are out there, but we're confident also in our brand positioning, our transformed operating model, our teams, our strong expense control, and our balance sheet. These will all be enablers for us to achieve our plan. With that, I'll give it back to Fran.
Well, thank you everybody for coming this morning and listening to our story. Just gonna do a little recap, and then we're gonna head on to some questions and answers. Over the last 4 years, we have done so much transformational work to fortify our underlying fundamentals. We are stronger, smarter, and faster than ever before. With a balance sheet that allows us to be agile and continue to invest in our business through any cycle. We have clearly defined positioning at each of our global brands with unique edit points, a smaller, modernized, and more profitable omni-enabled store base, and close to 50% annual digital penetration and meaningful cash generation. We are unapologetically purpose-led with a clear vision of who we are and who we want to be. That vision is rooted in our corporate purpose, which serves as our North Star.
It impacts how we interact with our communities, engage our teams and partners, and how we drive the business forward. It has empowered us in each of our brands to put our customer at the center of absolutely everything we do. Know them better and wow them everywhere. Purpose has also helped us shape our approach to our Always Forward Plan and to the three strategic pillars we discussed earlier this morning. Execute focused brand growth plans, accelerate an enterprise-wide digital revolution, and to operate with financial discipline. The path to achieving our Always Forward Plan is not dependent on just one scenario. We have multiple avenues to meet our targets and the flexibility to respond to a variety of macroeconomic situations. We will lean into our data and analytics to make informed decisions as we navigate near-term challenges while maintaining our focus on our long-term goals.
We'll also be informed by our recently completed materiality assessment, which is the latest step on our ESG journey. It has given us valuable insights on our customer, associate, partner, and investor expectations, and we will leverage feedback to ensure that we further fortify the company's already existing sustainability program, determine the best measures of success for priority topics which don't exist today, and establish new ESG goals to supplement our current existing ones. With each of those, we will remain committed to listening, learning, and evolving, and we look forward to giving you regular updates on our progress. If you give us just a couple minutes, we're gonna put some chairs on the stage, and we're happy to answer everyone's questions. Here goes. We'll go every other. There you go. T hese are a little heavy.
I didn't realize there was one.
All right, can you pass me the first one? I'm gonna get up here one sec. I'm gonna be not answering any questions, which is great for me, but I will point, and then you have Mackenzie, and Nate will bring the mics over to you. Matt, you are clearly the first one asking a question, so it's all you. All right.
Matt Boss at JP Morgan. Thanks for all the details today. So maybe a two-part question. Fran, at the Abercrombie brand, it seems that that was a huge opportunity that you laid out. Where do you see the largest opportunity for market share, maybe by category? And then, Scott, could you speak to the cadence of the multi-year gross margin plan? And specifically, what level of promotional activity for the landscape are you embedding relative to 2019 within that modest AUR opportunity?
Thanks, Matt. So yes, Abercrombie is back, and I could not be prouder. I know you've been on this journey with us for quite some time, and it really is an amazing moment for us to be standing up here and talking about the opportunities. If you think about what Kristin talked about from a category perspective particularly, we'll start with, you know, with the genders. I mean, female has been outpacing the U.S. We see tremendous opportunity, and men's is seeing green shoots, which is awesome. Three, what we call franchises that barely existed a few years ago, denim, YPB, and Best Dressed Guest are all growing at terrific rates. So all three are very important. Denim is a big opportunity for us and continues to be.
You know, we showed you before how, you know, TikTok's favorite brand is actually seems to be America's favorite jean at the moment, and we're going to really press on that and make it even better than it is today. If you have anything-
I would just add to that. We didn't get into the detail of how we really get into this young millennial's life, but the team's done an amazing job creating what we call a life resume. We look at that four-day weekend, and the team has literally worked with so many customers to say, "Okay, what's really happening over those four days, and what are the categories that we should be leaning into?" That's how many of our opportunities have been addressed. As we continue to stay close to that customer, new opportunities come up. YPB is a great one.
