Abercrombie & Fitch Co 8-K, filed May 30, 2024
Abercrombie & Fitch Co (ANF)
8-K
2024-05-30
For: 2024-05-29
View Original
Added on
April 11, 2026
About this 8-K
Abercrombie & Fitch Co filed this 8-K on May 30, 2024, reporting on events of May 29, 2024.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 29, 2024
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Item 2.02. Results of Operations and Financial Condition.
On May 29, 2024, Abercrombie & Fitch Co. (the “Company”) issued a news release (the “Release”) reporting the Company’s unaudited financial results for the first quarter ended May 4, 2024. A copy of the Release is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In conjunction with the Release, the Company also made available additional unaudited quarterly financial information for the first quarter ended May 4, 2024, and for each of the quarters in the fiscal year ended February 3, 2024. The Company also made available additional unaudited financial information for the fiscal years ended February 3, 2024 and January 28, 2023. The additional financial information is included as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
In conjunction with the Release, the Company also made available an investor presentation of results for the first quarter ended May 4, 2024. The presentation, which is available under the “Investors” section of the Company’s website, located at corporate.abercrombie.com, is included as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference. Information on the Company’s website is not, and will not be deemed to be, a part of this Current Report on Form 8-K or incorporated into any other filings the Company may make with the Securities and Exchange Commission.
The Company’s management conducted a conference call on May 29, 2024 to review the Company’s financial results for the first quarter ended May 4, 2024. A copy of the transcript of the conference call is included as Exhibit 99.4 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02, including the accompanying Exhibits, are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(a) through (c) Not applicable
(d) Exhibits:
The following exhibits are included with this Current Report on Form 8-K:
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 99.3 | ||||||||
| 99.4 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Abercrombie & Fitch Co. | |||||||||||
Dated: May 30, 2024 | By: | /s/ Scott D. Lipesky | |||||||||
| Scott D. Lipesky | |||||||||||
| Executive Vice President, Chief Financial Officer and Chief Operating Officer | |||||||||||
ABERCROMBIE & FITCH CO. REPORTS FIRST QUARTER FISCAL 2024 RESULTS
•Net sales of $1.0 billion, up 22% from last year with comparable sales growth of +21%, resulting in the highest first quarter net sales in company history
•Broad-based net sales growth across regions and brands; with Abercrombie brands growth of +31%
•First quarter operating margin of 12.7%, up 860 basis points from last year
•Increases full year outlook to net sales growth of around 10%, and operating margin of around 14%
New Albany, Ohio, May 29, 2024: Abercrombie & Fitch Co. (NYSE: ANF) today announced results for the first quarter ended May 4, 2024. These compare to results for the first quarter ended April 29, 2023. Descriptions of the use of non-GAAP financial measures and reconciliations of GAAP and non-GAAP financial measures accompany this release.
Fran Horowitz, Chief Executive Officer, said, “Our outstanding first quarter results reflect the power of our brands and strong execution of our global playbook. We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, driving sales above our expectations. Growth was broad-based across regions and brands with Abercrombie brands registering 31% growth and Hollister brands delivering growth of 12%. Strong top-line growth, along with gross profit rate expansion, led to record first quarter operating income and an operating margin of 12.7%.
With excellent first quarter performance, we are increasing our full year sales and operating margin outlook. We remain on track to achieve our 2024 goal of demonstrating sustainable, profitable growth after a defining year for the company in fiscal 2023. Our brands are delivering high-quality, on-trend assortments for new and retained customers across regions and brands. Importantly, we continue to make strategic investments across stores, digital and technology to further strengthen the company in pursuit of our long-term ambition.”
Details related to reported net income per diluted share and adjusted net income per diluted share for the first quarter are as follows:
| 2024 | 2023 | |||||||||||||
| GAAP | $ | 2.14 | $ | 0.32 | ||||||||||
Excluded items, net of tax effect (1) | — | (0.06) | ||||||||||||
| Adjusted non-GAAP | $ | 2.14 | $ | 0.39 | ||||||||||
Impact from changes in foreign currency exchange rates (2) | — | — | ||||||||||||
| Adjusted non-GAAP constant currency | $ | 2.14 | $ | 0.39 | ||||||||||
(1)Excluded items consist of pre-tax store asset impairment charges in the prior year.
(2)The estimated impact from foreign currency is calculated by applying current period exchange rates to prior year results using a 26% tax rate.
A summary of results for the first quarter ended May 4, 2024 as compared to the first quarter ended April 29, 2023:
•Net sales of $1.0 billion, up 22% as compared to last year on a reported basis and constant currency basis.
•Comparable sales up 21%.
•Gross profit rate of 66.4%, up approximately 540 basis points as compared to last year.
•Operating expense, excluding other operating income, net, of $549.6 million for the quarter, decreased to 53.8% of sales from 57.3% last year.
•Operating income of $130 million as compared to operating income last year of $34 million and $38 million, on a reported and adjusted non-GAAP basis, respectively.
•Net income per diluted share of $2.14 as compared to net income per diluted share last year of $0.32 and $0.39 on a reported and adjusted non-GAAP basis, respectively.
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| Net Sales | ||
Net sales by segment and brand for the first quarter are as follows:
| (in thousands) | 2024 | 2023 | 1 YR % Change | Comparable sales (2) | |||||||||||||||||||||||||
Net sales by segment: (1) | |||||||||||||||||||||||||||||
Americas (3) | $ | 820,121 | $ | 665,423 | 23% | 21% | |||||||||||||||||||||||
EMEA (4) | 164,778 | 138,106 | 19% | 23% | |||||||||||||||||||||||||
APAC (5) | 35,831 | 32,465 | 10% | 22% | |||||||||||||||||||||||||
| Total company | $ | 1,020,730 | $ | 835,994 | 22% | 21% | |||||||||||||||||||||||
| 2024 | 2023 | 1 YR % Change | Comparable sales (2) | ||||||||||||||||||||||||||
| Net sales by brand: | |||||||||||||||||||||||||||||
Abercrombie (6) | 571,513 | 436,044 | 31% | 29% | |||||||||||||||||||||||||
Hollister (7) | $ | 449,217 | $ | 399,950 | 12% | 13% | |||||||||||||||||||||||
| Total company | $ | 1,020,730 | $ | 835,994 | 22% | 21% | |||||||||||||||||||||||
(1) Net sales by segment are presented by attributing revenues to an individual country on the basis of the segment that fulfills the order.
(2) Comparable sales are calculated on a constant currency basis. Refer to "REPORTING AND USE OF GAAP AND NON-GAAP MEASURES," for further discussion.
(3) The Americas segment includes the results of operations in North America and South America.
(4) The EMEA segment includes the results of operations in Europe, the Middle East and Africa.
(5) The APAC segment includes the results of operations in the Asia-Pacific region, including Asia and Oceania.
(6) For purposes of the above table, Abercrombie includes Abercrombie & Fitch and abercrombie kids.
(7) For purposes of the above table, Hollister includes Hollister and Gilly Hicks.
| Financial Position and Liquidity | ||
As of May 4, 2024 the company had:
•Cash and equivalents of $864 million. This compares to cash and equivalents of $901 million and $447 million as of February 3, 2024 and April 29, 2023, respectively.
•Inventories of $449 million. This compares to inventories of $469 million and $448 million as of February 3, 2024 and April 29, 2023, respectively.
•Long-term gross borrowings under the company’s senior secured notes of $214 million (the “Senior Secured Notes”) which mature in July 2025 and bear interest at a rate of 8.75% per annum.
•Borrowing available under the senior-secured asset-based revolving credit facility (the “ABL Facility”) of $293 million.
•Liquidity, comprised of cash and equivalents and borrowing available under the ABL Facility, of approximately $1.2 billion. This compares to liquidity of $1.2 billion and $0.8 billion as of February 3, 2024 and April 29, 2023, respectively.
Cash Flow and Capital Allocation | ||
Details related to the company’s cash flows for the year-to-date period ended May 4, 2024 are as follows:
•Net cash provided by operating activities of $95 million.
•Net cash used for investing activities of $39 million.
•Net cash used for financing activities of $93 million.
During the first quarter of 2024, the company purchased approximately $9 million, at a slight premium to par value, of its outstanding Senior Secured Notes. In addition, in the 2024 first quarter, the company repurchased 119,000 shares for approximately $15 million. The company has $217 million remaining on the share repurchase authorization established in November 2021.
Depreciation and amortization was $38 million for the year-to-date period ended May 4, 2024.
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Fiscal 2024 Full Year Outlook | ||
•Net sales up around 10% from $4.3 billion in fiscal 2023. This is an increase to the previous outlook of growth in the range of 4% to 6%. We expect Abercrombie brands will continue to outperform Hollister brands and the Americas will continue to lead the regional performance.
The following table illustrates the expected quarterly and full year net sales and related basis point impact of the calendar shift and loss of one selling week in fiscal 2024 compared to fiscal 2023.
Q1 | Q2 | Q3 | Q4 | Fiscal 2024 | |||||||||||||
Net sales impact (in millions) | $+10M | $+30M | $-10M | $-80M | $-50M | ||||||||||||
Basis point impact | +120 bps | +320 bps | -90 bps | -550 bps | -120 bps | ||||||||||||
•Operating margin to be around 14%. This range improves from the previous outlook of around 12%. We expect the year-over-year improvement to be driven by a higher gross profit rate and some operating expense leverage.
•Effective tax rate to be in the mid-to-high 20s, with the rate being sensitive to the jurisdictional mix and level of income.
•Capital expenditures of approximately $170 million.
Fiscal 2024 Second Quarter Outlook | ||
•Net sales growth to be up mid-teens compared to fiscal second quarter 2023 level of $935 million.
•Operating margin to be in the in the range of 13% to 14% compared to an operating margin of 9.6% in Q2 2023.
•Effective tax rate to be mid-20s, with the rate being sensitive to the jurisdictional mix and level of income.
| Conference Call | ||
Today at 8:30 a.m. ET, the company will conduct a conference call and provide additional details around its quarterly results and its outlook for the second quarter. To access the call by phone, participants will need to register at the following URL address to obtain a dial-in number and passcode:
https://register.vevent.com/register/BIc2b07a146008478c825c3b93c929d4ac
A presentation of first quarter results will be available in the “Investors” section at corporate.abercrombie.com at approximately 7:30 a.m. ET, today. Important information may be disseminated initially or exclusively via the website; investors should consult the site to access this information.
