New Albany, Ohio,
May 26, 2016: Abercrombie & Fitch Co. (NYSE:
ANF) today reported a GAAP net loss per diluted share of $0.59 for
the first quarter ended April 30, 2016, compared to a GAAP net loss
per diluted share of $0.91, or an adjusted non-GAAP loss per
diluted share of $0.53 excluding certain items, for the first
quarter last year. GAAP net loss per diluted share for the
quarter was adversely impacted by approximately $0.05 related to
changes in foreign currency exchange rates compared to the prior
year.
A description of the use of
non-GAAP financial measures and a schedule reconciling GAAP
financial measures to adjusted non-GAAP financial measures
accompanies this release. The company is not reporting any
non-GAAP financial measures for the quarter ended April 30,
2016.
Arthur Martinez, Executive
Chairman, said:
"Our results for the quarter
reflect significant traffic headwinds, particularly in
international markets and in our U.S. flagship and tourist stores,
resulting in negative comparable sales. However, in the face of
these headwinds, we were encouraged by our U.S. business, where
comparable sales improved in the Hollister brand, and gross margin
rate increased meaningfully for both brands. Overall, our business
remains well managed in these challenging times, with our
assortment and customer-centricity efforts driving improved
conversion, and expense and inventory well controlled.
We expect the second quarter to
remain challenging, but to see better results in the back half of
the year as our assortments continue to improve and we see returns
from significant investments in marketing, store management and
omnichannel. In addition, with the new brand presidents and
other key roles now filled, we have a strong team in place to drive
our brands forward and capitalize on the many opportunities we see
ahead of us."
First Quarter Sales
Results
Net sales for the first quarter of
$685.5 million were down 3% over last year, with comparable sales
for the first quarter down 4%.
Fiscal 2016 Comparable
Sales Summary (1) |
Brand |
|
Geography |
|
|
First Quarter |
|
|
|
First Quarter |
Abercrombie(2) |
|
(8)% |
|
United
States |
|
(2)% |
Hollister |
|
0% |
|
International |
|
(7)% |
Total
Company |
|
(4)% |
|
Total
Company |
|
(4)% |
(1) Comparable
sales are calculated on a constant currency basis.
(2) Abercrombie
includes the Abercrombie & Fitch and abercrombie kids
brands.
By brand, net sales for the first
quarter decreased 5% to $323.3 million for Abercrombie and
decreased 2% to $362.1 million for Hollister over last year.
By geography, net sales for the
first quarter decreased 5% to $425.4 million in the U.S. and were
approximately flat at $260.1 million in international markets over
last year.
Direct-to-consumer and omnichannel
sales grew to approximately 24% of total company net sales for the
first quarter, compared to approximately 23% of total company net
sales last year.
Additional First
Quarter Results Commentary
The gross profit rate for the
first quarter was 62.1%, 410 basis points higher than last
year. Excluding certain items last year, the gross profit
rate reflected an improvement of 100 basis points on a constant
currency basis, primarily due to higher average unit retails,
partially offset by higher average unit costs.
Stores and distribution expense
for the first quarter was $369.1 million, down from $391.6 million
last year, primarily due to expense reduction efforts and the
realization of savings on lower sales, partially offset by higher
direct-to-consumer expense. Excluding certain items last
year, stores and distribution expense decreased $17.8 million.
Marketing, general and
administrative expense for the first quarter was $114.4 million, up
from $107.5 million last year, primarily due to higher legal,
marketing and other expenses. Excluding certain items last
year, marketing, general and administrative expense increased $8.7
million.
Excluded from adjusted results for
the first quarter last year were restructuring benefits of $1.6
million and asset impairment charges of $6.1 million.
Net other operating income for the
first quarter was $2.9 million, compared to net other operating
income of $2.0 million last year.
Operating loss for the first
quarter was $54.9 million, compared to $90.2 million for the first
quarter last year. Excluding certain items last year,
operating loss increased $2.6 million.
The effective tax rate for the
first quarter was 35%, compared to 33%, or 35% excluding certain
items, last year.
Net loss attributable to
Abercrombie & Fitch Co. for the first quarter was $39.6 million
compared to $63.2 million for the first quarter last year.
Excluding certain items last year, net loss attributable to
Abercrombie & Fitch Co. increased $2.4 million.
Other
Developments
As previously announced, on May
20, 2016 the Board of Directors declared a quarterly cash dividend
of $0.20 per share on the Class A Common Stock of Abercrombie &
Fitch Co., payable on June 13, 2016 to stockholders of record at
the close of business on June 3, 2016.
Fiscal 2016
Outlook
For fiscal 2016, with references
to last year being on an adjusted non-GAAP basis, the company now
expects:
-
Comparable sales to remain challenging in the
second quarter, but to improve in the second half of the
year
-
Adverse effects from foreign currency on sales
of approximately $10 million and on operating income of
approximately $15 million, including the year-over-year impact from
hedging
-
A gross margin rate up slightly to last year's
rate of 61.9%, but down modestly in the second quarter
-
Operating expense dollars to be approximately
flat to last year, with investments in marketing, store management
and omnichannel offset by savings from expense reduction
efforts. Based on the timing of these investments, the
company expects operating expense dollars in the second quarter to
be up 2% to 3% over last year
-
An effective tax rate in the mid-to-upper
30s
-
A weighted average diluted share count of
approximately 68 million shares, excluding the effect of potential
share buybacks
The company continues to expect
capital expenditures in the range of $150 million to $175 million
for the full year.
The company plans to open
approximately 15 new stores in fiscal 2016, including approximately
10 in international markets, primarily China, and approximately
five in the U.S. The company now plans to open six new outlet
stores, primarily in the U.S. In addition, the company
anticipates closing up to 60 stores in the U.S. during the fiscal
year through natural lease expirations.
