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EX-3.1 - EXHIBIT 3.1 - ABERCROMBIE & FITCH CO /DE/ | c25016exv3w1.htm |
EX-99.3 - EX-99.3 - ABERCROMBIE & FITCH CO /DE/ | c25016exv99w3.htm |
EX-99.2 - EX-99.2 - ABERCROMBIE & FITCH CO /DE/ | c25016exv99w2.htm |
EX-99.1 - EXHIBIT 99.1 - ABERCROMBIE & FITCH CO /DE/ | c25016exv99w1.htm |
Exhibit 99.4
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FINAL TRANSCRIPT
Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
CORPORATE PARTICIPANTS
Eric Cerny
Abercrombie & Fitch Co. Senior Manager, IR
Abercrombie & Fitch Co. Senior Manager, IR
Mike Jeffries
Abercrombie & Fitch Co. Chairman & CEO
Abercrombie & Fitch Co. Chairman & CEO
Jonathan Ramsden
Abercrombie & Fitch Co. EVP & CFO
Abercrombie & Fitch Co. EVP & CFO
CONFERENCE CALL PARTICIPANTS
Jeff Klinefelter
Piper Jaffray Analyst
Piper Jaffray Analyst
Randy Konik
Jefferies & Co. Analyst
Jefferies & Co. Analyst
Stacy Pak
Barclays Capital Analyst
Barclays Capital Analyst
Evren Kopelman
Wells Fargo Securities Analyst
Wells Fargo Securities Analyst
Janet Kloppenburg
JJK Research Analyst
JJK Research Analyst
Liz Dunn
Macquarie Research Analyst
Macquarie Research Analyst
Brian Tunick
JPMorgan Analyst
JPMorgan Analyst
Jennifer Black
Jennifer Black & Associates Analyst
Jennifer Black & Associates Analyst
Anna Andreeva
FBR Capital Markets Analyst
FBR Capital Markets Analyst
Christine Chen
Needham & Co. Analyst
Needham & Co. Analyst
Dana Telsey
Telsey Advisory Group Analyst
Telsey Advisory Group Analyst
Edward Yruma
KeyBanc Capital Markets Analyst
KeyBanc Capital Markets Analyst
Paul Lejuez
Nomura Securities Analyst
Nomura Securities Analyst
Barbara Wyckoff
CLSA Analyst
CLSA Analyst
Michelle Tan
Goldman Sachs Analyst
Goldman Sachs Analyst
Omar Saad
ISI Group Analyst
ISI Group Analyst
Kimberly Greenberger
Morgan Stanley Analyst
Morgan Stanley Analyst
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FINAL TRANSCRIPT
Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Erika Maschmeyer
Robert W. Baird Analyst
Robert W. Baird Analyst
Lorraine Hutchinson
Bank of America-Merrill Lynch Analyst
Bank of America-Merrill Lynch Analyst
Robin Murchison
SunTrust Robinson Humphrey Analyst
SunTrust Robinson Humphrey Analyst
David Glick
Buckingham Research Analyst
Buckingham Research Analyst
Jeff Black
Citi Analyst
Citi Analyst
PRESENTATION
Operator
Good day and welcome to the Abercrombie and Fitch third-quarter earnings results conference
call. Todays conference is being recorded. (Operator Instructions). We will open the call to take
your questions at the end of the presentation. We ask that you limit yourself to one question
during the question-and-answer session. At this time, I would like to turn the conference over to
Mr. Eric Cerny. Mr. Cerny, please go ahead, sir.
Eric Cerny Abercrombie & Fitch Co. Senior Manager, IR
Good morning and welcome to our third-quarter earnings call. Earlier today, we released our
third-quarter sales and earnings, income statement, balance sheet, store opening and closing
summary and an updated financial history. Please feel free to reference these materials available
on our website. Also available on our website is an investor presentation, which we will be
referring to in comments during this call. This call is being recorded and the replay may be
accessed through the Internet at Abercrombie.com under the Investors section.
Before we begin, I remind you that any forward-looking statements we may make today are subject to
the Safe Harbor statement found in our SEC filings. Todays earnings call will be limited to one
hour. Joining me today on the call are Mike Jeffries and the Jonathan Ramsden. We will begin the
call with a few brief remarks from Mike, followed by a review of the financial performance for the
quarter from Jonathan. After our prepared comments, we will be available to take your questions for
as long as time permits. I will turn the call over to Mike.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Good morning, everyone. Thank you for joining us today. I ended my comments on our last earnings
call by saying that there were greater challenges and uncertainty in the back half of the year, but
that we remained confident in our strategy and in the underlying strengths of our brands.
Clearly, our results for the third quarter were impacted by some of those challenges. Equally,
however, our confidence in our long-term strategy in the strength of our brands and in our ability
to create long-term shareholder value, in particular through our international expansion, is
unchanged.
So I would like to start this call by being very clear on two points. First, that our strategy is
unchanged. Second, that our financial objectives are unchanged.
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FINAL TRANSCRIPT
Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
As you know, our strategic objective is to leverage the international appeal of our iconic brands
to build a highly profitable, sustainable global business. This means continuing to open highly
profitable stores in Europe and beyond that into Asia and other new markets. In the US, it means
driving productivity back toward peak levels while closing underperforming and non-brand-right
stores. In direct-to-consumer, it means investing to drive greater penetration, particularly
internationally in this very profitable channel.
With that, I would like to make some specific comments on our performance during the quarter.