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| Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 | ||
This Press Release and related statements by management or spokespeople of Abercrombie & Fitch Co. (A&F) contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements, including, without limitation, statements regarding our second quarter and annual fiscal 2024 results, relate to our current assumptions, projections and expectations about our business and future events. Any such forward-looking statements involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the company’s control. The inclusion of such information should not be regarded as a representation by the company, or any other person, that the objectives of the company will be achieved. Words such as “estimate,” “project,” “plan,” “goal,” “believe,” “expect,” “anticipate,” “intend,” “should,” “are confident,” “will,” “could,” “outlook,” 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 any forward-looking statements, including any financial targets or estimates, whether as a result of new information, future events, or otherwise. Factors that may cause results to differ from those expressed in our forward-looking statements include, but are not limited to, the factors disclosed in Part I, Item 1A. “Risk Factors” of the company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024, and otherwise in our reports and filings with the Securities and Exchange Commission, as well as the following factors: risks related to changes in global economic and financial conditions, including inflation, and the resulting impact on consumer spending generally and on our operating results, financial condition, and expense management, and our ability to adequately mitigate the impact; risks related to geopolitical conflict, armed conflict, the conflicts between Russia and Ukraine or Israel and Hamas and the expansion of conflict in the surrounding areas, including the impact of such conflicts on international trade, supplier delivery or increased freight costs, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience; risks related to our failure to engage our customers, anticipate customer demand and changing fashion trends, and manage our inventory; risks related to our failure to operate effectively in a highly competitive and constantly evolving industry; risks related to our ability to execute on, and maintain the success of, our strategic and growth initiatives, including those outlined in our Always Forward Plan; risks related to fluctuations in foreign currency exchange rates; risks related to fluctuations in our tax obligations and effective tax rate, including as a result of earnings and losses generated from our global operations, may result in volatility in our results of operations; risks and uncertainty related to adverse public health developments; risks associated with climate change and other corporate responsibility issues; risks related to reputational harm to the company, its officers, and directors; risks related to actual or threatened litigation; risks related to cybersecurity threats and privacy or data security breaches; and the potential loss or disruption to our information systems.
| Other Information | ||
This document includes certain adjusted non-GAAP financial measures where management believes it to be helpful in understanding the company's results of operations or financial position. Additional details about non-GAAP financial measures and a reconciliation of GAAP financial measures to non-GAAP financial measures can be found in the "Reporting and Use of GAAP and Non-GAAP Measures" section. Sub-totals and totals may not foot due to rounding. Net income and net income per share financial measures included herein are attributable to Abercrombie & Fitch Co., excluding net income attributable to noncontrolling interests.
As used in this document, unless otherwise defined, "Abercrombie brands" refers to Abercrombie & Fitch and abercrombie kids and "Hollister brands" refers to Hollister and Gilly Hicks. Additionally, references to "Americas" includes North America and South America, "EMEA" includes Europe, the Middle East and Africa and "APAC" includes the Asia-Pacific region, including Asia and Oceania.
| About Abercrombie & Fitch Co. | ||
Abercrombie & Fitch Co. (NYSE: ANF) is a leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids. Abercrombie & Fitch was born in 1892 and aims to make every day feel as exceptional as the start of a long weekend. abercrombie kids sees the world through kids’ eyes, where play is life and every day is an opportunity to be anything and better anything. Hollister believes in liberating the spirit of an endless summer inside everyone and making teens feel celebrated and comfortable in their own skin. Gilly Hicks, offering active lifestyle products, is designed to create happiness through movement.
The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers around the world to express their own individuality and style. Abercrombie & Fitch Co. operates approximately 750 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce sites www.abercrombie.com, www.abercrombiekids.com, www.hollisterco.com and www.gillyhicks.com
| Investor Contact: | Media Contact: | |||||||
| Mo Gupta | Kate Wagner | |||||||
| Abercrombie & Fitch Co. | Abercrombie & Fitch Co. | |||||||
| (614) 283-6751 | (614) 283-6192 | |||||||
| Investor_Relations@anfcorp.com | Public_Relations@anfcorp.com | |||||||
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| Abercrombie & Fitch Co. | |||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Thirteen Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||||||||
| May 4, 2024 | % of Net Sales | April 29, 2023 | % of Net Sales | ||||||||||||||||||||
| Net sales | $ | 1,020,730 | 100.0 | % | $ | 835,994 | 100.0 | % | |||||||||||||||
| Cost of sales, exclusive of depreciation and amortization | 343,273 | 33.6 | % | 326,200 | 39.0 | % | |||||||||||||||||
| Gross profit | 677,457 | 66.4 | % | 509,794 | 61.0 | % | |||||||||||||||||
| Stores and distribution expense | 371,686 | 36.4 | % | 336,049 | 40.2 | % | |||||||||||||||||
| Marketing, general and administrative expense | 177,880 | 17.4 | % | 142,631 | 17.1 | % | |||||||||||||||||
| Other operating income, net | (1,958) | (0.2) | % | (2,894) | (0.3) | % | |||||||||||||||||
| Operating income | 129,849 | 12.7 | % | 34,008 | 4.1 | % | |||||||||||||||||
| Interest expense | 5,780 | 0.6 | % | 7,458 | 0.9 | % | |||||||||||||||||
| Interest income | (10,803) | (1.1) | % | (4,015) | (0.5) | % | |||||||||||||||||
| Interest (income) expense, net | (5,023) | (0.5) | % | 3,443 | 0.4 | % | |||||||||||||||||
| Income before income taxes | 134,872 | 13.2 | % | 30,565 | 3.7 | % | |||||||||||||||||
| Income tax expense | 19,794 | 1.9 | % | 12,718 | 1.5 | % | |||||||||||||||||
| Net income | 115,078 | 11.3 | % | 17,847 | 2.1 | % | |||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 1,228 | 0.1 | % | 1,276 | 0.2 | % | |||||||||||||||||
| Net income attributable to A&F | $ | 113,850 | 11.2 | % | $ | 16,571 | 2.0 | % | |||||||||||||||
| Net income per share attributable to A&F | |||||||||||||||||||||||
| Basic | $ | 2.24 | $ | 0.33 | |||||||||||||||||||
| Diluted | $ | 2.14 | $ | 0.32 | |||||||||||||||||||
| Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | 50,893 | 49,574 | |||||||||||||||||||||
| Diluted | 53,276 | 51,467 | |||||||||||||||||||||
5
Reporting and Use of GAAP and Non-GAAP Measures
The company believes that each of the non-GAAP financial measures presented are useful to investors as they provide a measure of the company’s operating performance excluding the effect of certain items which the company believes do not reflect its future operating outlook, such as asset impairment charges, therefore supplementing investors’ understanding of comparability of operations across periods. Management used these non-GAAP financial measures during the periods presented to assess the company’s performance and to develop expectations for future operating performance. Non-GAAP financial measures should be used supplemental to, and not as an alternative to, the company’s GAAP financial results, and may not be calculated in the same manner as similar measures presented by other companies.
The company provides comparable sales, defined as the percentage year-over-year change in the aggregate of: (1) sales for stores that have been open as the same brand at least one year and whose square footage has not been expanded or reduced by more than 20% within the past year, with prior year’s net sales converted at the current year’s foreign currency exchange rate to remove the impact of foreign currency rate fluctuation, and (2) digital net sales with prior year’s net sales converted at the current year’s foreign currency exchange rate to remove the impact of foreign currency rate fluctuation.
The company also provides certain financial information on a constant currency basis to enhance investors’ understanding of underlying business trends and operating performance, by removing the impact of foreign currency exchange rate fluctuations. The effect from foreign currency, calculated on a constant currency basis, is determined by applying current year average exchange rates to prior year results and is net of the year-over-year impact from hedging. The per diluted share effect from foreign currency is calculated using a 26% tax rate.
In addition, the company provides EBITDA and Adjusted EBITDA as supplemental measures used by the company's executive management to assess the company's performance. We also believe these supplemental performance measures are meaningful information for investors and other interested parties to use in computing the company's core financial performance over multiple periods and with other companies by excluding the impact of differences in tax jurisdictions, debt service levels and capital investment.
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| Abercrombie & Fitch Co. | |||||||||||||||||||||||
| Reconciliation of Constant Currency Financial Measures | |||||||||||||||||||||||
Thirteen Weeks Ended May 4, 2024 and April 29, 2023 | |||||||||||||||||||||||
| (in thousands, except percentage and basis point changes and per share data) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| 2024 | 2023 | % Change | |||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
GAAP (1) | $ | 1,020,730 | $ | 835,994 | 22% | ||||||||||||||||||
Impact from changes in foreign currency exchange rates (2) | — | (551) | —% | ||||||||||||||||||||
| Net sales on a constant currency basis | $ | 1,020,730 | $ | 835,443 | 22% | ||||||||||||||||||
| Gross profit | 2024 | 2023 | BPS Change (3) | ||||||||||||||||||||
GAAP (1) | $ | 677,457 | $ | 509,794 | 540 | ||||||||||||||||||
Impact from changes in foreign currency exchange rates (2) | — | 930 | (10) | ||||||||||||||||||||
| Gross profit on a constant currency basis | $ | 677,457 | $ | 510,724 | 530 | ||||||||||||||||||
| Operating income | 2024 | 2023 | BPS Change (3) | ||||||||||||||||||||
GAAP (1) | $ | 129,849 | $ | 34,008 | 860 | ||||||||||||||||||
Excluded items (4) | — | (4,436) | 50 | ||||||||||||||||||||
| Adjusted non-GAAP | $ | 129,849 | $ | 38,444 | 810 | ||||||||||||||||||
Impact from changes in foreign currency exchange rates (2) | — | 463 | (10) | ||||||||||||||||||||
| Adjusted non-GAAP constant currency basis | $ | 129,849 | $ | 38,907 | 800 | ||||||||||||||||||
| Net income attributable to A&F | 2024 | 2023 | $ Change | ||||||||||||||||||||
GAAP (1) | $ | 2.14 | $ | 0.32 | $1.82 | ||||||||||||||||||
Excluded items, net of tax (4) | — | (0.06) | 0.06 | ||||||||||||||||||||
| Adjusted non-GAAP | $ | 2.14 | $ | 0.39 | $1.75 | ||||||||||||||||||
Impact from changes in foreign currency exchange rates (2) | — | — | — | ||||||||||||||||||||
| Adjusted non-GAAP constant currency basis | $ | 2.14 | $ | 0.39 | $1.75 | ||||||||||||||||||
(1) “GAAP” refers to accounting principles generally accepted in the United States of America.
(2) The estimated impact from foreign currency is determined by applying current period exchange rates to prior year results and is net of the year-over-year impact from hedging. The per diluted share estimated impact from foreign currency is calculated using a 26% tax rate.
(3) The estimated basis point change has been rounded based on the percentage change.
(4) Excluded items consist of $4.4 million pre-tax store impairment charges for the prior year.
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| Abercrombie & Fitch Co. | ||||||||||||||||||||||||||
| Reconciliation of Constant Currency Net Sales by Geography and Brand | ||||||||||||||||||||||||||
Thirteen Weeks Ended May 4, 2024 and April 29, 2023 | ||||||||||||||||||||||||||
| (in thousands, except percentage changes) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| 2024 | 2023 | GAAP % Change | Non-GAAP Constant Currency Basis % Change | |||||||||||||||||||||||
| GAAP | GAAP | Impact From Changes In Foreign Currency Exchanges Rates (1) | Non-GAAP Constant Currency Basis | |||||||||||||||||||||||
Net sales by segment: (2) | ||||||||||||||||||||||||||
Americas (3) | $ | 820,121 | $ | 665,423 | $ | (62) | $ | 665,361 | 23% | 23% | ||||||||||||||||
EMEA (4) | 164,778 | 138,106 | 1,141 | 139,247 | 19% | 18% | ||||||||||||||||||||
APAC (5) | 35,831 | 32,465 | (1,630) | 30,835 | 10% | 16% | ||||||||||||||||||||
| Total company | $ | 1,020,730 | $ | 835,994 | $ | (551) | $ | 835,443 | 22% | 22% | ||||||||||||||||
| 2024 | 2023 | GAAP % Change | Non-GAAP Constant Currency Basis % Change | |||||||||||||||||||||||
| GAAP | GAAP | Impact From Changes In Foreign Currency Exchanges Rates (1) | Non-GAAP Constant Currency Basis | |||||||||||||||||||||||
| Net sales by brand: | ||||||||||||||||||||||||||
Abercrombie (6) | 571,513 | 436,044 | (572) | 435,472 | 31% | 31% | ||||||||||||||||||||
Hollister (7) | $ | 449,217 | $ | 399,950 | $ | 21 | $ | 399,971 | 12% | 12% | ||||||||||||||||
| Total company | $ | 1,020,730 | $ | 835,994 | $ | (551) | $ | 835,443 | 22% | 22% | ||||||||||||||||
(1)The estimated impact from foreign currency is determined by applying current period exchange rates to prior year results and is net of the year-over-year impact from hedging.