We had launched a separate franchise a couple of years ago that wasn't performance active, but they quickly came to us and said, "Ooh, we love this, but we want performance active." That came out, you know, two years ago, and we quickly reacted to it. As we stay close to the customer, new opportunities will come up. Fran's correct, you know, the categories that we've talked about today are really important. We've also identified our must-win categories that we know our customer always comes to us for. For instance, knits, you know, is a big part of that. The team is focused, depending on the gender, on those must-win categories, and then these new franchises that have evolved as we've gotten close to the customer.
All right, let me pick up the other one. Let's start with promotions. It's hard to bake in an assumption, you know, globally for promotions across the industry. When we look inside the four walls of Abercrombie, we have been promotional. We will remain promotional go forward. We're not a brand today that's all full price that has to layer on big promotions in the future. When we sat here four years ago, we were one of the more promotional group of brands out there. We have been able to pull back that dramatically based on all the work that has been done on the turnarounds across the brands. We feel like we manage our inventory well. We can manage our promotional calendar and continue to grow AUR, you know, modestly as we go through the next three years.
The pace at which the gross margin will turn, it will come with, you know, the stabilization of some of the freight rates. The first step for us will be lapping the air freight rates. I called out that $50 million where we were more or less forced into that air with the Vietnam closure. We'll be able to capture that back, and then hopefully we just start to see some moderating freight rates go forward. They came on very quickly. You know, cautiously optimistic, maybe they'll come down quickly. We're not planning that way. That'll be the big change, kind of a step change that we see in the future on margins.
Okay. Next up, Mauricio, we see you behind the column. Mauricio, go for it.
Thank you. Good morning. I'm Mauricio Serna from UBS. A couple of questions on Hollister. I mean, Hollister excluding Gilly Hicks. You know, what would an upside scenario look like, you know, considering recovery in EMEA? Like, what would be like the type of growth that you would expect from that brand? And also, you know, in the longer term, you had mentioned operating margins could be above 10%. When we look at the cost structure, what would be the drivers that would take you to sustainable double-digit operating margin? Thank you.
All right, let me grab those. Let's start with the operating margin first. You know, really get to that 10%. It's close to the level we delivered last year. Sales growth, operating expense leverage, and then seeing that gross margin come back, if we can see some stabilization in the freight line and the commodity line, that gives you a nice solid path to 10% or above in the future, specifically at a $5 billion level of revenue. There's significant fixed cost and leverage that we would see from today. Thinking about Hollister, on the other question on the upside plan, we are very clear today we're planning conservative, you know, for the Hollister business.
That customer today, you know, living in the world that we're living in, that teen customer has been slightly challenged, and it's the lower income brackets. You know, they're tilted towards the lower income bracket versus Abercrombie. So we're being conservative there. I think the upside plan would be the strategies that we presented today working and working quicker. We have that balance sheet. If the new store openings are working and we're generating the top line, we're generating the bottom line, we'll accelerate them. EMEA is another one where we're not even expecting to get back to pre-pandemic levels from 2019. If that region comes back quicker, trust me, we and our teams are gonna do everything we can to do that. We're not gonna assume that in our plan, but that would be another path to upside.
You know, I think one of the exciting things is the agility and the flexibility that we've been able to show over the past few years to make the progress that we have made is really ingrained in what we do. To have the family of brands that we have and be able to work off, right, each other and what we're learning from one, what's working in others, will help us to realize the opportunities that we've laid out today. Hopefully, as we've talked a lot this morning about upside, so more to come.
Okay. Next up, we're gonna keep it easy. Nate, if you could pass it over to Janet, and then afterwards we're gonna go right to Paul, so you could just pass it right over to him please.
Hi, everybody. Thank you for a great presentation. Just a couple of questions for Scott. I think in the model for 2021, you're looking at escalated wage and AUC pressure. I wondered how we should think about that in 2023 through 2025, and how you're thinking about that. I also was wondering if some of the promotional activity that you're referring to could be offset by higher prices, higher ticket prices, and maybe by brand, that would help a lot. For Kristin, you talked a lot about the women's business at ANF, which it looks fantastic. I was just wondering if you could talk a little bit about the men's business and the opportunity there. Thanks so much.