First, our European business. While slowing somewhat during the quarter, it is very robust and
healthy by any objective measure. If anyone doubts that, I strongly encourage you to visit London,
Milan or Paris to see first hand what is happening in our flagship stores there. Or to visit our
recently opened [Hollister] (added by company after the call) stores in Dublin, Paris, at the
Wijnegem Shopping Center in Antwerp or at the Gallerian Mall in Stockholm. In each of which, we are
annualizing at over $10 million.
Our London flagship remains highly profitable second only to A&F 5th Ave in overall profit
contribution, but with a higher four-wall margin. The Milan and Paris flagships are not far behind
and just two weeks ago, we had another very successful flagship opening in Madrid.
Just three years after we opened our first Hollister store in Europe, we now have 50 stores
annualizing at well over $0.5 billion. In the UK, our most mature European market for Hollister,
four-wall margins were very strong while we continued to comp positively and opened five new stores
during the quarter.
We are proud of what we have accomplished in just a few short years in Europe, but more important,
we are excited about the opportunity ahead of us. We are not immune to the macroeconomic
environment, so we demand high profitability levels from our new stores based on conservative
assumptions and this underpins our belief in the long-term sustainability of our model.
If anyone is inclined to believe that a softening of our business in Europe this quarter in the
face of severe macroeconomic headwinds is a major issue for our model, frankly, I think they are
missing the forest for the trees.
In Asia, we are very pleased with our first Hollister store opening in Hong Kong, which is also
tracking to be over a $10 million store. We remain excited about our first openings in Mainland
China during this quarter.
Turning to the US, our tourist stores also remain robust with Florida particularly strong.Within
the US promotional chain stores, we have chosen to keep our focus on driving productivity and we
were effective in doing that during the quarter. To do this, we chose to keep our AURs down in
these stores, which, combined with double-digit AUC increases, put significant pressure on our
gross margins in excess of the expense leverage we achieved. We expect that pressure to reverse in
the next few quarters with trends on both AUR and AUC improving and with the benefit of additional
store closures.
Turning to DTC, our strong overall growth was driven mainly by the US. Looking to 2012, we are
highly focused on driving faster growth in our international business. As part of this, we have
recently initiated fulfillment of European DTC sales from our third-party distribution center in
the Netherlands. We continue to expect that we will drive strong profitability growth from each of
these channels and improve our operating margins by growing our Home Office and other central
expenses at rates well below the overall rate of sales growth.
In conclusion, I would like to reaffirm that our strategy is very much on track. We have always
said that we are not immune to the macroeconomic environment, but we are very confident that the
quality, commitment to standards and pursuit of excellence on which our business is based stand us
in very good stead to weather external impacts to our business. I will now turn it over to
Jonathan, but will be happy to take your questions later.
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FINAL TRANSCRIPT
Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Thanks, Mike and good morning, everyone. As Mike noted a moment ago, we struck a note of caution on
our Q2 earnings call with regard to macroeconomic and currency uncertainty, which, allied with the
effect of pricing changes, gave us less visibility than in prior quarters. As the quarter
progressed, and particularly from early September onwards, it became clear that some of these
factors were affecting our business.
Our EPS for the quarter was up only slightly from last year with a reduced contribution from our US
chain business offset by less of a tailwind than we had anticipated from our European business.
However, our year-to-date EPS is up 86%, excluding discontinued operations and approximately in
line with our original budget. In addition, as Mike indicated, there is no change to our $4.75 EPS
objective for next year.
Coming back to the third quarter. Sales for the quarter increased 21% to $1.076 billion. US sales,
including DTC, were up 14%; international sales were up 56%. Overall DTC sales, including shipping
and handling, were up 41%. Comp store sales increased 7% across all brands; mens and womens comps
were similar. Foreign currency changes accounted for approximately 55 basis points of the sales
increase based on converting prior-year sales at current year rates. Relative to our initial budget
for the quarter, FX affected sales negatively by around $6 million.
Our gross margin rate for the quarter was 60.1%, down 360 basis points from last year. This
reflected significant erosion in our US chain store gross margins as we chose to keep AURs down at
the same time that AUC was up significantly. Overall, AUR was approximately flat for the quarter.
Turning to operating expenses, stores and distribution expense for the quarter included store
occupancy costs of $178 million, lower than our guidance, driven by changes in possession dates and
foreign currency. All other stores and distribution costs represented 26.4% of sales and delevered
somewhat more than expected due to lower sales. As a reminder, stores and distribution expense for
the quarter included approximately $4 million of accelerated depreciation from our DC
consolidation.
MG&A expense for the quarter increased 5%, better than our double-digit growth guidance, primarily
due to lower incentive and equity compensation. MG&A for the quarter include total equity and
incentive comp of $14.1 million versus $15.6 million last year. For the quarter, we achieved
approximately 220 basis points of expense leverage.
Overall, operating income was flat for the quarter with profit growth from international stores and
DTC offset by lower profits in our US chain stores and higher MG&A and other non-four-wall costs.
The tax rate for the quarter was 35.8%. On a full-year basis, we expect the rate to be around 35%
or slightly below; although it remains sensitive to the US international mix. Diluted EPS for the
quarter was $0.57.
Turning to the balance sheet, we ended the quarter with total inventory at cost, up 33% versus year
ago or up 26%, excluding in-transit. We expect inventory to be up by a greater percentage at
year-end. This includes the effect of fourth-quarter new store openings.
During the quarter, we repurchased approximately 150,000 shares at an aggregate cost of $8.8
million. We ended the quarter with $488 million in cash and equivalents compared to $593 million in
cash and
equivalents at the comparable point last year. This number reflects buybacks and dividends of
approximately $207 million in the past 12 months and the paydown of $57 million in revolver debt;
in addition to which we have eliminated substantially all outstanding letters of credit. While we
took a more conservative approach on buybacks this quarter, the general parameters we have
discussed in the past continue to apply going forward.