(2)Net sales by segment are presented by attributing revenues to an individual country on the basis of the segment that fulfills the order.
(3)The Americas segment includes the results of operations in North America and South America.
(4)The EMEA segment includes the results of operations in Europe, the Middle East and Africa.
(5)The APAC segment includes the results of operations in the Asia-Pacific region, including Asia and Oceania.
(6)For purposes of the above table, Abercrombie includes Abercrombie & Fitch and abercrombie kids.
(7)For purposes of the above table, Hollister includes Hollister and Gilly Hicks.
8
| Abercrombie & Fitch Co. | ||||||||||||||||||||
Reconciliation of EBITDA and Adjusted EBITDA | ||||||||||||||||||||
Thirteen Weeks Ended May 4, 2024 and April 29, 2023 | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| 2024 | % of Net Sales | 2023 | % of Net Sales | |||||||||||||||||
| Net income | $ | 115,078 | 11.3 | % | $ | 17,847 | 2.1 | % | ||||||||||||
| Income tax expense | 19,794 | 1.9 | 12,718 | 1.5 | ||||||||||||||||
| Interest (income) expense, net | (5,023) | (0.5) | 3,443 | 0.4 | ||||||||||||||||
Depreciation and amortization | 37,689 | 3.7 | 36,028 | 4.3 | ||||||||||||||||
EBITDA (1) | $ | 167,538 | 16.4 | % | $ | 70,036 | 8.4 | % | ||||||||||||
| Adjustments to EBITDA | ||||||||||||||||||||
| Asset impairment | — | — | 4,436 | 0.5 | ||||||||||||||||
Adjusted EBITDA (1) | $ | 167,538 | 16.4 | % | $ | 74,472 | 8.9 | % | ||||||||||||
(1)EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with GAAP. EBITDA is defined as net income before interest, income taxes and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for asset impairment.
9
| Abercrombie & Fitch Co. | |||||||||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||||||||
| (in thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| May 4, 2024 | February 3, 2024 | April 29, 2023 | |||||||||||||||
| Assets | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and equivalents | $ | 864,195 | $ | 900,884 | $ | 446,952 | |||||||||||
| Receivables | 93,605 | 78,346 | 106,149 | ||||||||||||||
| Inventories | 449,267 | 469,466 | 447,806 | ||||||||||||||
| Other current assets | 102,516 | 88,569 | 107,684 | ||||||||||||||
| Total current assets | 1,509,583 | 1,537,265 | 1,108,591 | ||||||||||||||
| Property and equipment, net | 540,697 | 538,033 | 550,810 | ||||||||||||||
| Operating lease right-of-use assets | 699,471 | 678,256 | 692,699 | ||||||||||||||
| Other assets | 220,334 | 220,679 | 205,978 | ||||||||||||||
| Total assets | $ | 2,970,085 | $ | 2,974,233 | $ | 2,558,078 | |||||||||||
| Liabilities and stockholders’ equity | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Accounts payable | $ | 266,925 | $ | 296,976 | $ | 221,587 | |||||||||||
| Accrued expenses | 402,786 | 436,655 | 340,331 | ||||||||||||||
| Short-term portion of operating lease liabilities | 188,851 | 179,625 | 188,520 | ||||||||||||||
| Income taxes payable | 61,137 | 53,564 | 19,023 | ||||||||||||||
| Total current liabilities | 919,699 | 966,820 | 769,461 | ||||||||||||||
| Long-term liabilities: | |||||||||||||||||
| Long-term portion of operating lease liabilities | $ | 656,862 | $ | 646,624 | $ | 682,996 | |||||||||||
| Long-term borrowings, net | 213,102 | 222,119 | 297,172 | ||||||||||||||
| Other liabilities | 89,252 | 88,683 | 97,476 | ||||||||||||||
| Total long-term liabilities | 959,216 | 957,426 | 1,077,644 | ||||||||||||||
| Total Abercrombie & Fitch Co. stockholders’ equity | 1,078,886 | 1,035,160 | 701,857 | ||||||||||||||
| Noncontrolling interests | 12,284 | 14,827 | 9,116 | ||||||||||||||
| Total stockholders’ equity | 1,091,170 | 1,049,987 | 710,973 | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,970,085 | $ | 2,974,233 | $ | 2,558,078 | |||||||||||
10
| Abercrombie & Fitch Co. | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (in thousands, except per share data) | |||||||||||
| (Unaudited) | |||||||||||
| Thirteen Weeks Ended | |||||||||||
| May 4, 2024 | April 29, 2023 | ||||||||||
| Operating activities | |||||||||||
| Net cash provided by (used for) operating activities | $ | 95,010 | $ | (560) | |||||||
| Investing activities | |||||||||||
| Purchases of property and equipment | $ | (38,886) | $ | (46,391) | |||||||
| Net cash used for investing activities | $ | (38,886) | $ | (46,391) | |||||||
| Financing activities | |||||||||||
| Purchase of senior secured notes | (9,425) | — | |||||||||
| Purchases of common stock | (15,000) | — | |||||||||
| Acquisition of common stock for tax withholding obligations | (65,173) | (18,359) | |||||||||
| Other financing activities | (3,353) | (3,597) | |||||||||
| Net cash used for financing activities | $ | (92,951) | $ | (21,956) | |||||||
| Effect of foreign currency exchange rates on cash | $ | (857) | $ | (1,998) | |||||||
| Net decrease in cash and equivalents, and restricted cash and equivalents | $ | (37,684) | $ | (70,905) | |||||||
| Cash and equivalents, and restricted cash and equivalents, beginning of period | $ | 909,685 | $ | 527,569 | |||||||
| Cash and equivalents, and restricted cash and equivalents, end of period | $ | 872,001 | $ | 456,664 | |||||||
11
| Abercrombie & Fitch Co. | ||||||||||||||||||||||||||||||||||||||||||||
| Financial Information | ||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||
| Fiscal 2023 | Fiscal 2024 | |||||||||||||||||||||||||||||||||||||||||||
| 2022 | Q1 | Q2 | Q3 | Q4 | 2023 | Q1 | ||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 3,697,751 | $ | 835,994 | $ | 935,345 | $ | 1,056,431 | $ | 1,452,907 | $ | 4,280,677 | $ | 1,020,730 | ||||||||||||||||||||||||||||||
| Cost of sales, exclusive of depreciation and amortization | 1,593,213 | 326,200 | 350,965 | 370,762 | 539,338 | 1,587,265 | 343,273 | |||||||||||||||||||||||||||||||||||||
| Gross profit | 2,104,538 | 509,794 | 584,380 | 685,669 | 913,569 | 2,693,412 | 677,457 | |||||||||||||||||||||||||||||||||||||
| Stores and distribution expense | 1,496,962 | 336,049 | 352,730 | 383,883 | 499,075 | 1,571,737 | 371,686 | |||||||||||||||||||||||||||||||||||||
| Marketing, general and administrative expense | 517,602 | 142,631 | 144,502 | 162,510 | 193,234 | 642,877 | 177,880 | |||||||||||||||||||||||||||||||||||||
| Other operating (income) loss, net | (2,674) | (2,894) | (2,694) | 1,256 | (1,541) | (5,873) | (1,958) | |||||||||||||||||||||||||||||||||||||
| Operating income | 92,648 | 34,008 | 89,842 | 138,020 | 222,801 | 484,671 | 129,849 | |||||||||||||||||||||||||||||||||||||
| Interest expense | 30,236 | 7,458 | 7,635 | 8,568 | 6,691 | 30,352 | 5,780 | |||||||||||||||||||||||||||||||||||||
| Interest income | (4,604) | (4,015) | (6,538) | (7,897) | (11,530) | (29,980) | (10,803) | |||||||||||||||||||||||||||||||||||||
| Interest (income) expense, net | 25,632 | 3,443 | 1,097 | 671 | (4,839) | 372 | (5,023) | |||||||||||||||||||||||||||||||||||||
| Income before income taxes | 67,016 | 30,565 | 88,745 | 137,349 | 227,640 | 484,299 | 134,872 | |||||||||||||||||||||||||||||||||||||
| Income tax expense | 56,631 | 12,718 | 30,014 | 39,617 | 66,537 | 148,886 | 19,794 | |||||||||||||||||||||||||||||||||||||
| Net income | 10,385 | 17,847 | 58,731 | 97,732 | 161,103 | 335,413 | 115,078 | |||||||||||||||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 7,569 | 1,276 | 1,837 | 1,521 | 2,656 | 7,290 | 1,228 | |||||||||||||||||||||||||||||||||||||
| Net income attributable to Abercrombie & Fitch Co. | $ | 2,816 | $ | 16,571 | $ | 56,894 | $ | 96,211 | $ | 158,447 | $ | 328,123 | $ | 113,850 | ||||||||||||||||||||||||||||||
| Net income per share attributable to Abercrombie & Fitch Co.: | ||||||||||||||||||||||||||||||||||||||||||||
| Basic | $0.06 | $0.33 | $1.13 | $1.91 | $3.13 | $6.53 | $2.24 | |||||||||||||||||||||||||||||||||||||
| Diluted | $0.05 | $0.32 | $1.10 | $1.83 | $2.97 | $6.22 | $2.14 | |||||||||||||||||||||||||||||||||||||
| Weighted-average shares outstanding: | ||||||||||||||||||||||||||||||||||||||||||||
| Basic | 50,307 | 49,574 | 50,322 | 50,504 | 50,559 | 50,250 | 50,893 | |||||||||||||||||||||||||||||||||||||
| Diluted | 52,327 | 51,467 | 51,548 | 52,624 | 53,399 | 52,726 | 53,276 | |||||||||||||||||||||||||||||||||||||
1
| Abercrombie & Fitch Co. | ||||||||||||||||||||||||||||||||||||||||||||
| Financial Information | ||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Fiscal 2023 | Fiscal 2024 | |||||||||||||||||||||||||||||||||||||||||||
| 2022 | Q1 | Q2 | Q3 | Q4 | 2023 | Q1 | ||||||||||||||||||||||||||||||||||||||
Segment comparable sales (1) | ||||||||||||||||||||||||||||||||||||||||||||
Americas comparable sales (2) (3) | Not provided | Not provided | 14 | % | 16 | % | 17 | % | 13 | % | 21 | % | ||||||||||||||||||||||||||||||||
EMEA comparable sales (2) (4) | Not provided | Not provided | 6 | % | 15 | % | 10 | % | 7 | % | 23 | % | ||||||||||||||||||||||||||||||||
APAC comparable sales (2) (5) | Not provided | Not provided | 26 | % | 32 | % | 21 | % | 26 | % | 22 | % | ||||||||||||||||||||||||||||||||
Comparable sales (2) | Not provided | 3 | % | 13 | % | 16 | % | 16 | % | 13 | % | 21 | % | |||||||||||||||||||||||||||||||
| Branded comparable sales | ||||||||||||||||||||||||||||||||||||||||||||
Abercrombie comparable sales (2) (6) | Not provided | 14 | % | 23 | % | 26 | % | 28 | % | 23 | % | 29 | % | |||||||||||||||||||||||||||||||
Hollister comparable sales (2) (7) | Not provided | (6) | % | 5 | % | 7 | % | 6 | % | 4 | % | 13 | % | |||||||||||||||||||||||||||||||
Comparable sales (2) | Not provided | 3 | % | 13 | % | 16 | % | 16 | % | 13 | % | 21 | % | |||||||||||||||||||||||||||||||
(1) Net sales by segment are presented by attributing revenues to an individual country on the basis of the segment that fulfills the order. | ||||||||||||||||||||||||||||||||||||||||||||
(2) Comparable sales are calculated on a constant currency basis. Refer to "REPORTING AND USE OF GAAP AND NON-GAAP MEASURES," for further discussion. The Company did not provide comparable sales results for fiscal 2022 due to temporary store closures as a result of COVID-19. | ||||||||||||||||||||||||||||||||||||||||||||