That's three questions in one. I'll start in the middle with the ticket question. 2021, we did not actually have to raise any of our tickets. We talked about that several times in our calls. As we got to 2022 and the pressures of inflation and raw materials got a bit tougher, we have been judicious about raising some of our prices, but very specifically in, you know, the categories where we know we can find some of that elasticity. We did finish first quarter with our eighth consecutive AUR growth quarter in a row, so that was super exciting. We're gonna watch our promotions. We have a very flexible ability for our pricing. Pre-pandemic, I mean, Scott just said it a minute ago, we were exceptionally promotional.
You know, we've made a ton of progress with the health that we've built in our brands being less promotional, and our discounted ticket has been a big, big opportunity for us. Again, we're managing it, you know, daily and weekly, and we're gonna keep doing it that way.
Do you want me to take men's?
Feel free.
Okay. As I mentioned earlier, men's, we're actually seeing some amazing traction in the U.S., so we are very optimistic that the men's business is now following shortly behind the women's business in terms of its turn. Takes a little longer to get the guys to come in and really try something new, but we're seeing great traction in categories such as, you know, the golf lifestyle that we've done, essential tees, essential fleece. Wovens have been amazing. A lot of the categories that you see over in the shop are driving tremendous business in the U.S. Next up, we have to turn the international business back on, and as those markets start to reopen and we invest in marketing there, we're confident we can do that using our North America playbook. Very optimistic.
Four questions. Hold on. It's amazing.
I know you have a team dedicated to that region. My question is it just that those regions haven't opened up? Are there other, you know, sector factors like competition or, you know, some sort of price resistance or whatever that are or even assortment challenges that may be preventing that rebound to be as strong as you would have expected?
Can I just repeat the question because people in the press may not have heard it.
A bsolutely. No, we are on mute this call, but r egarding EMEA. Yo u wanna repeat it? Go ahead..
.Go ahead. Just repeat it as you answer it, if you don't mind.
Regarding EMEA, are there other macro pressures or internal opportunities besides just the macro situation there. I was just in Europe two weeks ago, actually. I was in Germany and London for the first time in three years, because it's been impossible to get there and really see stores. Stores have been closed. It was amazing to be there. It was quite inspirational, in fact. What we're seeing is that we're seeing traction already in the UK, which opened up more quickly than the rest of EMEA. I'd say the UK and the Middle East have been strong, stronger. What we learned, we learned a lot from the customers while we were in stores. We saw Germany and London, and overall, they're loving the product. It's just a matter of getting the traffic back.
For instance, when we were in Germany, they had just lifted the final restrictions that first week of May, and people are slowly starting to come back. It's different than what happened in the United States. When they lifted restrictions here, everybody ran to the mall. It's not happening as quickly there. In the inter-country, travel isn't happening as fluidly as it was pre-pandemic. We're confident it will again, though, as people get comfortable with understanding, you know, do I have to test or not? Do I need masks or not? You know, all that has just been slower to come back in EMEA. What we're confident in is our team there. Three years ago, we didn't even have a team there. You know, we had just started building it, and now we've got an amazing team.
I got to spend a lot of time with them when I was there a couple weeks ago. They are, as much as they can, staying close to the customer. It's been more difficult there because they can't get, you know, from country to country to really understand. With what they're learning, we feel really confident in the product that we have. Then the marketing that we're doing is minimal right now because it's, you know, the country's been under lockdown. As we started marketing again, we're seeing amazing traction with our marketing. Again, it's the same playbook as North America. It's just identifying the right time to go big, and we wanna do it when the region's really open.
Yeah. Just to zoom out one point on Kristin's last one. Our brand awareness is strongest in the U.S., next strongest in EMEA, and then third strongest in or weakest in APAC. We are dependent on store traffic. When there's a mall shutdown, like we've seen, and restrictions and people aren't in the mall, that's the primary way they're discovering our brand. As traffic gets back out there, that's something that we need across our brands. To Kristin's point, we will also be amping up marketing as we continue to fill in some of these white spaces with stores to get that brand halo around our brands. We need that traffic for awareness. All right, I will finish up your last or your first point, which was around wage inflation as well as cost inflation.
