The flagship units for Abercrombie & Fitch (NYSE:ANF) increased revenues by only 4% in the first quarter of fiscal 2006, while same-store sales declined 4%. I can see it now -- the short sellers are coming out of the woodwork, declaring, "This dog is going to zero!" Don't believe it, folks. Great companies find other ways to spur growth. A&F has done just that by employing abercrombie (kids' fashions), Hollister, and REUHL as engines for growth.

Yes, A&F is being challenged, particularly against tough year-ago comparisons. But strong sales in its other concepts helped fuel the entire enterprise to net revenue growth of 20.2%, with a comps increase of 6%. Contributing to these solid results: abercrombie and Hollister, which saw increases in comps of 30% and 13%, respectively.

Numbers for A&F's new REUHL concept were not provided, but comments from management during the quarterly earnings conference call suggest things are going well. This higher-end line, with only 10 stores in operation, is still trying to find its sea legs in the choppy waters of fickle fashion. But a reduction in its price points -- to 12% above A&F levels (down from a previous level of 30%) -- and a move to a more casual look have management excited about its prospects. The concept remains on target to meet management's previous guidance of profitability by the end of fiscal 2007.

As A&F's other concepts continue to perform well, management has plans to refresh the look and feel of its flagship stores. The company intends to invest at least $50 million to improve lighting and sound (among other things) in A&F stores. And while domestic sites get a makeover, management is thrilled by the performance of A&F in the international market. A&F in Canada was one example of the stellar sales the company is witnessing beyond U.S. borders.

Looking ahead into the second quarter, investors should be aware that management expects comps to be even more challenged in the upcoming period, as it faces difficult year-ago comparisons. Additionally, the anticipated decline in denim should continue, but management believes that inventory levels are appropriate for the softness in this category.

Between international and e-commerce opportunities, strong performances from its lesser-known concepts, and plans to refresh the look of flagship sites, there are plenty of reasons to keep Abercrombie & Fitch high on one's watch list.

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Fool contributor Jeremy MacNealy has no financial interest in any company mentioned.