(3) The Americas segment includes the results of operations in North America and South America. | ||||||||||||||||||||||||||||||||||||||||||||
(4) The EMEA segment includes the results of operations in Europe, the Middle East and Africa. | ||||||||||||||||||||||||||||||||||||||||||||
(5) The APAC segment includes the results of operations in the Asia-Pacific region, including Asia and Oceania. | ||||||||||||||||||||||||||||||||||||||||||||
(6) For purposes of the above table, Abercrombie includes Abercrombie & Fitch and abercrombie kids. | ||||||||||||||||||||||||||||||||||||||||||||
(7) For purposes of the above table, Hollister includes Hollister and Gilly Hicks. | ||||||||||||||||||||||||||||||||||||||||||||
2
INVESTOR PRESENTATION: FIRST QUARTER 2024
Safe Harbor and Other Information 3 Company Overview 5 Q1 2024 Results 15 Appendix 21 2 TABLE OF CONTENTS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This presentation contains forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements, including, without limitation, statements regarding our second quarter and annual fiscal 2024 results, relate to our current assumptions, projections and expectations about our business and future events. Any such forward-looking statements involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the company’s control. The inclusion of such information should not be regarded as a representation by the company, or any other person, that the objectives of the company will be achieved. Words such as “estimate,” “project,” “plan,” “goal,” “believe,” “expect,” “anticipate,” “intend,” “should,” “are confident,” “will,” “could,” “outlook,” 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 any forward- looking statements, including any financial targets or estimates, whether as a result of new information, future events, or otherwise. Factors that may cause results to differ from those expressed in our forward-looking statements include, but are not limited to, the factors disclosed in Part I, Item 1A. “Risk Factors” of the company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024, and otherwise in our reports and filings with the Securities and Exchange Commission, as well as the following factors: risks related to changes in global economic and financial conditions, including inflation, and the resulting impact on consumer spending generally and on our operating results, financial condition, and expense management, and our ability to adequately mitigate the impact; risks related to geopolitical conflict, armed conflict, the conflicts between Russia and Ukraine or Israel and Hamas and the expansion of conflict in the surrounding areas, including the impact of such conflicts on international trade, supplier delivery or increased freight costs, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience; risks related to our failure to engage our customers, anticipate customer demand and changing fashion trends, and manage our inventory; risks related to our failure to operate effectively in a highly competitive and constantly evolving industry; risks related to our ability to execute on, and maintain the success of, our strategic and growth initiatives, including those outlined in our Always Forward Plan; risks related to fluctuations in foreign currency exchange rates; risks related to fluctuations in our tax obligations and effective tax rate, including as a result of earnings and losses generated from our global operations, may result in volatility in our results of operations; risks and uncertainty related to adverse public health developments; risks associated with climate change and other corporate responsibility issues; risks related to reputational harm to the company, its officers, and directors; risks related to actual or threatened litigation; risks related to cybersecurity threats and privacy or data security breaches; and the potential loss or disruption to our information systems. OTHER INFORMATION As used in this presentation, unless otherwise defined, references to "Abercrombie" and "Abercrombie Brands" includes Abercrombie & Fitch and abercrombie kids and references to "Hollister" and "Hollister Brands" includes Hollister and Gilly Hicks. Additionally, references to "Americas" includes North America and South America, "EMEA" includes Europe, the Middle East and Africa and "APAC" includes the Asia-Pacific region, including Asia and Oceania. 3
4 REPORTING AND USE OF GAAP AND NON-GAAP MEASURES The following presentation includes certain adjusted non-GAAP financial measures. Additional details about non-GAAP financial measures and a reconciliation of GAAP financial measures to non-GAAP financial measures is included in the Appendix to this presentation. As used in the presentation, "GAAP" refers to accounting principles generally accepted in the United States of America. Sub-totals and totals may not foot due to rounding. Net income and net income per share financial measures included herein are attributable to Abercrombie & Fitch Co., excluding net income attributable to noncontrolling interests. The company believes that each of the non-GAAP financial measures presented are useful to investors as they provide a measure of the company’s operating performance excluding the effect of certain items which the company believes do not reflect its future operating outlook, such as asset impairment charges, therefore supplementing investors’ understanding of comparability of operations across periods. Management used these non-GAAP financial measures during the periods presented to assess the company’s performance and to develop expectations for future operating performance. Non-GAAP financial measures should be used supplemental to, and not as an alternative to, the company’s GAAP financial results, and may not be calculated in the same manner as similar measures presented by other companies. The company provides comparable sales, defined as the percentage year-over-year change in the aggregate of: (1) sales for stores that have been open as the same brand at least one year and whose square footage has not been expanded or reduced by more than 20% within the past year, with prior year’s net sales converted at the current year’s foreign currency exchange rate to remove the impact of foreign currency rate fluctuation, and (2) digital net sales with prior year’s net sales converted at the current year’s foreign currency exchange rate to remove the impact of foreign currency rate fluctuation. The company also provides certain financial information on a constant currency basis to enhance investors’ understanding of underlying business trends and operating performance, by removing the impact of foreign currency exchange rate fluctuations. The effect from foreign currency, calculated on a constant currency basis, is determined by applying current year average exchange rates to prior year results and is net of the year-over-year impact from hedging. The per diluted share effect from foreign currency is calculated using a 26% tax rate.
5 Abercrombie & Fitch Co. is a global, digitally-led, omnichannel apparel and accessories retailer catering to kids through millennials with assortments curated for their specific lifestyle needs Our corporate purpose of 'We are here for you on the journey to being and becoming who you are' fuels our customer-led brands and our global associates
COMPANY OVERVIEW 6
$1.46B $1.29B $1.56B $1.73B $2.20B FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 60% 40% PRODUCT 247 GLOBAL NET SALES CUSTOMER VOICE EXPERIENCE STORES GLOBALLY (FY 2023) STORES DIGITAL +10% GROWTH CAGR NET SALES BY CHANNEL (FY 2023) POST GRAD LOVES TO TRAVEL FASHION OBSESSED DIGITALLY-LED TARGETING MILLENNIALS ~ ~ 7
EXPERIENCE $2.16B $1.83B $2.15B $1.96B $2.08B FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 8 518 PRODUCT CUSTOMER VOICE TEENS ENGAGE DIGITALLY GLOBAL NET SALES NET SALES BY CHANNEL (FY 2023) PURCHASE IN-STORE 30% 70% STORES DIGITAL 2023 BACK TO GROWTH +6% Y/Y COMING INTO THEIR OWN COMFORT OBSESSED VALUE VERSATILITY FINANCIALLY RELIANT TARGETING GEN Z W/ MILLENNIAL PARENTS ~ ~ STORES GLOBALLY (FY 2023)
COMPANY OVERVIEW Fiscal 2017 - 2022 STABILIZE & TRANSFORM 9 FOCUS ON SUSTAINABLE, PROFITABLE GROWTH 2022: $3.7B Sales 3% Op Margin 2025 Target1: $4.1-$4.3B Sales 8%+ Op Margin Longer-Term Ambition1: $5B Sales 10%+ Op Margin 2023 - 2025 ALWAYS FORWARD PLAN BUILT ON YEARS OF TRANSFORMATION 2023 Results: $4.3B Sales 11% Op Margin BEYOND 2025 (1) As presented in our June 2022 Investor Day
COMPANY OVERVIEW $72 $127 $70 $(20) $343 $93 $485 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 $3.5 $3.6 $3.6 $3.1 $3.7 $3.7 $4.3 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 STABILIZE & TRANSFORM STABILIZE & TRANSFORM SALES & PROFITABILITY 10 Net Sales (in $ billions) Operating Income (Loss) (in $ millions) COVID CLOSURE IMPACT COVID CLOSURE IMPACT EXPECT ~10% GROWTH OP MARGIN 11%3%9%(1%)2%4%2% EXPECT ~14% MARGIN Y/Y GROWTH 16%0%19%(14%)1%3%5%
COMPANY OVERVIEW ALWAYS FORWARD PLAN EXECUTE GLOBAL BRAND GROWTH PLANS •Data driven approach to store expansion •Grow brand lovers through digital marketing and social selling ACCELERATE AN ENTERPRISE-WIDE DIGITAL REVOLUTION •"Know Them Better" - continued expansion and acceleration of investments in customer analytics to improve customer engagement •"Wow Them Everywhere" - continued investments in people, systems, and processes to improve the end-to-end customer experience OPERATE WITH FINANCIAL DISCIPLINE •Operate with a more agile cost structure •Seek expense efficiencies while protecting investments in digital, technology and store growth 2025 TARGETS: $4.1B - $4.3B REVENUES 8%+ OPERATING MARGIN $600M MINIMUM FREE CASH FLOW GENERATION OVER 3 YEARS LONG-TERM GOAL OF $5B IN REVENUES AND A 10%+ OPERATING MARGIN 1 2 3 11 ALWAYS FORWARD PLAN INTRODUCED AT JUNE 2022 INVESTOR DAY ALWAYS FORWARD PLAN PILLARS
COMPANY OVERVIEW 1 PRODUCT GLOBAL BRAND GROWTH 12 COLLECTIONS & EXTENSIONS • Active (YPB in A&F) • A&F Best Dressed Guest • Graphics Licensing DIGITAL CUSTOMER ACQUISITION • Influencer Channel • Social Commerce (Instagram, TikTok, WeChat) • Affiliate Sales GEOGRAPHIC EXPANSION • Localized Physical/Digital Experiences • Fuel Regional Growth (Americas, EMEA, APAC) • Digital Marketplaces VOICE EXPERIENCE
