Attached files
file | filename |
---|---|
8-K - FORM 8-K - ABERCROMBIE & FITCH CO /DE/ | c21783e8vk.htm |
EX-99.3 - EXHIBIT 99.3 - ABERCROMBIE & FITCH CO /DE/ | c21783exv99w3.htm |
EX-99.2 - EXHIBIT 99.2 - ABERCROMBIE & FITCH CO /DE/ | c21783exv99w2.htm |
EX-99.4 - EXHIBIT 99.4 - ABERCROMBIE & FITCH CO /DE/ | c21783exv99w4.htm |
Exhibit 99.1
ABERCROMBIE & FITCH REPORTS SECOND QUARTER 2011 RESULTS
NET SALES INCREASE 23% AND NET INCOME INCREASES 64%
BOARD OF DIRECTORS DECLARES QUARTERLY DIVIDEND OF $0.175
New Albany, Ohio, August 17, 2011: Abercrombie & Fitch Co. (NYSE: ANF) today reported unaudited
results which reflected net income of $32.0 million and net income per diluted share of $0.35 for
the thirteen weeks ended July 30, 2011, compared to net income of $19.5 million and net income per
diluted share of $0.22 for the thirteen weeks ended July 31, 2010. Net income for the thirteen
weeks ended July 31, 2010, included a charge of $0.02 per diluted share associated with store
closures.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
We are pleased that our results for the quarter continued to reflect strong momentum, both in the
US and Europe, resulting in a 71% increase in operating income for the quarter. Going forward, our
focus remains very much on execution against our long-term strategy and roadmap objectives. Costing
pressures will be greater in the second half of the year, and macroeconomic uncertainty has
increased. However, our strong top-line momentum and overall performance for the past several
quarters give us confidence that we are well positioned to navigate through this environment.
Second Quarter Summary
Net sales for the thirteen weeks ended July 30, 2011 increased 23% to $916.8 million from $745.8
million for the thirteen weeks ended July 31, 2010. U.S. sales, including direct-to-consumer
sales, increased 12% to $684.9 million. International sales, including direct-to-consumer sales,
increased 74% to $231.9 million. Total Company direct-to-consumer sales, including shipping and
handling, increased 28% to $102.1 million.
Total comparable store sales for the quarter increased 9%. By brand, comparable store sales
increased 5% for Abercrombie & Fitch, 7% for abercrombie kids, and 12% for Hollister Co. Total
sales by brand were $383.4 million for Abercrombie & Fitch, $83.3 million for abercrombie kids and
$434.2 million for Hollister Co.
The gross profit rate for the second quarter was 63.6%, 150 basis points lower than last years
second quarter gross profit rate. The decrease in the gross profit rate was driven primarily by an
increase in average unit cost partially offset by a higher AUR and an international mix benefit.
Stores and distribution expense, as a percentage of net sales, decreased to 46.4% from 48.9% for
the second quarter last year. The decrease in the stores and distribution expense rate was
primarily driven by lower store occupancy costs as a percentage of net sales.
Marketing,
general and administrative expense for the second quarter was $110.0 million, a 16%
increase compared to $95.2 million during the same period last year. The increase in marketing,
general and administrative expense was due to increases in compensation, including incentive and
equity compensation, marketing, and other expenses, net of favorable prior year legal settlements.
The effective tax rate for the thirteen weeks ended July 30, 2011 was 30.7%. The current rate
reflects a lower than anticipated full year rate as a result of an increased share of the companys
pre-tax income coming from international operations with a lower effective tax rate.
Net income was $32.0 million and net income per diluted share was $0.35 for the thirteen weeks
ended July 30, 2011, compared to net income of $19.5 million and net income per diluted share of
$0.22 for the comparable period last year.
During the second quarter of Fiscal 2011, the Company repurchased 950,142 shares of its common
stock at an aggregate cost of approximately $64.4 million. As of July 30, 2011, the Company had
approximately 8.4 million remaining shares available for purchase under its publicly announced
stock repurchase authorizations.