The way I like to think about wages is they only go one direction, and that is up. You have to manage through, you know, how you build your corporate office in terms of headcount or how you build your stores and distribution centers to manage through those wage increases. The rest of the cost, specifically freight and raw materials, I wish I could tell you when we'll peak and come down. I think it will happen at some point in the future, specifically with the demand environment that's happening. I just can't tell you when, but we're optimistic that we'll get some benefit in the future in our path to 2025.
Thanks.
Is this on? Paul Lejuez, Citigroup. Two questions. I just wanted to hear a little bit more about the change in the loyalty program at Hollister. What inspired the move? I think, is it away from Club Cali completely, or are those two loyalty programs gonna live side by side? What's the goal with the Hollister House? That's the first question.
Then, Scott, for you have some e xpensive debt still on the balance sheet. Could you just remind us the situation there, what the plan is? Can you repay it? Will you repay it? Just what you're thinking in terms of, maybe getting something a little bit cheaper.
Absolutely. I'll start with that one, and then chime in. We have 8.75% senior secured notes that we did during COVID. It doesn't mature until 2025. We have a non-call two provision that comes up right about now. We're keeping our eyes on the market. Obviously, the debt markets are interesting right now, to say the least, but it's something we'll continue to look at as we move forward.
Regarding Hollister House and Club Cali, we've done, as Robert mentioned, we've been researching for almost the last 24 months, really spending time with our customers and looking at industry leading loyalty programs. What we found across all the brands actually is that we had an opportunity to offer more benefits within our loyalty programs and customers were so engaged in these, and they really wanted certain things. We learned across the brands what they're looking for, and we're now in a position we've built the program so that we can actually iterate as we continue to learn. We're positioning it. Still, you're going to earn your cash, but you're also going to earn early access to product drops, or you'll earn early access to a promotion.
You know, we've really taken all the insights from our customers and said, "How can we create an industry-leading, you know, evolve our industry-leading loyalty program and turn it into something that they're really excited to be part of versus just an earn and burn, you know, membership?" Hollister House is the reskin of Club Cali, and we're really excited about it. As we've really spent a lot of time with our customers to understand what they're looking for, we know they're going to love this, and it provides some upside even for the brand. Robert, I don't know if there's anything you wanna add about Hollister House Rewards.
No, I think you got it.
Wait one moment and Mackenzie will get you.
Two mics. That's even better than one mic. I think the only thing. Just to reiterate what Kristin said, I think it's it really is. We have an amazing loyalty program, and that loyalty program will continue, and then on top of that, we're expanding it to be more of a membership program. Really taking our loyal customers that are a part of this program and then expanding that into more benefits, more services, right? The Hollister brand has so many people as part of that program, that the expansion of the services especially is something that we feel is a big unlock for the brand as we move forward. Also another way to gain even more incremental consumers coming into the brand.
The only thing I'd add to that is that, you know, with all the restrictions that Apple is putting out there from a privacy standpoint, the loyalty program is a big vehicle for us to better understand who our customer is, so we can deliver that personalized experience. A lot of brands, including us, are really trying to figure out how do we get the customer into our loyalty program, so we can understand more of who they are and deliver them that better experience. Before, cookies and things like that allowed you to deliver that personalization. All that's going away, so you really have to give the customer a reason to join the program. These changes are giving more incentive to our customers to join that program, so we can in turn then deliver the better experience.
Marni, go for it.
Hi. Marni from the Retail Tracker. Thanks, guys. This has been very informative. Scott, I have one quick question for you. Can you just help us understand how you're thinking about foreign exchange for the rest of the year with the strength of the dollar? Back to Hollister. I guess first question on Hollister, you identified an opportunity with the older Gen Z customer, and I'm curious, you know, some of us here have a little PTSD from when Hollister and Abercrombie were the same, leaving Ruehl completely out of that conversation. How will that be differentiated? Like, why is that customer not going to Abercrombie? Do you feel like you're losing her for a few years before she goes to Abercrombie? If you could just talk a little bit about that.