COMPANY OVERVIEW 13 • Lead with Personalization • Fast, Digital Product Testing • Real Estate Location Analytics • Modernize Foundation (Retail ERP, Data Infrastructure) • Consistent Omnichannel experience (Digital and In-Store) • Powerful, Modern Loyalty Program ENTERPRISE-WIDE DIGITAL REVOLUTION2
COMPANY OVERVIEW (1) Reflected as a percent of net sales. 14 $4.3B 62.9% 2023 51.7% 11.3% OPERATING EXPENSE (1) $4.1B-$4.3B 60% - 63% 52% - 53% 8%+OPERATING INCOME (1) GROSS PROFIT (1) NET SALES FINANCIAL DISCIPLINE3 $3.7B 56.9% 2022 54.5% 2.5% 2025 TARGET GROSS PROFIT RATE expansion from 2022 on improved AUR and lower freight costs OPERATING EXPENSE leverage from sales growth, net of expected inflation and investments in digital infrastructure, marketing 2023 SIGNIFICANT ACHIEVEMENT TO 2025 TARGETS
+860 BPS Y/Y GROSS MARGIN 66.4% 12.7% "With excellent first quarter performance, we are increasing our full year sales and operating margin outlook. We remain on track to achieve our 2024 goal of demonstrating sustainable, profitable growth after a defining year for the company in fiscal 2023. Our brands are delivering high-quality, on-trend assortments for new and retained customers across regions and brands. Importantly, we continue to make strategic investments across stores, digital and technology to further strengthen the company in pursuit of our long-term ambition." Fran Horowitz, CEO Abercrombie & Fitch Co. 15 2024 +22%Y/Y OPERATING MARGIN NET SALES GLOBAL SALES GROWTH FINANCIAL DISCIPLINE +540 BPS Y/Y $1B AMERICAS +23%Y/Y EMEA +19%Y/Y APAC +10%Y/Y Q1 UPDATE +31%Y/Y +12%Y/Y
2024 Q1 RESULTS $32 $32 $31 $43 $36 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $665 $731 $868 $1,191 $820 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $138 $172 $158 $219 $165 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 16 Americas Net Sales (in $ millions) EMEA Net Sales (in $ millions) APAC Net Sales (in $ millions) • Net sales up 23% to last year • Comparable sales up 21% to last year (1) • Net sales up 19% to last year • Comparable sales up 23% to last year (1) • Net sales up 10% to last year • Comparable sales up 22% to last year (1) (1) Comparable sales are calculated on a constant currency basis. Refer to "Reporting and Use of GAAP and Non-GAAP Measures" for further discussion. 2024 Q1 NET SALES RESULTS BY SEGMENT +23% Y/Y +19% Y/Y +10% Y/Y
2024 Q1 RESULTS $400 $473 $509 $698 $449 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $836 $935 $1,056 $1,453 $1,021 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $436 $463 $548 $755 $572 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 17 Total Company Net Sales (in $ millions) Abercrombie Brands Net Sales (in $ millions) Hollister Brands Net Sales (in $ millions) • Highest Q1 net sales in history • Net sales up 22% to last year • Comparable sales up 21% to last year(1) • Highest Q1 net sales in brand history • Consistent growth across genders, channels and geographies • 56% of total net sales • Growth across Women's and Men's business • Sales growth achieved across regions • 44% of total net sales (1) Comparable sales are calculated on a constant currency basis. Refer to "Reporting and Use of GAAP and Non-GAAP Measures" for further discussion. 2024 Q1 NET SALES RESULTS BY BRAND +22% Y/Y +31% Y/Y +12% Y/Y
2024 Q1 RESULTS • Benefit from lower raw materials costs and AUR growth • Offset by higher freight costs 61.0% 62.5% 64.9% 62.9% 66.4% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $34 $90 $138 $223 $130 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 18 Gross Profit Rate (as a % of net sales) Operating Income (in $ millions) • Driven by 22% increase in sales compared to Q1 2023, along with gross profit rate expansion and expense leverage 2024 Q1 GROSS PROFIT/ OPERATING INCOME +540 bps Y/Y +$96M Y/Y
2024 Q1 RESULTS CASH & EQUIVALENTS • $864M as compared to $447M last year INVENTORIES • $449M, up 0.3% from last year • Clean, current inventory position with regained chase capability SHORT-TERM BORROWINGS • No borrowings outstanding under the company's senior secured revolving credit facility ("ABL Facility") • $293M of borrowing available under ABL Facility as of May 4, 2024 GROSS LONG-TERM BORROWINGS • $214M outstanding compared with $300M last year TOTAL LIQUIDITY (1) • $1.2B as compared to $758M last year $448M $493M $595M $469M $449M Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $0M $100M $200M $300M $400M $500M $600M $700M (1) Liquidity is comprised of cash and equivalents and borrowing available under the ABL Facility. 19 Inventory 2024 Q1 FINANCIAL POSITION
OUTLOOK 20 2024 FISCAL OUTLOOK PREVIOUS FULL YEAR OUTLOOK (1) Q2 2024 Q2 OUTLOOK NET SALES UP MID-TEENS OPERATING MARGIN IN THE RANGE OF 13% TO 14%(1) EFFECTIVE TAX RATE MID-20S(2) The following outlook replaces all previous full year guidance. For fiscal 2024, the company now expects: FY 2024 CURRENT FULL YEAR OUTLOOK PREVIOUS FULL YEAR OUTLOOK (3) NET SALES UP AROUND 10% (4) GROWTH IN THE RANGE OF 4% TO 6% (4) OPERATING MARGIN AROUND 14% AROUND 12% EFFECTIVE TAX RATE MID-TO-HIGH 20S(5) MID-TO-HIGH 20s CAPITAL EXPENDITURES ~$170 MILLION ~$170 MILLION (1) We expect the year-over-year improvement to be primarily driven by a higher gross profit rate on continued year-over-year cotton benefits and some AUR growth, combined with modest operating expense leverage. (2) This outlook assumes the continued inability to realize benefits on certain expected tax losses incurred outside of the U.S. (3) Released March 6, 2024. (4) Includes the adverse impact of $50 million from the loss of one selling week in Fiscal 2024. (5) The current outlook assumes the continued inability to realize benefits on certain expected tax losses incurred outside of the U.S., although to a lesser extent than than previously projected, primarily due to higher worldwide income levels.
21 APPENDIX
APPENDIX INCOME STATEMENT (1) Gross profit is derived from cost of sales, exclusive of depreciation and amortization. GAAP (in thousands) Q1 2024 % OF NET SALES Q1 2023 % OF NET SALES NET SALES $1,020,730 100.0% $835,994 100.0% GROSS PROFIT (1) 677,457 66.4% 509,794 61.0% OPERATING EXPENSE 549,566 53.8% 478,680 57.3% OTHER OPERATING INCOME, NET (1,958) (0.2)% (2,894) (0.3)% OPERATING INCOME 129,849 12.7% 34,008 4.1% INTEREST (INCOME) EXPENSE, NET (5,023) (0.5)% 3,443 0.4% INCOME BEFORE INCOME TAXES 134,872 13.2% 30,565 3.7% INCOME TAX EXPENSE 19,794 1.9% 12,718 1.5% NET INCOME $113,850 11.2% $16,571 2.0% NET INCOME PER SHARE ATTRIBUTABLE TO A&F BASIC $2.24 $0.33 DILUTED $2.14 $0.32 WEIGHTED-AVERAGE SHARES BASIC 50,893 49,574 DILUTED 53,276 51,467 22
APPENDIX (in thousands) Q1 2024 % OF NET SALES Q1 2023 % OF NET SALES 1 YR Δ BPS (1) STORES AND DISTRIBUTION $371,686 36.4% $336,049 40.2% (380) MARKETING, GENERAL & ADMINISTRATIVE 177,880 17.4% 142,631 17.1% 30 TOTAL OPERATING EXPENSE - GAAP $549,566 53.8% $478,680 57.3% (350) RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSE TOTAL OPERATING EXPENSE - GAAP 549,566 53.8% 478,680 57.3% (350) EXCLUDED ITEMS (2) — 0.0% 4,436 0.5% (50) TOTAL ADJUSTED OPERATING EXPENSE - NON-GAAP $549,566 53.8% $474,244 56.7% (290) (1) Rounded based on reported percentages. (2) Excluded items consist of pre-tax store and other asset impairment charges for the prior year, respectively. OPERATING EXPENSE 23
APPENDIX (in thousands) MAY 4, 2024 FEBRUARY 3, 2024 APRIL 29, 2023 CASH AND EQUIVALENTS $864,195 $900,884 $446,952 RECEIVABLES 93,605 78,346 106,149 INVENTORIES 449,267 469,466 447,806 OTHER CURRENT ASSETS 102,516 88,569 107,684 TOTAL CURRENT ASSETS $1,509,583 $1,537,265 $1,108,591 PROPERTY AND EQUIPMENT, NET 540,697 538,033 550,810 OPERATING LEASE RIGHT-OF-USE ASSETS 699,471 678,256 692,699 OTHER ASSETS 220,334 220,679 205,978 TOTAL ASSETS $2,970,085 $2,974,233 $2,558,078 ACCOUNTS PAYABLE $266,925 $296,976 $221,587 ACCRUED EXPENSES 402,786 436,655 340,331 SHORT-TERM PORTION OF OPERATING LEASE LIABILITIES 188,851 179,625 188,520 INCOME TAXES PAYABLE 61,137 53,564 19,023 TOTAL CURRENT LIABILITIES $919,699 $966,820 $769,461 LONG-TERM PORTION OF OPERATING LEASE LIABILITIES 656,862 646,624 682,996 LONG-TERM BORROWINGS, NET 213,102 222,119 297,172 OTHER LIABILITIES 89,252 88,683 97,476 TOTAL LONG-TERM LIABILITIES $959,216 $957,426 $1,077,644 TOTAL ABERCROMBIE & FITCH CO. STOCKHOLDERS EQUITY 1,078,886 1,035,160 701,857 NONCONTROLLING INTEREST 12,284 14,827 9,116 TOTAL STOCKHOLDERS' EQUITY $1,091,170 $1,049,987 $710,973 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,970,085 $2,974,233 $2,558,078 24 BALANCE SHEET
APPENDIX YEAR TO DATE PERIOD ENDED (in thousands) MAY 4, 2024 APRIL 29, 2023 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $95,010 $(560) PURCHASES OF PROPERTY AND EQUIPMENT (38,886) (46,391) NET CASH USED FOR INVESTING ACTIVITIES $(38,886) $(46,391) PURCHASE OF SENIOR SECURED NOTES (9,425) — PURCHASES OF COMMON STOCK (15,000) — ACQUISITION OF COMMON STOCK FOR TAX WITHHOLDING OBLIGATIONS (65,173) (18,359) OTHER FINANCING ACTIVITIES (3,353) (3,597) NET CASH USED FOR FINANCING ACTIVITIES $(92,951) $(21,956) EFFECT OF FOREIGN CURRENCY EXCHANGE RATES ON CASH (857) (1,998) NET DECREASE IN CASH AND EQUIVALENTS, AND RESTRICTED CASH AND EQUIVALENTS $(37,684) $(70,905) CASH AND EQUIVALENTS, AND RESTRICTED CASH AND EQUIVALENTS, BEGINNING OF PERIOD $909,685 $527,569 CASH AND EQUIVALENTS, AND RESTRICTED CASH AND EQUIVALENTS, END OF PERIOD $872,001 $456,664 STATEMENT OF CASH FLOWS 25
APPENDIX SHARE REPURCHASES (1) (in thousands, except for average cost) NUMBER OF SHARES COST AVERAGE COST TOTAL FY 2021 10,200 $377,290 $36.99 $377,290 FY 2022 4,770 $125,775 $26.37 $125,775 FY 2023 — $— $— $— YTD 2024 119 $15,000 $125.56 $15,000 (in thousands) FY 2020 FY 2021 FY 2022 Q1 2024 ENDING SHARES OUTSTANDING 62,399 52,985 49,002 51,102 26 (1) As part of publicly announced plans or programs. SHARE REPURCHASES SINCE THE START OF 2021, THE COMPANY REPURCHASED APPROXIMATELY 15 MILLION SHARES FOR APPROXIMATELY $518 MILLION. THERE IS APPROXIMATELY $217 MILLION REMAINING UNDER OUR PREVIOUSLY AUTHORIZED SHARE REPURCHASE PROGRAM.