Excluded from the company's
outlook are the effects of certain potential items, including, but
not limited to, insurance recoveries, impairments and other
items.
An investor presentation of first
quarter results will be available in the "Investors" section of the
company's website at www.abercrombie.com at approximately 8:00 AM,
Eastern Daylight Time, today.
About Abercrombie
& Fitch Co.
Abercrombie &
Fitch Co. is a leading global specialty retailer of high-quality,
casual apparel for Men, Women and kids with an active, youthful
lifestyle under its Abercrombie & Fitch, abercrombie kids and
Hollister Co. brands. At the end of the first quarter, the
company operated 745 stores in the United States and 180 stores
across Canada, Europe, Asia and the Middle East. The company also
operates e-commerce websites at www.abercrombie.com,
www.abercrombiekids.com and www.hollisterco.com.
Today at 8:30 AM,
Eastern Standard Time, the company will conduct a conference
call. Management will discuss the company's performance and
its plans for the future and will accept questions from
participants. To listen to the conference call, dial (888) 378-0332
and ask for the Abercrombie & Fitch Quarterly Call or go to
www.abercrombie.com. The international call-in number is
(719) 325-2291. This call will be recorded and made available
by dialing the replay number (888) 203-1112 or the international
number (719) 457-0820 followed by the conference ID number 634490
or through www.abercrombie.com.
Investor Contact: |
|
Media
Contact: |
|
|
|
Brian
Logan |
|
Michael Scheiner |
Abercrombie & Fitch |
|
Abercrombie & Fitch |
(614)
283-6877 |
|
(614)
283-6192 |
Investor_Relations@abercrombie.com |
|
Public_Relations@abercrombie.com |
SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
A&F cautions that any
forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) contained in this Press
Release or made by management or spokespeople of A&F involve
risks and uncertainties and are subject to change based on various
important factors, many of which may be beyond the company's
control. Words such as "estimate," "project," "plan," "believe,"
"expect," "anticipate," "intend," and similar expressions may
identify forward-looking statements. Except as may be required by
applicable law, we assume no obligation to publicly update or
revise our forward-looking statements. The following factors, in
addition to those included in the disclosure under the heading
"FORWARD-LOOKING STATEMENTS AND RISK FACTORS" in "ITEM 1A. RISK
FACTORS" of A&F's Annual Report on Form 10-K for the fiscal
year ended January 30, 2016, in some cases have affected,
and in the future could affect, the company's financial performance
and could cause actual results for Fiscal 2016 and beyond
to differ materially from those expressed or implied in any of the
forward-looking statements included in this Press Release or
otherwise made by management: changes in global economic and
financial conditions, and the resulting impact on consumer
confidence and consumer spending, as well as other changes in
consumer discretionary spending habits, could have a material
adverse effect on our business, results of operations and
liquidity; our inability to anticipate customer demand and changing
fashion trends and to manage our inventory commensurately could
adversely impact our sales levels and profitability; a significant
component of our growth strategy is international expansion, which
requires significant capital investment, the success of which is
dependent on a number of factors that could affect the
profitability of our international operations; direct-to-consumer
sales channels are a significant component of our growth strategy,
and the failure to successfully develop our position in these
channels could have an adverse impact on our results of operations;
our market share may be negatively impacted by increasing
competition and pricing pressures from companies with brands or
merchandise competitive with ours; we have currently suspended our
search for a new Chief Executive Officer and the continuance of our
interim governance structure may create uncertainty; our inability
to successfully implement our strategic plans could have a negative
impact on our growth and profitability; our failure to protect our
reputation could have a material adverse effect on our brands; our
business could suffer if our information technology systems are
disrupted or cease to operate effectively; we may be exposed to
risks and costs associated with cyber-attacks, credit card fraud
and identity theft that would cause us to incur unexpected expenses
and reputation loss; fluctuations in foreign currency exchange
rates could adversely impact our financial condition and results of
operations; fluctuations in the cost, availability and quality of
raw materials, labor and transportation, could cause manufacturing
delays and increase our costs; we depend upon independent third
parties for the manufacture and delivery of all our merchandise,
and a disruption of the manufacture or delivery of our merchandise
could result in lost sales and could increase our costs; our
ability to attract customers to our stores depends, in part, on the
success of the shopping malls or area attractions that our stores
are located in or around; we rely on the experience and skills of
our senior executive officers, the loss of whom could have a
material adverse effect on our business; our reliance on two
distribution centers domestically and third-party distribution
centers internationally makes us susceptible to disruptions or
adverse conditions affecting our distribution centers; our
litigation exposure could have a material adverse effect on our
financial condition and results of operations; our inability or
failure to adequately protect our trademarks could have a negative
impact on our brand image and limit our ability to penetrate new
markets; fluctuations in our tax obligations and effective tax rate
may result in volatility in our operating results; extreme weather
conditions and the seasonal nature of our business may cause net
sales to fluctuate and negatively impact our results of operations;
our facilities, systems and stores, as well as the facilities and
systems of our vendors and manufacturers, are vulnerable to natural
disasters, pandemic disease and other unexpected events, any of
which could result in an interruption to our business and adversely
affect our operating results; the impact of war or acts of
terrorism could have a material adverse effect on our operating
results and financial condition; changes in the regulatory or
compliance landscape could adversely affect our business and
results of operations; our Asset-Based Revolving Credit Agreement
and our Term Loan Agreement include restrictive covenants that
limit our flexibility in operating our business; and, compliance
with changing regulations and standards for accounting, corporate
governance and public disclosure could adversely affect our
business, results of operations and reported financial results.
Q1 2016 ER Financials
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Abercrombie & Fitch Co via Globenewswire
HUG#2015670
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