I think you guys said about 65% of Hollister sales are done in store, which is a really healthy number. I'm curious if that's partially influenced because mom is still buying most of this, 'cause you see the credit card. I'm assuming for a big percentage of Hollister sales, it's still mom buying, not the kid buying.
All right, I'll kick it off with foreign exchange and then get to the fun stuff. We're expecting foreign exchange to just stay where it is. I've tried to guess that market a million times in the past and have failed every time. We're just gonna assume it stays where it is for the rest of the year.
I'll start, and then I'll kick it over to Kristin. You have been on this journey, Marni, and the brands are evolved and incredibly different than when I first joined the company. I've told this story many times, but when I interviewed to join, and I went to Abercrombie, and I went to Hollister, I mean, it was essentially, it was the same product in the same mall in two different stores with two different labels and two different price points. It has been a journey and a commitment to pull these brands apart and set them on their own individual paths. That's what the team has done an outstanding job doing. Today, I can tell you, will there be some customers who cross over between the brands? Of course, there will be.
Their position, and their product, and their marketing is so distinctly different that there will not be cannibalization, as perhaps the question that you're asking. That Gen Z consumer, you know, he and she are 13 to early twenties, and that young millennial picks up there and goes up to 40 now. We are very pleased with where those positions are, and I'd like to.
As part of that total Gen Z view, we know the 19 to 22 segment, that's the one I was talking about a lot today, the $190 million in annual volume for every point of market share we pick up. That is an under-penetrated segment within Hollister from a sales perspective, but when we measure brand love and all those metrics Robert had up on the screen, we actually score very high. We actually did a lot of research to say, "Why is it that we score high?" They love us as a brand. They've shopped with us since they were 13, love us, but then, for whatever reason, our market share drops off a bit.
What we found is that there are certain products that they wanted to buy from us that were different than what they bought from us from 13 until 18 or 19, and we can simply start to change our assortment architecture to offer more of that and engagement strategies to really go where they are. It's really a really focused effort on that segment to say, "How do we keep them with the brand longer?" Then they'll go to Abercrombie, you know, after that. Today, we see a drop-off, and then it takes a while to get to Abercrombie, so it's white space for us.
The Social Tourist product is very different than the Hollister product. Not at the very beginning, it was a little more similar. Now it's become definitely different. Is that the avenue with which you can use to reach them?
I missed the first part of your question.
It's about Social Tourist. Is that the avenue because the product, when you first dropped Social Tourist? It was very different. It was right for COVID, but right now it's much cooler, a little s exier, so is that the avenue which you can use?
That's absolutely part of the way that we will reach the 19- to 22-year-old, and you're right. When we launched Social Tourist, at first it was a different mindset, and now what we've learned quickly is that they want that fashion, that high fashion, and it's an older customer, a bit edgier customer. But it will help us attract that 19- to 22-year-old into the brand, and it also gives us tremendous learnings for Hollister in terms of a version of that's appropriate for a big volume brand like Hollister. A lot to learn there.
Y ou could.
All right. Just sticking with that point and maybe to play the devil's advocate, I mean, I get the not wanting to cross over the main two brands here, but is there not an opportunity now that you have the sort of customer cohorts, your backend customer files, to kind of do more from a marketing and targeting standpoint to get people to cross over into Gilly Hicks, into Social Tourist, into certain parts of the collection? Are you doing that? Are you thinking about that?
Sorry. I'm trying to decide who's going here. I'll kick off by saying yes. I mean, Samir talked a lot today about all the progress that we've made on our customer journeys and our data and analytics and knowing our customers better. That is all the path to doing exactly what you're talking about, which is having the five-year-olds, you know, the youngest of our cohorts to start shopping with us and stay with us through all of our brands. I would say that it happens now somewhat a little bit more organically, but it will be much more targeted, and it will happen through our ability to track them with data as we move ahead.
Great. Scott, you're behind the pillar, but t he gross margin guide, I just wanna be crystal clear here. The wide range is reflective of not knowing the outcome of sort of the path that freight costs take. At the higher end, are you embedding some, I guess, you know, the inverse of a benefit in that they do come down to some degree? Is it at all in the outlook, I guess, is my question?