To add some color on our operating performance for the quarter, our international stores had
overall four-wall margins of greater than 30%. Both our margins and return on Investment in Europe
remained very strong. A&F international flagships
comped negatively, but significant AUR increases protected the gross margin rates in these stores.
Japan and Canada both had declines in operating income as a result of negative same-store sales
with Japan down significantly.
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FINAL TRANSCRIPT
Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Turning to expectations for the fourth quarter, we expect gross margin rate erosion similar to that
in Q3. Some more specific guidance on fourth-quarter expense projections is included in our
investor presentation. This expense guidance excludes the impact of any potential impairment
charges resulting from our annual review of long-lived assets and other potential charges
associated with additional store closures or other underperforming real estate.
Store occupancy costs for the fourth quarter are expected to be in the mid-$180 millions. All other
stores and distribution costs are expected to be approximately flat as a percentage of sales to
last year. MG&A expense for the fourth quarter is expected to be approximately flat to last year.
Our plans for store openings for the year remain in line with prior guidance. We expect to close
approximately 55 to 60 US stores during the fiscal year through natural lease expirations, but the
overall number of closures may increase as a result of buyouts or other early closures. We continue
to expect total capital expenditures for 2011 to be approximately $350 million.
Turning to 2012, our roadmap to the $4.75 in EPS includes a similar or somewhat greater number of
Hollister openings as compared to 2011, which is a rate we expect to maintain in subsequent years.
With regard to flagships, we are announcing today that we are adding Amsterdam and Munich to the
list of confirmed 2012 openings. These openings are in addition to the previously announced Hamburg
and Hong Kong A&F openings. We expect to confirm additional openings on our February earnings
call. We will provide more detail on the components of our $4.75 objective for 2012 on our February
earnings call. However, the key components are the store opening plans referenced a moment ago, the
goals for US store productivity we have discussed in the past, including modest AUR increases for
2012 and sourcing cost assumptions based on our current visibility into 2012. We are not modeling in
any closures beyond the natural closures I talked about a moment ago, although we are hopeful that
we will derive some benefit from additional closures.
This concludes our prepared comments section of the call. We are now available to take your
questions. Thank you.
QUESTION SAN DANSWERS
Operator
(Operator Instructions). Jeff Klinefelter, Piper Jaffray.
Jeff Klinefelter Piper Jaffray Analyst
Yes, thank you. Thanks for the detail this morning, Mike and Jonathan. My question, Mike, would be,
or Mike and Jonathan, would be around Europe and maybe providing a little bit more of your thoughts
on the trends by different region, by the concept between flagships and Hollisters. I mean I think
that probably the number one question about this $4.75 target, in addition to the inputs you
already described, Jonathan, would be what sort of assumptions about Europe would be included in
that? And help us understand kind of the puts and takes and what kind of flexibility you have to
navigate toward that number if Europe doesnt trend the direction that we all hope it does?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Sure, Jeff. I think thats a great question. I think, first of all, I think it was very clear from
Mikes comments and also from mine that our Hollister Europe business is in extremely good shape.
We grew the top line while we were adding new stores, at least
one of which the new Stratford Mall in London probably cannibalized a little bit from the
other London stores since it is a new mall.
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FINAL TRANSCRIPT
Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
But we opened 19 Hollister stores during the quarter. Five of them opened right in the last week of
the quarter, so it is frankly too early for us to talk about those, but of the other 14, 12 of them
are running ahead of their projections and those projections are tied to that 30% four-wall margin
that we have talked about.
For all of the 40 stores we expect to open this year, we expect them to average around $10 million
in annualized volume based on the current run rate of those stores, which is after that stepdown
that we have seen in the last couple of months in terms of the deteriorating trend in Europe.
So we feel extremely good about the Hollister business in Europe. As one of our Board members said
earlier this week, it is practically gravity-defying when you look at all the other news that is
coming out of Europe now, that we are continuing to actually grow the productivity of those stores.
And Mike talked about Dublin where we opened a store that is doing unbelievably well in an
environment thats obviously particularly difficult in Ireland, but we are seeing that elsewhere as
well.
I think if you look at the mix of stores that opened this quarter, a couple of them are in Canada,
a couple of them were in the eastern part of Germany where the productivity of those stores is
somewhat lower than we would see in the west of Germany. We had a couple in Spain. So the average
productivity of the stores we happened to open this quarter is probably lower than the average
productivity weve talked about over time.
But if you look at where we are today with the 50 stores we have open, we are saying they are
running at over $0.5 billion with averaging over $10 million and as youll recall, we have said in
the past that, to get to our overall goal for Hollister of $1.5 billion by 2015, those stores only
need to average a little over $8 million. So we are running well ahead of that today and frankly
more ahead of that than we would have thought six months ago even though we did see a softening in
the last couple of months. So Hollister is in phenomenal shape.
The A&F flagships did step down too and they have been moved into negative territory. Again, I
think youve got to put that in historical context. Those stores did phenomenally well for several
years. We have always said it wouldnt be surprising given how well many of these stores have
opened that we would go through a period when there would be some negative comps. Clearly, the
macro environment is very difficult in Europe. Tourism has slowed down. We have certainly seen a
slowing of traffic into those flagship stores, which is indicative of a macro issue. We are
continuing to dig into other potential components of that.
But again to reiterate the absolute profitability of those stores is extremely high. Our model has
always been to say we are going to go out and open profitable stores based on conservative
assumptions and even if we comp negatively, we still have a very profitable model and we are not
going to get oversaturated, but we are going to keep moving on to new markets to drive the top line
and to keep sustaining that high four-wall growth. So that was kind of a long-winded answer to your
question, but I think we have covered a lot of important points.