APPENDIX (1) The estimated impact from foreign currency is determined by applying current period exchange rates to prior year results and is net of the year-over-year (2) impact from hedging. The per diluted share estimated impact from foreign currency is calculated using a 26% tax rate. (3) Net sales by segment are presented by attributing revenues to an individual country on the basis of the segment that fulfills the order. (4) Abercrombie includes Abercrombie & Fitch and abercrombie kids. (5) Hollister includes Hollister and Gilly Hicks. (in thousands) Q1 2024 Q1 2023 GAAP Δ % NON-GAAP CONSTANT CURRENCY BASIS Δ %GAAP IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) NON-GAAP CONSTANT CURRENCY BASIS NET SALES BY SEGMENT: (2) AMERICAS $ 820,121 $ 665,423 $ (62) $ 665,361 23% 23% EMEA 164,778 138,106 1,141 139,247 19% 18% APAC 35,831 32,465 (1,630) 30,835 10% 16% TOTAL COMPANY $ 1,020,730 $ 835,994 $ (551) $ 835,443 22% 22% (in thousands) Q1 2024 Q1 2023 GAAP Δ % NON-GAAP CONSTANT CURRENCY BASIS Δ % GAAP IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) NON-GAAP CONSTANT CURRENCY BASIS NET SALES BY BRAND: ABERCROMBIE (3) $ 571,513 $ 436,044 $ (572) $ 435,472 31% 31% HOLLISTER (4) 449,217 399,950 21 399,971 12% 12% TOTAL COMPANY $ 1,020,730 $ 835,994 $ (551) $ 835,443 22% 22% RECONCILIATION OF GAAP TO NON-GAAP RESULTS 27 NET SALES BY GEOGRAPHY AND BRAND
APPENDIX RECONCILIATION OF GAAP TO NON-GAAP RESULTS NET SALES Q1 2024 Q1 2023 Δ % GAAP $1,020,730 $835,994 22% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — (551) 0% NON-GAAP CONSTANT CURRENCY BASIS $1,020,730 $835,443 22% GROSS PROFIT Q1 2024 Q1 2023 Δ BPS (2) GAAP $677,457 $509,794 540 IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 930 (10) NON-GAAP CONSTANT CURRENCY BASIS $677,457 $510,724 530 OPERATING INCOME Q1 2024 Q1 2023 Δ BPS (2) GAAP $129,849 $34,008 860 EXCLUDED ITEMS (3) — (4,436) 50 ADJUSTED NON-GAAP $129,849 $38,444 810 IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 463 (10) ADJUSTED NON-GAAP CONSTANT CURRENCY BASIS $129,849 $38,907 800 NET INCOME PER DILUTED SHARE Q1 2024 Q1 2023 Δ $ GAAP $2.14 $0.32 $1.82 EXCLUDED ITEMS, NET OF TAX (3) — (0.06) 0.06 ADJUSTED NON-GAAP $2.14 $0.39 $1.75 IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — — — ADJUSTED NON-GAAP CONSTANT CURRENCY BASIS $2.14 $0.39 $1.75 (1) The impact from foreign currency is determined by applying current period exchange rates to prior year results and is net of the year-over-year impact from hedging. The per diluted share impact from foreign currency is calculated using a 26% tax rate. (2) The estimated basis point impact has been rounded based on the percentage change. (3) Excluded items consist of pre-tax store and other asset impairment charges. 28 STATEMENT OF OPERATIONS
REFINITIV STREETEVENTS EDITED TRANSCRIPT ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call EVENT DATE/TIME: MAY 29, 2024 / 12:30PM GMT REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.
C O R P O R A T E P A R T I C I P A N T S Fran Horowitz Abercrombie & Fitch Co. - CEO & Director Mohit Gupta Scott D. Lipesky Abercrombie & Fitch Co. - Executive VP, COO & CFO C O N F E R E N C E C A L L P A R T I C I P A N T S Alexandra Ann Straton Morgan Stanley, Research Division - America Equity Analyst Dana Lauren Telsey Telsey Advisory Group LLC - CEO & Chief Research Officer Janet Joseph Kloppenburg JJK Research Associates, Inc. - President Kelly Crago Citigroup Inc., Research Division - VP Marni Shapiro The Retail Tracker - Co-Founder Matthew Robert Boss JPMorgan Chase & Co, Research Division - MD & Senior Analyst Mauricio Serna Vega UBS Investment Bank, Research Division - Analyst P R E S E N T A T I O N Operator Good day, and thank you for standing by. Welcome to the Abercrombie & Fitch Fourth Quarter Fiscal Year 2023 Earnings Call. Today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to Mo Gupta. Please go ahead. Mohit Gupta Thank you. Good morning, and welcome to our first quarter 2024 earnings call. Joining me are Fran Horowitz, Chief Executive Officer and Scott Lipesky, Chief Financial Officer and Chief Operating Officer. Earlier this morning, we issued our first quarter earnings release, which is available on our website at corporate.abercrombie.com under the Investors section. Also available on our website is an investor presentation. Keep in mind that we will make certain forward-looking statements on the call. These statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions we mentioned today. These factors and uncertainties are discussed in our reports and filings with the Securities and Exchange Commission. In addition, we will be referring to certain non-GAAP financial measures during the call. Additional details and reconciliations of GAAP to adjusted non-GAAP financial measures are included in the release and investor presentation issued earlier this morning. Finally, references to Abercrombie Brands include Abercrombie & Fitch and abercrombie kids, and references to Hollister brands includes Hollister and Gilly Hicks. With that, I'll turn the call over to Fran. Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director Thanks, Mo. Good morning, and thank you for joining us to discuss what has been a very busy and productive start to 2024. And I'm happy to report that our sales trend remained strong throughout the first quarter, exceeding the expectations we provided in early March. Net sales of $1 billion and operating income of $130 million were both the best first quarter results in the history of the company. First quarter sales grew 22% year-over-year with broad-based growth across regions, brands and direct channels. 2 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
I'm also pleased to share that women's and men's divisions grew across our brand families in the quarter. We entered the year in a clean inventory position and maintained that discipline through Q1. Allowing for fewer promotions, which contributed to gross profit rate improvement. With a strong top line and improved gross profit rate, we achieved a 12.7% operating margin for the quarter, while also funding strategic investments across marketing, digital and technology and global expansion. These are simply outstanding results, adding yet another proof point of our global team's ability to execute at the highest standard. Always looking forward, we are laser-focused on showing continued growth through 2024, which is reflected in our increased full year net sales growth and operating margin outlook. Before I dive deeper into the first quarter, I'd like to zoom out and share more context on where we are in our journey. Fiscal 2023 was a defining year for our company. We delivered 16% revenue growth and operating margin over 11%. These results would not have been possible without the hard work and dedication of our team to transform our operating model and our playbook. While there is no finish line, we have developed an extensive global platform to support our brands leveraging strong inventory discipline and agile chase capabilities. We have further strengthened our operations by building our teams and modernizing our capabilities across digital and technology, stores and data analytics. We've leveraged these strengths to support and grow our global brands through 2023, while also improving the gross profit rate on reduced promotions and clearance selling. We further defined what each of our brands stand for and the customers they serve, presenting a significant global addressable market opportunity they are capitalizing on with relevant assortments and compelling brand voice. Both brand families are contributing nicely to our business results while expanding our customer base to increase marketing spend and improved omnichannel customer experience. Abercrombie Brands issued a double-digit net sales growth CAGR from 2019 and Hollister Brands returned to growth in 2023 in the midst of a challenging teen apparel environment. We entered 2024 with momentum and the objective of producing sustainable, profitable growth. We believe we have the pieces in place to deliver global brand growth this year, and our first quarter results are further evidence that we are off to a strong start. Diving into those results. We saw great progress across regions in Q1. Starting with the Americas business, which continued to show strength of 23% net sales growth. Outside of the Americas, I am proud of how our teams are executing in EMEA and APAC. In EMEA, we delivered 19% net sales growth led by U.K. and Germany. Our teams continue to localize our assortments and operations, and we've made strategic investments in marketing to drive brand awareness in these 2 key EMEA markets. We saw great digital engagement and conversion from new marketing campaigns, along with the benefit of new store experiences, particularly in Greater London. In APAC, we saw similar themes play out with 10% net sales growth led by China. We believe we have more runway ahead in both regions, and the first quarter was another proof point that our playbook is working. Shifting to the brand side and continuing the theme of broad-based growth. Both brand families delivered double-digit net sales growth. Abercrombie Brand's momentum continued, growing 31% on top of 14% growth in the first quarter of 2023. Both women's and men's contributed nicely to this result, showing balanced growth across categories. Both AUR and units continue to contribute nicely to growth. With AUR, improvement coming from category and style mix as well as reduced promotions. Customer acquisition remains a key focus for the brand, and we increased global marketing investments year-over-year to help build community and brand affinity. Abercrombie's results this quarter were driven in part by our continued focus on building and growing concepts within the brand to speak to customers' needs in a relevant authentic way. This quarter, we launched the Wedding Shop. A curated set of dresses and other apparel to outfit our customers from bachelorette parties to honeymoons to the big day itself. The Wedding Shop is a successful extension of our best dressed guest collection, which has been a part of the assortment for a few years. We led The Wedding Shop with a mix of styles, including new fashion items while also showcasing product that has performed and grown over several seasons. Congratulations to our team on a great initial reception. I'm excited by the continued opportunities for The Wedding Shop as we approach peak wedding season this summer and into the fall. 3 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
At Hollister, we saw progress with both women's and men's contributing to the 12% first quarter sales growth an acceleration from the 9% we saw in the fourth quarter of 2023. The men's division returned to growth, led by fleece tops and bottoms as well as pants, which all did well throughout the quarter. Women's contributed nicely to the growth acceleration with balance across categories. We increased Hollister marketing in the back half of 2023, and we also increased year-over-year investment this quarter. We saw improved traffic trends across both stores and digital channels, which helped show teen customers the changes we have made to the assortment. Importantly, the Hollister team continue to seek opportunities to reduce discounts and promotions while tightly managing inventory levels, further supporting AUR and gross profit rate expansion in the quarter, a really great effort on all fronts. And we enter the second quarter with inventory flexibility and momentum as we build to the back-to-school season later in the quarter. Across brands, regions and genders, we had an outstanding start to the year carrying great momentum from 2023 to produce record first quarter results. We did this while also investing globally to attract and retain our target customers, further strengthening our brand portfolio. Our team remains focused on following up a defining fiscal 2023, leveraging the power of our brands and operating model to deliver sustainable long-term growth and profitability. After an impressive record-setting first quarter and a strong start to Q2 across regions and brands, we have a high degree of confidence that we can accomplish our 2024 goals while also building and investing in the tools, technology and people to realize the long-term ambitions we've previously shared. And with that, I'll hand it over to Scott. Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Thanks, Fran. I'd like to thank our global teams for their continued strong execution throughout the first quarter, helping to drive record first quarter net sales and operating income. For the quarter, total net sales of $1 billion were up 22% compared to last year with growth across regions and brands. This is the first time in the history of the company, we have delivered sales of $1 billion in the first quarter. On a reported basis, we saw a 120 basis point benefit from the calendar shift from the 53rd week in 2023. Comparable sales growth for the quarter was 21%. By channel, we saw double-digit growth in both stores and digital. On a regional basis, we delivered double-digit growth in each region. Net sales grew 23% in the Americas, 19% in EMEA and 10% in APAC. On a comp basis, sales grew 21% in the Americas, 23% in EMEA and 22% in APAC. In the Americas, we saw balanced growth across markets. In EMEA, the growth was driven by the U.K. and Germany, 2 markets where we are accelerating our increasingly localized marketing efforts. In APAC, growth was driven by China. In APAC, we saw a larger spread from comps to net sales growth, which was primarily driven by foreign currency and a few store closures. From a brand perspective, Abercrombie Brands delivered another stellar quarter of growth at 31% and while Hollister brands grew 12%. On a comp basis, Abercrombie grew 29% and Hollister grew 13%. Taking a look at gross profits. We delivered record first quarter gross profit dollars, driven by both a strong top line and a healthy gross profit rate. The gross profit rate for the quarter was 66.4% up 540 basis points compared to the 61% rate in 2023. We saw year-over-year benefits from lower cotton costs and slightly lower freight costs. We also saw benefits from lower discounts and clearance selling across brands on continued strong inventory management. We leveraged our chase capabilities across brands during the quarter, and each brand was in a position to chase entering the second quarter. Moving on to expenses. Operating expense, excluding other operating income, was $550 million for the quarter compared to adjusted operating expense of $474 million last year. On top of higher variable expenses on strong sales growth, the year-over-year increase was driven by inflation and increased investments in marketing, digital and technology and people. For marketing, the first quarter spend was around 5% of sales compared to around 4% in the first quarter of last year. As a reminder, we pulled back on Hollister marketing last year as we worked through our assortment and brand projection evolution. Even after these investments, we delivered solid expense leverage with operating expenses as a percentage of sales of 53.8% compared to 57.3% last year. Operating income was $130 million or 12.7% of sales compared to adjusted operating income of $38 million or 4.6% of sales last year. 4 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