Yeah, just good to see you behind the pillar. What I would say is we're assuming moderate AUR growth. We're not gonna put a plan out there that assumes high single-digit AUR growth to overcome this freight. The range is wide, and you think about calling out for 2022, we have $300 million of freight and raw material pressure versus pre-pandemic levels. You can find a path to a few hundred basis points within that $300 million based on our sales levels pretty easily. I just can't tell you when, if, and how that will happen. We are making the assumption that we'll get about a third of that back, of that $300 million, but the rest of it really kind of fills in the blanks between that range. The midpoint of the range assumes that third comes back.
Finally, I don't really know how to ask this question, but it seems like you've done a lot from a hiring standpoint in the sort of last 4 years and maybe even the last two years. Can you just kind of speak to the, you know, the amount of people you've hired for these respective teams, where you are on that journey and, you know, does that sort of scale from here?
That's all I got.
I'll be happy and proud to answer that question. We have been on an amazing journey at Abercrombie, not only recruiting talent, but growing talent from within. When I first arrived at the company, and I will share this, you know, people said to me, "People from the outside don't make it here." I'm happy to say, you know, almost eight years later, that not only have I survived and thrived here, but we have built a team that has combined both existing talent and new talent, and those two things coming together have really been the magic of what we've created. We used to solely depend on our very terrific LDP program that I talked about a little bit earlier today, and that is a big part of the fuel that, you know, drives the engine.
We also recruit, as Samir mentioned, from other industries to help us understand the value that's out there and bring it within the company. We're on a journey. I'm not gonna give specific numbers, but, you know, relative to the size of the company, we'll continue to evaluate that as we move forward. Kim
Great. Thank you so much. Kimberly Greenberger, Morgan Stanley. I wanted to just ask, if I could, about the AUR one more time. I just am trying to understand the journey of AUR. If 2021 AUR is here, does 2022 AUR drop? It goes up by 2025 so that it's above 2021 levels? Or what's the path of AUR over that time frame? I wanted to ask about the technology transformation that you're working on.
You mentioned during your presentation that you want to operate like a tech company rather than like a retailer. I'm wondering who did you bring in from the outside who has worked at tech companies who are helping you specifically make that pivot? Thanks.
Y ou want me to take the first one? You know, me personally, in the time I spent at Equinox, the last two or three years, I spent all my time building a technology startup called Equinox Media, which was part of the larger Equinox Holdings, Inc. It really was there to build the Equinox+ streaming app, where we were streaming fitness content to the world, and we basically built the SoulCycle at-home bike, put a 21-inch screen on top of that bike, and we're streaming SoulCycle classes. That itself was a technology company, and we recruited a number of product managers, designers, engineers, data engineers to do that. I personally have a lot of experience there. Just the ways of working in a model in a company like that are the things that we're bringing into this company.
It's important to be clear that we're not saying that we are a tech company. I think it's really important to understand that we're saying that we're operating like a tech company, so we're still a retailer. But a lot of the principles that tech companies use, like, you know, making data-driven decisions, being really close to the customer, you know, empowering the smart, talented individuals that you hire closest to the work to make decisions and not having, you know, ten layers of red tape or meetings to make decisions. Those are all the things that we're injecting into the culture and the organization here to drive just speed and agility and velocity, frankly. Hopefully that helps.
On the AUR, not gonna talk too much about 2022 at this point, but on our Q1 call, we talked about growing AUR in Q1. Our expectation is to grow AUR slightly here in 2022. We don't expect that'll be enough to offset all the freight and raw material headwinds, which is why we're anticipating a step back here in 2022 gross margin. Our expectation is to continue to just grow AUR slightly each year.
Okay. 2021, 2022, slight growth and the hope is...
Same thing. Slight growth as we go up.
Slight growth through 2025.
That's the goal.
Corey? Right at the same table, Nate. R ight here.