Jeff Klinefelter Piper Jaffray Analyst
So, Jonathan, are you suggesting that, at this point, the run rate of Europe and the UK could
essentially continue as it is into next year and that would be incorporated into your $4.75 target?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Well, we have a run rate for the stores that are open today, which is reflective of the current
state of the business and trend of the business. For the new stores that are opening, we tend, as
Mike alluded to earlier, to put somewhat conservative projections
on them well, projections we assume are conservative. So if you look at those new stores
relative to the stores we have opened and the volumes we have assigned to them, those volumes are,
if anything, conservative relative to the volumes of the stores we have opened today in terms of
what they are actually delivering in terms of productivity.
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FINAL TRANSCRIPT
Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Jeff Klinefelter Piper Jaffray Analyst
Okay, great. Thank you very much.
Operator
Randy Konik, Jeffries.
Randy Konik Jefferies & Co. Analyst
How are you guys? Quick question, did you say just wanted to clarify did you say that you
think the AURs will start going up in the future quarters? Is that starting in the fourth quarter?
Is that a total Company comment and can we give it a little clarity? Would that also be at both
brands Abercrombie and Hollister? And then if the AURs are going up, is that a reflection of any
pricing strategy changes or just being less promotional? Thanks.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Let me kick that off. I think we have to say that central to this conversation is that we think we
drove the AURs too low in US promotional stores during the third quarter. We think we left dollars
on the table. This goes into our thinking about getting AUR increases go forward. Jonathan can
comment about when, but we are very convinced that we were going to be able to see AUR increases.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Randy, the comment on AUR was specific to our US chain business where, to get to those productivity
goals we have talked about in the past, we are saying embedded in there for 2012 is the assumption
of a modest increase in AUR in those chain stores.
Randy Konik Jefferies & Co. Analyst
So that would be a function of both at Abercrombie and Hollister, you expect a less promotional
posture at both businesses?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
That is correct.
Randy Konik Jefferies & Co. Analyst
All right, thank you.
Operator
Stacy Pak, Barclays Capital.
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FINAL TRANSCRIPT
Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Stacy Pak Barclays Capital Analyst
Good morning. So a couple questions. I guess, first of all, just on the AUC visibility, could you
comment on when you see it coming down and how much? And then I guess more fundamentally, circling
back to the flagships, help me understand, if the brand is so strong internationally, and I totally
get the macro, why did 15% price hikes lead to negative comps in those two beautiful flagships? Is
it how they opened so strong and maybe you want to compare it to New York and you dont comp
forever? Or how do we sort of think about that and how do we not come to the conclusion that those
stores continue to comp negatively and the story isnt what we thought?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Let me start with the second part of that conversation because I think the conversation that the
15% price increases caused the decrease. I dont know if that is true. I dont really believe that
is true. I believe what has happened to the flagships are totally a function of the macroeconomic
situation. Tourism down, we see it on a day-to-day basis in those
stores. Those stores are terrific,
they are popular and will continue to be and you can see that, Stacy. So I cant predict where this
is going to go because I cant predict the macroeconomic environment, but those stores are very
vulnerable to what is going on in macroeconomy, tourism.
To address the first part of your question, we say that the AUCs will be coming down the second
half of the year, that will start in second quarter. I cant tell you what level that will be.
Stacy Pak Barclays Capital Analyst
Okay. Is there any way to quantify I dont know if you want to tell us what those flags are
comping or the level of reduction or anything along those lines to help sort of get our arms around
it.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
I think, Stacy, we have never gone into specific store level detail on that. I think the important
point is that the profitability of all those stores is very strong. All three are doing four-wall
margins at greater than 40% or 40% or greater. And that is really the key, that we are going to
protect the profitability of those stores, but we havent spoken to individual stores in terms of
comps in the past.
Stacy Pak Barclays Capital Analyst
Okay. Last thing, you are going to take prices down there in Q1 as well in the flags?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
We are looking at the prices on an item-by-item basis. I would say they will come down. I cant
tell you how significant that is going to be.
Stacy Pak Barclays Capital Analyst
Okay. Thanks, guys.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Stacy, if I could just add one comment on the AUC thing, I think one thing that has evolved over
the last few months is that we now have better visibility on the back half of the year. And at one
point, we certainly didnt have visibility that we were going to be down, as Mike said, from
mid-second quarter onwards and we have that visibility today based on where we are in the cycle of
planning for 2012.
Stacy Pak Barclays Capital Analyst
Do you think it is down mid-singles, Jonathan?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
I think, as Mike said, we cant comment on the specifics.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Good try.
Stacy Pak Barclays Capital Analyst
All right, thanks, guys.
Operator
Evren Kopelman, Wells Fargo.
Evren Kopelman Wells Fargo Securities Analyst
Good morning, guys. I wanted to ask about the inventory. It is such a big swing from end of Q2 to
Q3 from up 7 to up 33 and youre talking about higher at the end of Q4. So question is are
inventories higher than you would like at this point and does that have anything to do with your
level of promotional cadence in the US in third quarter? You said maybe you drove AUR down a little
too much in Q3. If you can share the thinking behind why maybe you did that, what was the thinking
and if that had anything to do with the inventory and why inventory swung so much. Thank you.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
One thing to remind you of is that, on the last earnings call, we said that we were lower in spring
carryover inventory than we would have liked to have been. So that number was a little bit
artificially low at the end of the second quarter and lower than we would have liked. If you look
at where we are the end of the third quarter, it is pretty close to the trend of sales,
particularly when you take into account the stores that have opened later in the quarter and we
have a lot more openings coming in the fourth quarter, including some big flagships. So I think
overall we are pretty comfortable with where we are in inventory.