Net income per diluted share was $2.14 compared to adjusted net income per diluted share of $0.39 last year. This quarter, we've introduced an additional performance measure of non-GAAP EBITDA to our results. For Q1, EBITDA totaled $168 million or 16% of sales compared to adjusted EBITDA of $74 million or 9% of sales last year. Please refer to our press release for disclosures on EBITDA, adjusted EBITDA and other non-GAAP metrics. On the balance sheet, we ended the quarter with cash of $864 million and liquidity of approximately $1.2 billion. We delivered operating cash flow of $95 million and had $39 million of capital expenditures. We repurchased $15 million worth of shares, ending the quarter with $217 million remaining on our current share repurchase authorization. We also purchased $9 million of senior secured notes at par value on the open market, ending the quarter with $214 million of notes outstanding. In the second quarter, we will continue to focus on debt and share repurchases as the primary options to put excess cash to work pending business performance, share price and our ability to increase investments in the business. For share repurchases, we continue to expect to buy back shares to offset dilution from stock compensation at a minimum. On the store fleet, we ended the first quarter with 753 stores. During the quarter, we opened one new store, remodeled 13 stores and closed 13 stores. For the full year, we have updated and increased our store investment plan to deliver approximately 60 new stores, 65 remodels and rightsizes and 40 closures. Moving on to our expectations for the rest of fiscal 2024. From a total company perspective, we had a strong start to the year, delivering record Q1 results. As we said last quarter, we believe we are executing well in those areas in our control across product, voice and experience. For the second quarter, we expect net sales growth in the mid-teens compared to the second quarter 2023 level of $935 million. This expectation includes a year-over-year benefit of around $30 million or 320 basis points for the quarter due to the calendar shift from the 53rd week in 2023 as we pick up a peak back-to-school week in Q2 this year compared to Q3 last year. We expect growth across regions and brands and a slight adverse impact from foreign currency. We expect operating margin to be in the range of 13% to 14% compared to 9.6% in 2023. We expect the year-over-year operating margin improvement to be primarily driven by a higher gross profit rate on continued year-over-year cotton benefits and some AUR growth, combined with modest operating expense leverage. And we expect an effective tax rate in the mid-20s with the rate being sensitive to the jurisdictional mix and level of income. For the full year, we are increasing our expectations primarily based on the actual results from the first quarter and the outlook for the second quarter. We are leaving the back half outlook consistent with the levels implied in the outlook given in March. We expect net sales growth of around 10% from the 2023 level of approximately $4.3 billion, an increase from the previous outlook of up 4% to 6%. This outlook continues to include an adverse impact of around $50 million from the loss of the 53rd week in 2023. We also expect the growth rate to be higher in the first half of the year, partially due to the calendar shifts from the 53rd week in 2023 and the loss of the 53rd week in the fourth quarter of 2024 compared to 2023. We've included a table in the press release to provide more detail on expected sales and comparative growth impacts by quarter and for the full year. For operating margin, we expect to be around 14%, an increase in the previous outlook of around 12%. We expect the year-over-year improvement to be driven primarily by gross profit rate expansion from the combination of lower cotton costs and AUR expansion on lower promotions and clearance selling slightly offset by higher freight costs. Based on the updated first half expectations, we also now expect some full year expense leverage that will contribute to operating margin. We expect to continue to use our Agile funding process to find ways to increase investments over the remainder of the year. We expect an effective tax rate in the mid- to high 20s and capital expenditures of approximately $170 million. 5 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
To close it out, there was another quarter of progress as we delivered strong financial results, managed inventory well and continue to strengthen the foundation of our company. We have plenty of hard work ahead, but we believe each of our brands is in a position to deliver for our customers in the summer selling season, keeping us on track to deliver sustainable, profitable growth this year. Operator, we are now ready for questions. Q U E S T I O N S A N D A N S W E R S Operator (Operator Instructions) And our first question comes from Dana Telsey of Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC - CEO & Chief Research Officer Congratulations on the terrific results. Fran, as you think about the merchandise assortment for each of the brands, key drivers for men and women, did you see men improve? What are you seeing from women? How is the denim impact? And then, Scott, as you think about the drivers of gross margin, what was the AUR uptick in the first quarter? How are you thinking of it going forward in addition to the benefit from any lower freight and raw material costs? Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director Dana, so I'll kick off on the first one. It was a pretty incredible quarter. So super excited to have reported a record quarter for us. And what's great about it is that it was very balanced and driven across both brands across genders, channels, regions, et cetera. So what we did see was a very balanced growth by category. The probably biggest standout I would talk about would be Abercrombie women's dresses. The launch of this Wedding Shop has clearly exceeded our expectations from the beginning. And the wedding season hasn't even technically started yet, right? We got out ahead of that and got that in early. The men's Abercrombie business also a very strong, big contributor . We are super excited to see the Guys Hollister business returned positive comps that helped drive that acceleration in total to up 12. In denim, specifically, we are seeing some new trends happening in denim, which is exciting. The rise is actually going back down a little bit. So this low-rise baggy is coming in pretty strong. Wide-leg jeans are happening. But the biggest lesson that we learned from COVID and the word that everybody knows on campus I love, which is balance. So denim is very important to our business. It always has been, but striking a balance on our assortments is most important. Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Dana, I'll pick up the gross margin side. So yes, nice gross margin performance in Q1, so up around 540 basis points to last year. A couple of factors, and we talked about the cotton we're finally there. It's been a couple of years. We've been talking about that cotton drag. We've gotten to the good side of it. So that was a nice pickup here in Q1. And then we did see some AUR benefit in Q1. And it came from reduced promotions as well as less clearance selling. Obviously, with the top line results, strong above our expectations. We are chasing throughout the quarter, a good place to be. So we were able to pull back on some promotions and then reduce that clearance selling. Thinking about the go forward, expect cotton to be a benefit here again in Q2 and then just kind of moderate in the back half. 6 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
Thinking about freight specifically, a little bit of a help in Q1. That will flip to a little bit of a [hurt], I think, Q2 through the end of the year. We've seen those rates pick up a little bit more recently. On the ocean side, and then we're keeping our eyes on the air rates. So a little bit of friction coming there. All that said, expect to see that gross profit rate expansion this year, and that will be kind of a key driver of our operating margin expansion that we put out there, that 14% versus that 9.6% last year. Operator And our next question will be coming from Matthew Boss of JPMorgan. Matthew Robert Boss - JPMorgan Chase & Co, Research Division - MD & Senior Analyst Congrats on another nice quarter. So 2-part question. Fran, could you elaborate on drivers of the same-store sales acceleration that you're seeing at Hollister across men's as well as women's. And any change in current business momentum across the organization? And then, Scott, just maybe relative to 2024 operating margin guide of 14%. What do you see as the right long-term margin target for the business? Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director Matt, I'll kick off. So Hollister, we were super excited to see the men's business turn around a bit faster than we had anticipated. I mean we've been as you know, working hard on testing and chasing and reading into that business. We've seen a lot of success in the bottoms business over the past several quarters. And I would say this season, the biggest accelerator were the tops businesses. Excited to see that there's a proportion happening and changing a bit in guys. They're wearing these baggier jeans that involve looser tops different proportions. So that was probably the biggest change in the accelerator. But overall, Hollister and Abercrombie, nice success across the genders in a pretty well-balanced category business. Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Matt, on the operating margin, yes, so great to put that 14% out here for the year, up from the 12% original outlook. Really nice growth in the first quarter, seeing that growth continue into the second quarter here. Not talking about long term at this point. We've talked back in our Investor Day about getting to that double-digit operating margin, that's been proven by some of our peers in the industry, we're there, which is exciting. But right now, we've been focused, 2024 is about sustainable profitable growth. And so far, so good. As we've come through the first quarter and into the second quarter, and that's our focus right now. We'll talk a little bit more about the long term in the future. Operator And our next question will be coming from Marni Shapiro of the Retail Tracker. Marni Shapiro - The Retail Tracker - Co-Founder Congratulations. Could you talk a little bit about the marketing side? You've done an exceptional job on the Abercrombie side as the brand is coming back to strength and continues to put growth on top of growth. Now that Hollister on solid ground, will you follow that same kind of path, even though it's a younger customer. Could you talk a little bit about what that could look like and what the spend will look like over the next couple of months? 7 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director So what's exciting about our current marketing spend is that we're actually with the strength of the brands able to spend that marketing over the bottom middle and top of funnel. So to your point, it was a build in Abercrombie over the years, starting in the bottom in the middle and now doing lots of top of funnel to make sure that we acquire those customers. We will follow that same pattern for Hollister. We've started to reinvest, as we mentioned earlier in the script today. Just last week, we had a terrific top-of-funnel event for Hollister, a Festival that we did at one of the schools out in California to really bring brand awareness. So we will definitely follow a similar playbook, but one that is focused on the teen consumer. Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Marni, as we think about spend over the next few months, same story. We like this 5% of sales. It's something we talked about here for a couple of years. The great thing is with the top line growing, that 5% equals more dollars. So we're putting more dollars to work. It is good to see Hollister kind of turn that back on. We slowed that marketing a little bit in the front half last year as we were getting that assortment right and getting that brand projection right. We feel both of those things are in a good place. So we're continuing to accelerate that Hollister marketing like Fran said up and down the funnel, which is great. you can drive the business short term, but you also want to drive that business long term, and we're super focused on customer acquisition and getting people into our brands. We love our offering at this point. So we'll continue to get that spend around that 5% and find more customers. Operator Our next question will be coming from Alex Straton of Morgan Stanley. Alexandra Ann Straton - Morgan Stanley, Research Division - America Equity Analyst Great. Just a couple here. One, just on the full year sales guidance raise, it looks like you guys have a pretty big back half slowdown built in. Is that just a function of compares? Or can you talk to us about the rationale there? And then secondly, just on Asia Pac, can you just elaborate on what you're seeing there for the brand in that geography as well as your view on the consumer there. Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director Let's -- Go ahead, Scott. Let's kick off with that. Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Yes, I'll go with the first one. So let's talk about the full year guide. Yes. So obviously, a strong start to Q1. It was amazing to deliver $1 billion in revenue for the Q1. We've never done that as a company. So really nice to see better balance across the quarters for the year. So super exciting start, good start to Q2 here. And then thinking about Q2, it's more back weighted. We'll see that build in the back half of the quarter for Hollister and Kids. So tons to learn as we go through the next couple of months into that build. And so as we think about the back half, sitting here today, there's still a lot of uncertainty out there, lots of learnings for us coming here in Q2. We're excited to get through back-to-school and we'll know a lot more in August, and then we'll talk about the back half once we get there. 8 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director Yes. And just real quick on the APAC piece. I know you know this Alex. But it's a very small piece of our business. It's probably about 3% at this point in time, but we were excited to deliver 10% net sales growth. The team is hard at work, getting close to that customer, localizing our assortments, making sure that our promotions are lined up with the calendar appropriately and we're going to continue to believe and invest in that region. Operator Our next question will be coming from Mauricio Serna of UBS. Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst Great. Congratulations on our results. Just a few questions for me. Maybe could you talk about in Q1, what you're seeing in terms of customer acquisition in Abercrombie, are you seeing like any new customers coming into the brand specifically age cohort or anything like that? And maybe also, could you talk about the playbook (inaudible) more details about the playbook implemented in international markets? How are you seeing that in -- like what are you doing in U.K. and Germany to drive that strong growth? And then just finally, just I was wondering like for Q2 -- sorry, for the second half of the year, are you baking any expectation of OpEx leverage considering that there's an implied slowdown in the sales guidance? Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director All right. So back up to the top, Mauricio. Customer Acquisition at A&F. So there's a lot of exciting things happening in the A&F brand. And as we continue to launch all of these new concepts, we are definitely seeing new consumers coming into the brand. We saw that through 2023 as an example, with all of our licensing that we did as an example with the NFL. For the first quarter, this launch of the Wedding Shop has brought in lots of new customers. It's also opportunity to add value to the customers that we already have. It was built off an extension of the best dressed guest collection that we had already seen success in. So we are seeing exciting acquisition by customer. As we mentioned just a few minutes ago, we are investing in top of funnel, which is certainly helping to grow brand awareness. For the second question, our playbook is something that we are definitely exporting outside of North America. We had a terrific quarter in EMEA. In fact, we were just in London last week. We had my first international Board meeting in London with the team, and we're really excited about the opportunity that we see there. We are focused on U.K. and Germany and exporting that playbook and making sure that we stay close to the customer. It's about aligning that product voice and experience, which is working very well for us in North America and is now working well for us, particularly in those 2 countries. I'll hand the third question over to Scott. Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Give you a break. All right. So OpEx leverage in the second half. The outlook that's out there that implied outlook from our last one, there'd be minimal OpEx leverage. As we think about approaching the back half as we're coming through Q1 into Q2, we're making investments. Number one, we're keeping that inventory agile and quick and using the chase model. We're also making investments in marketing. We're making investments in stores. 9 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
We have a good store plan here for the back half strong store plan for the back half with remodels, refreshes, new stores coming in as well as that end-to-end customer journey. So excited about the investments that we're putting into place and optimistic that will keep our growth trajectory going into the future. Mauricio Serna Vega - UBS Investment Bank, Research Division - Analyst Understood. And Congratulations. Operator And our next question will come from La -- excuse me, Paul Lejuez of Citi. Kelly Crago - Citigroup Inc., Research Division - VP This is Kelly for Paul. First one is for Scott. Just to follow up on the AURs. Did you say what AURs were up in the quarter? I think your plan was for flat. So just curious how AUR has performed? And any color by brand and how -- and what your assumption is for AURs for the year now? And then secondly, for Fran, I'm just curious on new customer growth at Hollister. I know previously you said Hollister was somewhat more limited by just the age range of the Hollister customer relative to ANS. Just curious if any of your thoughts have changed about what the ultimate customer acquisition opportunity is there. Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO All right. Let's pick up the first one on AUR. So yes, nice growth in AUR. I didn't give a basis points impact there for Q1, but really saw AUR growth across brands. And we continue to see that mix benefit in Abercrombie. We talked about the dress shop. That launch here in the quarter, late, maybe first quarter, really nice pick up there. So we're seeing a little bit of a mix benefit in AUR. But again, that doesn't exactly flow through to gross margin. When you think about those gross margin impacts, nice pickup from just slightly reduced promotions as well as lower clearance selling. Again, we were chasing inventory throughout the quarter. The assortments have been well received, specifically that spring, summer assortment has performed well across those key categories. So we've been able to pull back promotions just a bit. So as we think about Q2 and going forward, expect to see some AUR pick up based on those trends come out of Q1 and Q2. And then for the back half, sitting here today, we'll assume moderating AUR growth in the back half, and we'll pick that up when we talk in August. Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director Yes. And then just for clarity on the second question, Kelly. I think what we said was that the addressable market for Abercrombie is a bit larger than the addressable market for Hollister because it's a teen-specific consumer as opposed to now what we look at for Abercrombie, which is coming into the brand in the early 20s and staying well past their 40s. So there's always opportunity for new customers. And the fact that we are now investing increased marketing across all parts of the funnel will always help us bring new customers in. There's lots of exciting things happening within the brand. I just mentioned a few minutes ago from the top of funnel activities that we're doing through the high schools. So new customers are always an opportunity. It's just the addressable market specifically that was a bit different between the 2 brands. 10 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Yes. Kelly, just to add on for Hollister. When you think about that customer, very different than the Abercrombie customer. A lot of transactions happen in store. But they start the product search online. So for us, it's about a balanced investment in store locations. Obviously, we have a lot more stores for Hollister than Abercrombie because of that fact. But we're also increasing that digital marketing for Hollister because there's so much discovery that happens with that teen before they come in store. So looking at that kind of store and rent plus marketing is our way to acquire customers in Hollister. Operator And our next question will be coming from Janet Kloppenburg of JJK Research Associates. Janet Joseph Kloppenburg - JJK Research Associates, Inc. - President Congratulations. It's a really nice quarter. I wondered about the -- you're comparing here still, against high promotions and clearance last year at Hollister. And I'm wondering if you expect that to be a benefit for the year. And also, when you think about the international business, I think that you're in early innings there in terms of recovery trend. So I wondered if you thought that comps could be maintained at the kind of level we saw in the first quarter. And just lastly, on brand extensions with The Wedding Dress Shop do you see opportunities for additional brand extensions at both brands as we look forward? Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Janet, let me get the first 1 out of the way. So when you think about those promos at Hollister, yes, if we look back into history, that brand was over-inventoried coming through 2022 after we saw that drop off in kind of the mid-2022 range. we cleared through most of that in 2022, a little bit of an overhang there in Q1 of '23. So got that benefit here in Q1 of 2024. And that benefit moderates as we go forward, I would say, like I just said, in kind of second quarter, we'll see some benefit. We're going to assume it's going to moderate in the back half. The great thing is like kind of bringing it current and into the present. All brands are chasing. We're chasing into the summer at this point in late summer into back-to-school. It's an exciting place to be for each brand, and that gives us the chance to hold the AUR or maybe get some growth. Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director Yes. Regarding the International business, sorry, we're very excited to report, obviously, nice progress in both APAC and EMEA. We've talked for a few quarters now actually for a couple of years now about building those teams, and we're really building the muscle. Exploring this playbook is working. The opportunity to start investing in marketing is working. And all of the comps of that is built into the outlook that we put out today. And then regarding brand extensions, I mean, that is what we do. The team is busy and hard at work always listening to the customer, trying to see what opportunities are out there. That The Wedding Dress Shop is clearly an opportunity that came from our customer telling us that they spend long weekends away with their friends. I mean these weddings have become 2, 3, 4-day events where they need outfits throughout the weekend for that. We're providing those now actually for both men and women, which is exciting. So we're going to continue to stay focused on listening to them and hearing what the opportunities are, and there will certainly be new things as we move ahead. 11 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call
Janet Joseph Kloppenburg - JJK Research Associates, Inc. - President Okay. One more, if I could. Scott, I was wondering is there an outlook given -- the sales acceleration for the back half, is there an outlook for SG&A to leverage in that? I know you said for the year, it could leverage. What would that pace look like in the back half of the year? Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Yes. At this point, with the implied outlook out there, we wouldn't see much SG&A leverage in the back half. It would be more front half weighted. Obviously, the growth rate is higher here in the front half versus that implied in the back half. So a lot of that full year leverage would come from the front half. Janet Joseph Kloppenburg - JJK Research Associates, Inc. - President But not deleverage in the back half? Scott D. Lipesky - Abercrombie & Fitch Co. - Executive VP, COO & CFO Yes, we'll see. We'll kind of bounce around leverage, deleverage, basis points here and there. Operator I would now like to turn the conference back to Fran for closing remarks. Fran Horowitz - Abercrombie & Fitch Co. - CEO & Director Thanks, everyone, for joining the call today, and we look forward to providing some more updates in the future. Operator And this concludes today's conference call. Thank you for participating. You may now disconnect. D I S C L A I M E R Refinitiv reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES REFINITIV OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. ©2024, Refinitiv. All Rights Reserved. 15986517-2024-05-29T16:21:47.123 12 REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us ©2024 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 29, 2024 / 12:30PM, ANF.N - Q1 2024 Abercrombie & Fitch Co Earnings Call