Hi. Corey Tarlowe with Jefferies. Thanks so much for having us here today. First, can you talk about how you're using data to inform store growth and de-risk opening those new stores? Because you have pretty strong four-wall operating margins on the existing stores that you have, and it sounds like you're projecting those metrics to get better. How are you thinking about using data to really drive predictable, profitable store growth? And then second question is, have you thought about sizing the opportunity for active? It sounds like YPB is off to a great start. Gilly Hicks Play Happy seems to be doing quite well. How are you thinking about active overall as a penetration of the overall business long term?
Yes, I can take the first one around data. You know, in the example that we shared around our two Chicago stores that we opened, that's a perfect example of how we're using data. Given we have such a high digital penetration, we have really strong insight into understanding where our customer is and where that demand is coming from. That's the primary signal that we're using today to understand, you know, where is there a hot pocket of customer or demand where we don't actually have a physical presence. That's, you know, kind of priority one, two, and three is effectively finding those markets across the globe and using that as the first places to start from a store opening perspective.
The other thing I'd say is that we, b eyond our first-party data or the data that we collect ourselves, there's a lot of third-party data that we're able to have access to. From that, we're able to understand, you know, where else is our customer spending and shopping, and are there other areas where, you know, we could be profitable or we could have a good business, because there's demand for our type of product, but we don't have a physical presence there yet. Those are two areas where data is starting to influence how we think about our real estate strategy.
I'll add to that also, there are two other areas that we're using data as it relates to driving store productivity, essentially. We're able to now use the data to say what assortments should go in each store depending on customer preference. That's new work for us that we've just started, and it's pretty fascinating when you see the data to say, "Okay, should this be a stronger women's store or a men's store, or should this be a stronger denim store versus not?" We're able to use data to actually determine the assortments in each of our stores. Then the other place we're using it is to inform our store design.
We alluded to the customer journey work that we just completed, and it was fascinating to really look at our key customer segments' journeys and say, "Where are those pivotal moments in a journey where we need to win, both physically and digitally," so from an omni perspective, and how do we build in those experiences into our physical space? As we start to open stores, Abercrombie's first, Hollister's later on this year, but we'll start to build those experiences in based on the data. Pretty fascinating.
I would recommend if you have Chicago in your travels to go and visit both those stores. I was just there about three weeks ago, and it was I mean, the stores are terrific, the teams are terrific. To Kristin's point about the assortment, I mean, one is a women's only specific store in Southport and the other is on State Street, not that far away from each other, but have different customers and different needs. Really, you could see how well and terrific the merchants had assorted the stores for that, for those purposes. If you, if you're in Chicago, I'd stop by and take a look at both of those.
I think another great example of that is in Hollister, where denim is a key category for Hollister. Obviously, back to school is like our Christmas. We were able to take data and say which stores really over-index in denim and how can we expand the space there and do something really different. That's about to roll out. We're just around the corner from that.
Stay tuned.
Stay tuned on that. Those sorts of things will help us drive productivity in our existing stores, in addition to finding the right locations, the right sizes, et cetera.
YPB sizing is the other one?
What's that?
YPB.
As we know, we're just on the beginning of this active journey across, you know, performance active with YPB and active lifestyle with Gilly, and the customer response has been so strong in both. The market is big, and it's really the fastest-growing segment of the apparel market. We are just out to get as much of our share as we could possibly get. We're on a journey. As we do, we're very agile, and we chase. You know, we've since YPB launched in March, we sold out essentially, and we've been chasing ever since. Similarly in Gilly, when we relaunched last year, we saw how important it was, and we've been chasing to try to get it to 50%.
We'll continue to do what we do, and we'll make it as big as we can possibly make it to take our fair share of that market.
Thank you very much.
Thank you.
Which is why you should all feel so great you have those YPB bags.
I know, 'cause we can't get enough.
Those are one of the things that it sold out. Do we have any other questions? Oh, there we go, Susan.
There's a question in the middle too.
Great. Thank you. Susan Anderson, B. Riley. For Gilly, I was wondering if maybe you could talk about just the breakout of the athletic casual versus the intimates. Is the athletic part that big yet, or at least the expectation for this year, $110 million? And then also, I'm not sure if you said what the growth expectation is for this year to get to that 110. Is it also about 15%? And then maybe Scott, for you, since you're now becoming a net store opener, I'm curious what you're seeing just from a rent perspective on the leases, if they're similar to your average now or if you're seeing better deals out there.