In addition, the company repaid outstanding borrowings of $44.3 million and ended the quarter with
$539.6 million in cash and cash equivalents, compared to $596.5 million in cash and cash
equivalents at the comparable point last year.
2011 Outlook
The Company continues to anticipate opening five Abercrombie & Fitch flagship locations during
Fiscal 2011, including the flagship opened in Paris in May. The Company expects to open up to 40
international mall-based Hollister stores, of which six had opened in the first half of the year.
The Company expects to open two domestic stores in Fiscal 2011 and now expects to close
approximately 60 to 65 domestic stores, primarily at the end of the year through natural lease
expirations.
Based on current new store plans and other planned expenditures, the Company continues to expect
total capital expenditures for fiscal 2011 to be approximately $350 million.
Other Developments
On August 16, 2011, the Board of Directors declared a quarterly cash dividend of $0.175 per share
on the Class A Common Stock of Abercrombie & Fitch Co. payable on September 13, 2011 to
shareholders of record at the close of business on August 29, 2011.
An investor presentation of second quarter results will be available in the Investors section of
the Companys website at www.abercrombie.com at approximately 8:00 AM, Eastern Time, today.
At the end of the second quarter, the Company operated a total of 1,073 stores. The Company
operated 316 Abercrombie & Fitch stores, 179 abercrombie kids stores, 501 Hollister Co. stores and
18 Gilly Hicks stores in the United States. The Company operated 10 Abercrombie & Fitch stores,
four abercrombie kids stores, 44 Hollister Co. stores and one Gilly Hicks store internationally.
The Company operates e-commerce websites at www.abercrombie.com, www.abercrombiekids.com,
www.hollisterco.com and www.gillyhicks.com.
Today at 8:30 AM, Eastern Time, the Company will conduct a conference call. Management will
discuss the Companys performance and its plans for the future and will accept questions from
participants. To listen to the conference call, dial (888)-218-8170 and ask for the Abercrombie &
Fitch Quarterly Call or go to www.abercrombie.com. The international call-in number is (913)
312-0839. This call will be recorded and made available by dialing the replay number (888)
203-1112 or the international number (719) 457-0820 followed by the conference ID number 8454067 or
through wwww.abercrombie.com.
For further information, call:
Eric Cerny
Senior Manager, Investor Relations
(614) 283-6385
Eric Cerny
Senior Manager, Investor Relations
(614) 283-6385
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
A&F cautions that any forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) contained in this Press Release or made by management or
spokespeople of A&F involve risks and uncertainties and are subject to change based on various
important factors, many of which may be beyond the Companys control. Words such as estimate,
project, plan, believe, expect, anticipate, intend, and similar expressions may
identify forward-looking statements. Except as may be required by applicable law, we assume no
obligation to publicly update or revise our forward-looking statements. The following factors, in
addition to those included in the disclosure under the heading FORWARD-LOOKING STATEMENTS AND
RISK FACTORS in ITEM 1A. RISK FACTORS of A&Fs Annual Report on Form 10-K for the fiscal year
ended January 29, 2011, in some cases have affected and in the future could affect the Companys
financial performance and could cause actual results for the 2011 fiscal year and beyond to differ
materially from those expressed or implied in any of the forward-looking statements included in
this Press Release or otherwise made by management: changes in economic and financial conditions,
and the resulting impact on consumer confidence and consumer spending, could have a material
adverse effect on our business, results of operations and liquidity; if we are unable to
anticipate, identify and respond to changing fashion trends and consumer preferences in a
timely
manner, and manage our inventory commensurate with customer
demand, our sales levels and profitability may decline; fluctuations in the cost, availability and
quality of raw materials, labor and transportation, could cause manufacturing delays and increase
our costs; equity-based compensation awarded under the employment agreement with our Chief
Executive Officer could adversely impact our cash flows, financial position or results of
operations and could have a dilutive effect on our outstanding Common Stock; our growth strategy