Operator
Janet Kloppenburg, JJK Research.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Janet Kloppenburg JJK Research Analyst
Good morning, everybody. Mike, a couple of questions about the flagships. I know that you said that
you dont think pricing is the issue. I am wondering if you think the mix of product was an issue
perhaps. There was a skew to some of the higher priced cashmeres and outerwear, and if theres any
changes to that mix as we go into the fourth quarter.
And also on the flagships, is there anything you are contemplating with regard to Japan and Canada
that you could do to offset some of the declines you are witnessing there?
Jonathan, if you can give us an idea about how we should be thinking about inventory on a comp
store basis, that would help a lot. In other words, you are opening a lot of stores here in Q4. You
opened a lot at the end of Q3. So Id like some delineation to give us a better handle on that.
Thanks so much.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Janet, the AUR increase in the flagships, it is a complex issue because mix is involved.
Janet Kloppenburg JJK Research Analyst
Right.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
We are studying this very hard. Clearly in our whole business we mix the fourth quarter to more
outerwear because we are heavily invested in outerwear. Were heavily invested in fur fur,
sherpa, etc., which skews the AUR higher. Cashmere is not an issue in flagships because we dont
have very much of it and we dont sell very much, but there is a mix issue.
It is not clear to me at this point that that has affected us in the flagship volumes.We are
studying it very carefully. It is not clear. My first instinct is that that has not been the
problem, and we are looking at a lot of statistics. But having said that, we are being more careful
with the mix and the AUR going into spring, in case that is not true.
Janet Kloppenburg JJK Research Analyst
Mike, are you seeing any cannibalization of Hollister to the A&F stores in Europe at all?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Of A&F?
Janet Kloppenburg JJK Research Analyst
Hollister openings affecting the flagships. For instance, in Milan, you have got a couple of
Hollister stores now around the Milan flagship, same with London, more Hollister openings. Could
that be affecting the A&F (multiple speakers) ?
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Earnings Conference Call
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
That is very astute. Some and there is some cannibalization of flagship to flagship. When we opened
in Paris, we were hit by a significant number in the London flagship. I dont want to overreact to
this because I think it is normal, we have expected it, but we are reacting as if that is not
happening and we are running the best business we can because of it. But that is a very, very
astute question.
Janet Kloppenburg JJK Research Analyst
Okay, so it is something you are examining and it is something that you have contemplated in your
$4.75 guidance?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Absolutely.
Janet Kloppenburg JJK Research Analyst
Okay. And Jonathan, on the inventory? Also, if you guys could address the Canada and Japanese
flagships and what you might be doing to stem some of the profitability losses there. Thanks.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Lets go to Japan. We have two stores in Japan, as you know. Ginza, we are redoing or eliminating an
off-site stockroom, bringing it on-site, which will absolutely improve the profitability of that
store. That is our focus. Fukuoka is a problem store that we would rather not have and we are
working to that end.
Operator
Liz Dunn, Macquarie.
Liz Dunn Macquarie Research Analyst
Hi, hello. So I guess just a couple of points of clarification. In terms of the plan to increase
AURs going forward or the comment that the third quarter got a little too low in the US, does that
mean that you will be looking for a moderation in the comps and more gross margin going forward?
How do you sort of weigh the acceleration that you saw in the US business in the third quarter with
obviously your thoughts that prices werent appropriate?
And then just a follow-up on your comment regarding buybacks, you said you didnt buy back that
much in the third quarter, but you would get back to normalized levels. What does normalized levels
mean? Does that mean you will look at that $350 million minimum cash balance that you like to run
with and be more aggressive about buying back above and beyond that?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Yes, let me take the second part first here. The parameters for buybacks are what we have said in
the past. We are not going to go or we dont have any plans to go below that net $350 million
cushion. We plan to at least offset equity plan issuances and where we end up between those two
guardrails would depend on market conditions and if we see opportunities to buy stock at prices
which we think are attractive lined up with those other factors then we will continue to do that.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
In terms of the AUR, one important distinction is the comment we made about modest increases again
was a reference to the US chain stores. As Mike alluded to a second to go, in the flagships, we are
likely to be going the other way, that the increases will be somewhat less in the spring than we
had in the fall. But baked into our objective to hit those productivity goals we have talked about
for US chain stores in the past is the assumption that we would get to somewhat modestly positive
AURs in 2012.
Liz Dunn Macquarie Research Analyst
But do you expect that to have an impact on your comp because one of the points of good news in the
third quarter was the acceleration in the US business. But if you said it came at a cost that that
was thats not sustainable going forward. How do you feel about your ability to drive the US
business if prices are coming up?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Very good. As I said, we think we left dollars on the table and we really gave some margin away. We
will continue to drive for productivity in the US stores and we think we could do so with a little
moderation in the AUR.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
And just to add to that, Liz, we are assuming some moderation actually in the comp rate in 2012 for
those US chain stores relative to what we have been running the last couple of quarters.
Liz Dunn Macquarie Research Analyst
Okay, great. Thanks.
Operator
Brian Tunick, JPMorgan.