If you could talk about just the timeframe of the leases you're having to sign on if, you know, for some reason the store doesn't work out?
Are you okay with this?
All right, let me start with the final two. Gilly, we talked about $110 million this year as our expectation for 2022. Each brand we give a dollar value to launch from this year, but not talking about anything for 2022 otherwise. In terms of the leasing environment, we're gonna open 60 stores this year. We talked about that on our last call. That should tell you that we're getting deals that are good for us, right size, like, right location, right economics. We're gonna maintain that discipline as we go forward. We are not going to chase stores to chase revenue. We're gonna do it in a smart way. Like we've said a lot of times, we have the balance sheet to do it, but we have to get the right deal.
We know we've talked a lot about Chicago today, but it's exciting to have a whole new tool kit for Abercrombie & Fitch and a different way to go to market. Our real estate team is out there trying to find more success stories for us and more streets around the U.S. and Europe to attack.
Regarding Gilly Hicks active lifestyle, what we're doing is we're looking at the freestanding and the side-by-side stores because that's really the future of where the volume's going to come from. The traction we're seeing in active is robust there. We know it's already 30% of the business in those stores with a lot of missed business as we're chasing that in Gilly Hicks. Long term, we've said active lifestyle will represent 50% of Gilly Hicks. Lounge will be about 20%, so you've got 70% there. The balance will be between intimates, accessories, and a couple of new categories that we're introducing.
I think there was one more question in the middle.
Hiya. Thank you. Just getting back to your debt, it is an expensive piece of paper. It's first lien, secured by assets outside of your ABL. Going forward, how should we think about your balance sheet? Would you like to get back to an unencumbered balance sheet sort of outside of your ABL? Or do you sort of view the, you know, the debt markets as a way to sort of, as a place for liquidity to drive growth?
Yeah, the great thing about our ability to generate cash in up cycles and down cycles is it gives us the flexibility to carry debt or not carry debt. We put this debt in place as we came into COVID, a lot of uncertainty. As I mentioned earlier, we'll continue to keep our eyes on it. We don't like paying 8.75%. We'd love that rate to be lower, but debt can be a part of our capital structure go forward. We are comfortable carrying that level of debt long term, but we'll see what the cash flow looks like.
Okay, we have time for one more, if there is one more. I knew Dana. I was waiting for you to raise your hand. Dana Telsey gets the last question.
Thank you. Sorry I'm late. As you think about the 10% overall long-term operating margin target, you've talked about product, you've talked about new customer acquisition and existing customers. What are you looking for as the benchmarks to drive to that 10%, and what would you look at first if you prioritize? Thank you.
Go ahead.
Yeah, I'll start. You know, number one, it's top line growth, and we think about just the P&L. It's gonna be top line growth, get some of that margin back through some normalization and freight and continuing to tick up AUR. Then on the expense line, you know, continuing to be very diligent, invest where the growth is coming, and see leverage there as we get to that $5 billion level in the future is our expectation. Whenever you put those numbers together, it's a very reasonable path. We think it's a very doable path as we think about what just happened here in 2021. If you wanna talk about the brands side.
Well, I'll just say, t o recap, Dana, you know, if we talk about the three key principles that we talked about today, financial discipline, focused brand growth, and our digital revolution, I mean, those are the three key components in order to make to get there. You know, we were thrilled with the opportunity to beat that 2018 target, you know, and triple it. We know that it's in our sights. There's been a lot of macro challenges, you know, sent our way over the past couple of years that we're working through. But the brands, the team, and the strategy, we're ready to go.
Okay. With that, we hope. I know we've said multiple times how proud we are of all of the buildouts that we have, but we would encourage you all to go there. Our merchants are gonna be there, and then our management team just needs to unmic, get some water, and then they will be mingling as well. In about half an hour or so, we will have a lunch too. T hat's what we have for you. We encourage you all to go that direction, find out a lot about the merchandising in the stores, and we'll see you shortly.
Thanks.
Thank you, everybody.