relies significantly on international expansion, which adds complexity to our operations and may
strain our resources and adversely impact current store performance; our international expansion
plan is dependent on a number of factors, any of which could delay or prevent successful
penetration into new markets or could adversely affect the profitability of our international
operations; our direct-to-consumer sales are subject to numerous risks that could adversely impact
sales; we have incurred, and may continue to incur, significant costs related to store closures;
the costs associate with our development of a new brand concept such as Gilly Hicks could have a
material adverse effect on our financial condition or results of operations; fluctuations in
foreign currency exchange rates could adversely impact our financial condition and results of
operations; our business could suffer if our information technology systems are disrupted or cease
to operate effectively; comparable store sales will continue to fluctuate on a regular basis and
impact the volatility of the price of our Common Stock; our market share may be negatively impacted
by increasing competition and pricing pressures from companies with brands or merchandise
competitive with ours; our ability to attract customers to our stores depends, in part, on the
success of the shopping malls in which most of our stores are located; our net sales fluctuate on a
seasonal basis, causing our results of operations to be susceptible to changes in Back-to-School
and Holiday shopping patterns; our inability to accurately plan for product demand and allocate
merchandise effectively could have a material adverse effect on our results; our failure to protect
our reputation could have a material adverse effect on our brands; we rely on the experience and
skills of our senior executive officers, the loss of whom could have a material adverse effect on
our business; interruption in the flow of merchandise from our key vendors and international
manufacturers could disrupt our supply chain, which could result in lost sales and could increase
our costs; we do not own or operate any manufacturing facilities and, therefore, depend upon
independent third parties for the manufacture of all our merchandise; our reliance on two
distribution centers domestically and one third-party distribution center internationally makes us
susceptible to disruptions or adverse conditions affecting our distribution centers; our reliance
on third parties to deliver merchandise from our distribution centers to our stores and
direct-to-consumer customers could result in disruptions to our business; we may be exposed to
risks and costs associated with credit card fraud and identity theft that would cause us to incur
unexpected expenses and loss of revenues; modifications and/or upgrades to our information
technology systems may disrupt our operations; our facilities, systems and stores as well as the
facilities and systems of our vendors and manufacturers, are vulnerable to natural disasters and
other unexpected events, any of which could result in an interruption in our business and adversely
affect our operating results; our litigation exposure could exceed expectations, having a material
adverse effect on our financial condition and results of operations; our inability or failure to
adequately protect our trademarks could have a negative impact on our brand image and limit our
ability to penetrate new markets; fluctuations in our tax obligations and effective tax rate may
result in volatility in our operating results; the effects of war or acts of terrorism could have a
material adverse effect on our operating results and financial condition; our inability to obtain
commercial insurance at acceptable prices or our failure to adequately reserve for self-insured
exposures might increase our expenses and adversely impact our financial results; reduced operating
results and cash flows at the store level may cause us to incur impairment charges; we are subject
to customs, advertising, consumer protection, privacy, zoning and occupancy and labor and
employment laws that could require us to modify our current business practices, incur increased
costs or harm our reputation if we do not comply; changes in the regulatory or compliance landscape
could adversely affect our business and results of operations; our unsecured credit agreement
includes financial and other covenants that impose restrictions on our financial and business
operations; and our operations may be affected by regulatory changes related to climate change and
greenhouse gas emissions.
Abercrombie & Fitch Co.