Brian Tunick JPMorgan Analyst
Thanks, morning, guys. I guess first on the international side, I guess, Jonathan, so on those
four-wall margins that you talked about, I think we would like to know what kind of comp declines
would it take to really impact that cushion you have on those returns? And then maybe, Mike, just
talk a little more about the US, particularly in that sort of more value space that Hollister
operates in. What are you thinking as you look at the landscape right now as we head into holiday
and next year and sort of again what gives you that confidence that you can maybe get some more
price? It just seems very competitive in that space.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
I guess on the first part, it is sort of hard to generalize because every store is different and
some of them are beating their original projections more than others. As a reminder, when we
approve a new store, we approve it based on what we think is a conservative volume and with a
couple of exceptions for brand-new markets where we have less visibility, it needs to at least be
achieving that 30% four-wall for Hollister and we typically look for it to be somewhat higher for a
flagship.
As you know, and as we have discussed in the past, generally those stores have run well ahead of
those initial projections.They have comped positively after running ahead of the projections. So on
average, we have a significant amount of room for those
productivity levels to come down and still be operating at very healthy four-wall margins, but it
is hard to generalize about that given that it clearly varies store by store.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Brian Tunick JPMorgan Analyst
Is there a maturity curve that youve seen at these Hollister stores that have been open now two or
three years that maybe you can share with us?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Not really. I mean there is no sort of clear pattern there that we can point to, where we can say
they peak after a certain period of time. I dont think we can say that at this point.
Brian Tunick JPMorgan Analyst
Okay. And then how about, Mike, just some thoughts on the US value channel.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
I think it will continue to be a promotional business. Why do I have faith that we will continue to
do well there? I think that we look very good for Christmas. I think lets get back to basic
merchandising. I think we are invested in the right categories and the right depth and we will see
what happens.
Operator
Jennifer Black, Jennifer Black and Associates.
Jennifer Black Jennifer Black & Associates Analyst
Good morning. I have a couple questions. My first question, I am curious, Mike, graphic Ts have
been soft for a number of retailers and I wondered what your thoughts were and your thoughts about
logos. It seems like kids dont want to wear huge logos. And then I also wondered if you could talk
about you have a significant cash position and would you consider making an acquisition of an
established competitor like with the likes of somebody like Jack Wills? Thank you.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Lets talk about logos. Logos are an ongoing part of our business. We constantly try to make them
more subtle. We constantly try to promote left chest icons and less aggressive logoing. It has been
part of our business concept for a long time. Having said that, we continue to sell logowear.
Although graphic T-shirts are relatively weak, fleece is relatively strong and fleece is a logo
business. So the conversation my kids dont want to wear logos anymore I have heard that for
a long time, but the fact is they want to continue to wear logos, but it is a good question.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
I guess on the second part, Jennifer, we think we have got a long runway with our current strategy
and we think the return on investment from investing in our own growth is going to be the greatest
return we can get for our capital, certainly for the foreseeable future.
Jennifer Black Jennifer Black & Associates Analyst
Great. Could you also give a little bit of color on Gilly Hicks?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
We think Gilly Hicks is doing very well; it is on track. It is on our roadmap track. I think we are
continuing to make progress in the bra and underwear category, which is where we have set our goals
to become very good. I think that positioning of the brand has gotten clearer, it is clear who the
target customer is. Her taste levels are aspirations and I think you can see that in the stores
today.
Operator
(Operator Instructions). Anna Andreeva, FBR.
Anna Andreeva FBR Capital Markets Analyst
Great, thanks. Good morning, guys. Could you talk about performance of your flagships domestically,
just any change that you are seeing there versus the second quarter? Was hoping you could also
address performance of your tourist stores in the US. Have you guys seen a softer environment there
at all?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
The tourist stores held up very well during the quarter. We saw a little bit of softening in 5th
Avenue, not as much frankly as we had seen in the European flagship stores. But in general, the US
tourist stores held up very well from a comp basis and from a profitability standpoint. I think, as
you know, as weve talked about in the past, if you look at our top tranche of stores, they have
generally outperformed the chain stores consistently over time and have remained very profitable
and comparable to the profitability we have seen in Europe and there is no change to that overall
picture.
Anna Andreeva FBR Capital Markets Analyst
Could you also talk about the impact from the store closures that you guys have seen domestically?
Just our understanding has been theres only a minimal impact to four-walls, but you are seeing
productivity at adjacent stores improve. Is there maybe opportunity to accelerate some store
closures into 2012?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Well, on the first part, we closed 65 stores last year and I think we had said that the average
volume of those stores is about a million. Depending on where those stores were, we have now got a
decent data read on how much of that volume transferred to other stores in the same mall or to
nearby stores of the same brand. And that is something we are now using to look at future potential
store closures.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
On the second part of the question, I think as we clearly alluded to in our comments, we are
looking at the potential for additional closures beyond the natural lease expirations that we have
talked about in the 55 to 60 range.
Operator
Christine Chen, Needham & Co.
Christine Chen Needham & Co. Analyst
Good morning. Was wondering when you talk about maybe pulling back a little bit on promotions, will
that be in the format of offering fewer category promotions, less percentage off entire purchase or
being strategic about excluding more stores year-over-year from the promotions? Thank you.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
I dont think we can really comment on this, Christine, because it addresses our strategy. We would
love to, but we cant.
Christine Chen Needham & Co. Analyst
Then I also wanted to ask what do you think is happening in Canada? Other retailers have also
called out Canada as a little weaker. Is there something specific you think is happening in Canada?
I mean we all know what is going on in Japan?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
We wish we could tell you about Canada. We are looking at Canada in great depth. We are about to
run some significant tests. We honestly dont know.
Operator
Dana Telsey, Telsey Advisor Group.
Dana Telsey Telsey Advisory Group Analyst
Good morning, everyone. Can you talk a little bit about the US core business getting back to peak
domestic levels of productivity? How do you see the runway for that, whether it is on product? And
also just give us an update on mens and womens and anything on the cost side, even with store
expenses, that you see as an ability to get you there? Thank you.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
I guess just to recap on what we said on that, Dana, in overall terms, we have said that our
roadmap is to get back to 90% or slightly greater of peak productivity by next year. And we had
said that would require us to sustain chain store comps that we saw in the first half of this year.
We accelerated a little bit above that in this quarter, so we can afford, as I said a second ago,
for that US chain store comp to come down a little bit and still hit our goal in 2012 and that is
what is baked into our plans at this point. I guess mens and womens we said comped similarly for
the quarter. Im not sure there is really much else we can add in terms of color on the chain store
comp.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
I think it is an indication that our content is good. Our mens and womens business is balanced.
So we are not counting on a particular category or one or the other to drive improvement to this
number.
Operator
Edward Yruma, KeyBanc Capital Markets.
Edward Yruma KeyBanc Capital Markets Analyst
Thanks very much for taking my question. Can you give us a quick update on Gilly Hicks,
particularly as it relates to your international operations? Thanks.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Mike just talked a little bit about Gilly. With regard to international, we havent been specific
on that. We have the one store in London, which opened a year ago. We are opening in Germany with
Gilly in December. That will be our second international store. We havent spoken more broadly
about that.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
And we are opening another UK store in Cardiff in December, but that is all we have announced.
Operator
Paul Lejuez, Nomura.
Paul Lejuez Nomura Securities Analyst
Thanks, guys. Anything that you guys are seeing now, whether it be macro or the cannibalization,
Mike, that you spoke of that makes you rethink the right number of flagships to be opening each
year? And also wondering, on the flagships, you said it was seemingly a transactions issue and a
traffic issue, but Im wondering what happened to average ticket or UPTs in the flagships in London
and Milan. Thanks.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
I guess on the first part of the question, Paul, we dont have any change to the plans for the
overall number of flagship locations that we have talked about through 2015. Some of the individual
locations may move in and out, but in total we dont foresee any change to that based on anything
we have seen. So I think that that answers that part. I think in terms of the average ticket in
London and Milan, we typically dont get into that level of detail, so I am not sure there is much
else we can tell you on that.
Operator
Barbara Wyckoff, CLSA.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Barbara Wyckoff CLSA Analyst
Hi, everyone. Can you talk about specifics on the Mainland China opening in fourth quarter? I think
they are in Beijing and maybe Shanghai and then just talk about the holiday 2010 timing of the
product flow.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Yes, I guess we have I think we are going to have three openings in China in the fourth quarter.
One of them is in Shanghai, another one is in Beijing. To your point, clearly this is our first
step into Mainland China, so we are very interested to see what happens there. We are frankly very
excited about the openings, but there is really not much else we can tell you until we have
actually opened those stores.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
And the second part of the question, Barbara, I didnt understand that holiday product flows?
Barbara Wyckoff CLSA Analyst
The product flow. When are you flowing goods typically you flow them before Black Friday and one
spread around Christmas to capture gift cards. Is that about the same as last year?
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
We have set the holiday set; that was three weeks ago. We will be flowing more product into the
stores December week one. That is the last Christmas flow, holiday flow.
Operator
Michelle Tan, Goldman Sachs.
Michelle Tan Goldman Sachs Analyst
Great, thanks. Hey, guys, I was wondering if you could talk a little bit about the flexibility that
you have to manage to the macro issues in Europe and Asia. How do you manage inventory levels in
those stores and what flexibility do you have on the expense line? Jonathan, it looks like you are
expecting better performance on stores and distribution, non-occupancy stores and distribution in
Q4 versus Q3. So I am curious if that is you managing variable expense at all or what flexibility
there is in that line item. Thanks.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
I guess on the last part, Michelle, I think it is partly just a function of scale and the impact of
the additional volume we are adding in Q4 is helping with that. But we continue to look very hard
at all expenses and we have been looking very hard at expenses into 2012, particularly preopening
expense. That was a number
we had called out earlier in the year as being very significant to 12 and that does look as though
it is going to be quite a bit lower than we had originally thought. But in general, we are
continually looking to be as efficient as we can from an expense standpoint. Not sure there is
really much else we can say on that.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
In terms of inventory in Europe and Asia, in Europe, we do have the ability to bring inventory back
from Europe to the US if we need to. So that gives us some ability to manage around that and
obviously, we can always send it the other way if the situation is reversed. So we do have
flexibility around that.
Operator
Omar Saad, ISI Group.
Omar Saad ISI Group Analyst
Thanks, good morning. The macro issues in Europe are obviously hitting a lot of the companies that
we follow. You are certainly not alone in that respect. Although one interesting thing that we have
been hearing is that, for some of these brands that are big in Europe, there has been a dichotomy
between the secondary European markets and the big flagship, tourist, gateway markets, whatever you
want to call them, where the business has held up a lot better.
And I wonder for you guys, which obviously that is where your key flagships are, does that reflect
maybe youre not getting as much as the Chinese or Asian tourists in Europe as some of these luxury
brands are? And does that reflect perhaps that the brand is still not as well-known in Asia or that
the brand maybe doesnt translate as well in Asia? Just any thoughts around that in terms of how
you think about it.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
I think we have spoken about this in the past. The level of penetration of Chinese and other Asian
customers in our flagship stores is probably lower than some of the other brands you are thinking
of. So I think we would regard that as an opportunity as we have greater awareness in China and
through Asia of the brands.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
But I think that is a very astute question. I think that is correct, but we believe it is an
awareness issue, not a relevance issue.
Operator
Kimberly Greenberger, Morgan Stanley.