Consolidated Statements of Income
Thirteen Weeks Ended July 30, 2011 and July 31, 2010
(in thousands, except per share data)
(Unaudited) | (Unaudited) | |||||||||||||||
Q2 2011 | % of Net Sales | Q2 2010 | % of Net Sales | |||||||||||||
Net Sales |
$ | 916,763 | 100.0 | % | $ | 745,798 | 100.0 | % | ||||||||
Cost of Goods Sold |
333,721 | 36.4 | % | 260,450 | 34.9 | % | ||||||||||
Gross Profit |
583,042 | 63.6 | % | 485,348 | 65.1 | % | ||||||||||
Total Stores and Distribution Expense |
425,325 | 46.4 | % | 364,482 | 48.9 | % | ||||||||||
Total Marketing, General and Administrative Expense |
109,999 | 12.0 | % | 95,206 | 12.8 | % | ||||||||||
Other Operating Expense (Income), Net |
544 | 0.1 | % | (1,900 | ) | -0.3 | % | |||||||||
Operating Income |
47,174 | 5.1 | % | 27,560 | 3.7 | % | ||||||||||
Interest Expense, Net |
985 | 0.1 | % | 807 | 0.1 | % | ||||||||||
Income Before Taxes |
46,189 | 5.0 | % | 26,753 | 3.6 | % | ||||||||||
Tax Expense |
14,158 | 1.5 | % | 7,274 | 1.0 | % | ||||||||||
Net Income |
$ | 32,031 | 3.5 | % | $ | 19,479 | 2.6 | % | ||||||||
Net Income Per Share: |
||||||||||||||||
Basic |
$ | 0.37 | $ | 0.22 | ||||||||||||
Diluted |
$ | 0.35 | $ | 0.22 | ||||||||||||
Weighted-Average Shares Outstanding: |
||||||||||||||||
Basic |
87,267 | 88,220 | ||||||||||||||
Diluted |
90,353 | 89,386 |
Abercrombie & Fitch Co.
Consolidated Statements of Income
Twenty-Six Weeks Ended July 30, 2011 and July 31, 2010
(in thousands, except per share data)
(Unaudited) | (Unaudited) | |||||||||||||||
Q2 2011 | % of Net Sales | Q2 2010 | % of Net Sales | |||||||||||||
Net Sales |
$ | 1,753,437 | 100.0 | % | $ | 1,433,602 | 100.0 | % | ||||||||
Cost of Goods Sold |
626,734 | 35.7 | % | 516,838 | 36.1 | % | ||||||||||
Gross Profit |
1,126,703 | 64.3 | % | 916,764 | 63.9 | % | ||||||||||
Total Stores and Distribution Expense |
824,426 | 47.0 | % | 718,892 | 50.1 | % | ||||||||||
Total Marketing, General and Administrative Expense |
217,650 | 12.4 | % | 191,838 | 13.4 | % | ||||||||||
Other Operating Income, Net |
(1,292 | ) | -0.1 | % | (2,814 | ) | -0.2 | % | ||||||||
Operating Income |
85,919 | 4.9 | % | 8,848 | 0.6 | % | ||||||||||
Interest Expense, Net |
1,935 | 0.1 | % | 1,632 | 0.1 | % | ||||||||||
Income from Continuing Operation Before Taxes |
83,984 | 4.8 | % | 7,216 | 0.5 | % | ||||||||||
Tax Expense (Benefit) from Continuing Operations |
27,608 | 1.6 | % | (435 | ) | 0.0 | % | |||||||||
Net Income from Continuing Operations |
56,376 | 3.2 | % | 7,651 | 0.5 | % | ||||||||||
Net Income from Discontinued Operations (net of taxes) |
796 | 0.0 | % | | | % | ||||||||||
Net Income |
$ | 57,172 | 3.3 | % | $ | 7,651 | 0.5 | % | ||||||||
Net Income Per Share from Continuing Operations: |
||||||||||||||||
Basic |
$ | 0.65 | $ | 0.09 | ||||||||||||
Diluted |
$ | 0.62 | $ | 0.09 | ||||||||||||
Net Income Per Share from Discontinued Operations: |
||||||||||||||||
Basic |
$ | 0.01 | $ | | ||||||||||||
Diluted |
$ | 0.01 | $ | | ||||||||||||
Net Income Per Share: |
||||||||||||||||
Basic |
$ | 0.66 | $ | 0.09 | ||||||||||||
Diluted |
$ | 0.63 | $ | 0.09 | ||||||||||||
Weighted-Average Shares Outstanding: |
||||||||||||||||
Basic |
87,274 | 88,157 | ||||||||||||||
Diluted |
90,397 | 89,561 |
Abercrombie & Fitch Co.