Kimberly Greenberger Morgan Stanley Analyst
Great, thank you. Good morning. Mike, I am wondering if you can just talk to us about your
philosophy on how to manage your US chain stores to a higher productivity level. In other words, if
you start to pull back on some of the promotions and you see that comp run rate turn flattish or
even slightly negative, do you have a sort of backup plan where you are willing to compromise a
little bit on your gross margin rate to continue to driver that productivity higher? Or are you
rather prioritizing getting a better margin, merchandise margin out of those stores? If you could
just help us understand your approach, that would be great.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Clearly, our focus this year has been on driving the productivity and we kept the foot on the pedal
this quarter. And I think as we have implied in some of our other comments, our focus is going to
be more now on getting the gross margin rate back up
in those US chain stores in 2012 through a combination of modest AUR increases and then the costing
benefit that we are expecting to see in the back half of the year allied with some benefit from
closures.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Operator
Erika Maschmeyer, Robert W. Baird.
Erika Maschmeyer Robert W. Baird Analyst
Thanks. Just following up on that, could you talk a little bit more about your gross margin
assumptions for Q4 in terms of AUR and AUC given that you are planning on being incrementally more
focused on gross margin versus productivity?
And then also just a follow-up on your European stores, your international stores, could you give
us a sense of what London, Tokyo and Milan are annualizing now? I think you said over $200 million
in the past and I know you wont comment on individual stores, but could you also give us a sense
of the magnitude of your European A&F flagship comps as a group?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Erika, on the first part of the question, the comment on gross margin is looking into 2012. For the
fourth quarter, as we said on the prepared comments, we are anticipating similar gross margin rate
erosion to Q3, but I cant really break that out between AUC and AUR. Thats not a level of detail
we can go into.
In terms of London, Tokyo and Milan, they are not far off that same $200 million number we gave a
year and a half or so ago.
Operator
Lorraine Hutchinson, Bank of America.
Lorraine Hutchinson Bank of America-Merrill Lynch Analyst
Thank you, good morning. I just wanted to follow up on some of the earlier inventory questions. I
know there is a lot of noise around store openings this quarter and next quarter. If you exclude
that, can you just maybe talk about the run rate and how you are planning your inventory for
existing stores?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Yes. Hi, Lorraine. We obviously plan for all of the different components of our business in terms
of the overall level of inventory. I guess Im not really sure what else we can tell you about the
specifics of that. When we look at the higher rate of inventory increase at the end of the year,
that takes into account the run rate of our like stores, as well as the inventory we need to add to
support DTC and support clearly the international stores. Im not sure there is really much else we
can really add to that, but it is a very detailed planning process we go through to determine these
inventory levels.
Operator
Robin Murchison, SunTrust Robinson Humphrey.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Robin Murchison SunTrust Robinson Humphrey Analyst
Thanks. Jonathan, just want to check and see if there is anything else you might add to costs that
you are watching in the new year, up or downward impact other than raw material. Thank you.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
For 2012?
Robin Murchison SunTrust Robinson Humphrey Analyst
Yes, yes.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Well, clearly, the big year-over-year favorability from middle of second quarter onwards is going
to be in the cotton raw materials piece. I think the other pieces, as we said in the past, are
still moving upwards, including labor costs and the effect over time of the currency. But we now
have visibility on the impact of the raw materials piece year-over-year to have the confidence
that, as Mike said earlier, our year-over-year average unit cost is going to be actually down
netting those different effects.
Operator
David Glick, Buckingham Research Group.
David Glick Buckingham Research Analyst
Thank you for taking my question. Perhaps I missed it, but could you tell us, Jonathan, what the
aggregate international comp was in the third quarter? We know the flagships are negative and
Hollister positive. Im just trying to get a sense of how that aggregates and the type of
assumptions you are factoring in on the international comp side heading toward that $4.75 goal in
2012.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
We
havent given an aggregate comp number, David and frankly, Im not sure how meaningful it is. You
have got a lot of different moving parts being Japan and Canada and the flagships and Hollister in
Europe and it is also still some of those pieces on a pretty small base, so that isnt something
we have broken out.
Broadly speaking, in terms of looking forward, when we look at our non-promotional stores, we are
assuming certainly a lower comp rate than we are for the chain stores for 2012 baked into that
$4.75 objective.
Operator
Jeff Black, Citi.
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Nov. 16. 2011 / 1:30PM, ANF Q3 2011 Abercrombie & Fitch Co Earnings Conference Call
Jeff Black Citi Analyst
Thanks. So, Jonathan, on the flagships, on the flagships that are comping negative, if you
annualize that, are they still at 40% run rates? What is the profit, four-wall profit of those two
stores if we just assume now goes through the end of the year? And on Japan, where is the four-wall
there and is any improvement baked into the assumptions of the $4.75 or no on that one? And finally
on the domestic AUR, can you tell us what the domestic AUR was in terms of decline for 3Q? Thanks.
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Jeff, on the first part, we really dont again get into the specifics of individual stores. I
think, as I alluded to earlier on, all three stores are running at 40% or greater four-wall during
the third quarter. I dont think there is anything else we can really add on that.
In terms of any improvements the Japanese four-wall is clearly significantly lower than that,
and we are working on it, as Mike talked about. We havent baked in any improvements relative to
what we are currently seeing in Japan. And then I think I missed the third part.
Jeff Black Citi Analyst
Thats the AUR? What was it down in 3Q just on the domestic base?
Jonathan Ramsden Abercrombie & Fitch Co. EVP & CFO
Again, we havent broken that out specifically.
Operator
That is all the time we have for questions today. This concludes todays conference and we thank
you for your participation.
Mike Jeffries Abercrombie & Fitch Co. Chairman & CEO
Thank you.
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