Consolidated Balance Sheets
(in thousands)
(Unaudited) | (Unaudited) | |||||||||||
July 30, 2011 | January 29, 2011 | July 31, 2010 | ||||||||||
ASSETS |
||||||||||||
Current Assets |
||||||||||||
Cash and Equivalents |
$ | 539,613 | $ | 826,353 | $ | 596,491 | ||||||
Receivables |
108,297 | 81,264 | 83,777 | |||||||||
Inventories |
516,128 | 385,857 | 480,128 | |||||||||
Deferred Income Taxes |
47,884 | 60,405 | 56,025 | |||||||||
Other Current Assets |
96,967 | 79,389 | 85,083 | |||||||||
Total Current Assets |
1,308,889 | 1,433,268 | 1,301,504 | |||||||||
Property and Equipment, Net |
1,196,585 | 1,144,940 | 1,200,251 | |||||||||
Non-Current Marketable Securities |
101,923 | 100,534 | 127,536 | |||||||||
Other Assets |
330,084 | 269,160 | 227,572 | |||||||||
TOTAL ASSETS |
$ | 2,937,481 | $ | 2,947,902 | $ | 2,856,863 | ||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||
Current Liabilities |
||||||||||||
Accounts Payable and Outstanding Checks |
$ | 221,004 | $ | 137,235 | $ | 205,025 | ||||||
Accrued Expenses |
300,648 | 306,587 | 238,425 | |||||||||
Deferred Lease Credits |
42,244 | 41,538 | 43,361 | |||||||||
Income Taxes Payable |
15,940 | 73,491 | 31,229 | |||||||||
Total Current Liabilities |
579,836 | 558,851 | 518,040 | |||||||||
Long-Term Liabilities |
||||||||||||
Deferred Income Taxes |
23,519 | 33,515 | 47,649 | |||||||||
Deferred Lease Credits |
194,586 | 192,619 | 202,949 | |||||||||
Long-term Debt |
26,288 | 68,566 | 75,967 | |||||||||
Other Liabilities |
213,937 | 203,567 | 192,561 | |||||||||
Total Long-Term Liabilities |
458,330 | 498,267 | 519,126 | |||||||||
Total Shareholders Equity |
1,899,315 | 1,890,784 | 1,819,697 | |||||||||
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |
$ | 2,937,481 | $ | 2,947,902 | $ | 2,856,863 | ||||||
Abercrombie & Fitch Co.
Domestic Store Count
(Unaudited)
Thirteen and Twenty-Six Week Periods Ended July 30, 2011
Store Activity | Abercrombie & Fitch | abercrombie | Hollister | Gilly Hicks | Total | |||||||||||||||
April 30, 2011 |
316 | 181 | 502 | 18 | 1,017 | |||||||||||||||
New |
| | | | | |||||||||||||||
Closed |
| (2 | ) | (1 | ) | | (3 | ) | ||||||||||||
July 30, 2011 |
316 | 179 | 501 | 18 | 1,014 | |||||||||||||||
January 29, 2011 |
316 | 181 | 502 | 18 | 1,017 | |||||||||||||||
New |
| | | | | |||||||||||||||
Closed |
| (2 | ) | (1 | ) | | (3 | ) | ||||||||||||
July 30, 2011 |
316 | 179 | 501 | 18 | 1,014 | |||||||||||||||
Abercrombie & Fitch Co.
International Store Count
(Unaudited)
Thirteen and Twenty-Six Week Periods Ended July 30, 2011
Store Activity | Abercrombie & Fitch | abercrombie | Hollister | Gilly Hicks | Total | |||||||||||||||
April 30, 2011 |
9 | 4 | 40 | 1 | 54 | |||||||||||||||
New |
1 | | 4 | | 5 | |||||||||||||||
Closed |
| | | | | |||||||||||||||
July 30, 2011 |
10 | 4 | 44 | 1 | 59 | |||||||||||||||
January 29, 2011 |
9 | 4 | 38 | 1 | 52 | |||||||||||||||
New |
1 | | 6 | | 7 | |||||||||||||||
Closed |
| | | | | |||||||||||||||
July 30, 2011 |
10 | 4 | 44 | 1 | 59 | |||||||||||||||