Progress on strategic initiatives;
3% net sales growth in Hollister and overall net sales down 4% in
an intense promotional environment
New Albany, Ohio,
May 25, 2017: Abercrombie & Fitch Co. (NYSE:
ANF) today reported a net loss per diluted share of $0.91 for the
first quarter ended April 29, 2017.
The net loss per diluted share for
the first quarter of fiscal 2017 included the following tax
impacts:
· a non-cash income tax charge of $0.14
per diluted share related to a change in share-based compensation
accounting standards, as previously announced;
· an adverse impact of approximately $0.05
per diluted share related to a lower than expected core tax rate,
which is sensitive at lower levels of full year earnings
Last year, the company reported a
net loss per diluted share of $0.59 for the first quarter ended
April 30, 2016.
In addition, the company reported
an operating loss of $69.9 million for the first quarter, which
included the adverse impact from year-over-year changes in foreign
currency exchange rates of approximately $5.3 million, compared to
an operating loss of $54.9 million last year.
Fran Horowitz, Chief Executive
Officer, said:
"We are encouraged by our progress
across all brands, particularly in March and April as a whole, in
an aggressively promotional environment. We are pleased with
the performance of our largest brand, Hollister, as our strategic
initiatives continue to deliver. Abercrombie comparable sales were
in line with our expectations as we continue to apply the learnings
from Hollister's successes. Our focus on closeness to our customers
enables us to adapt and execute better and faster, ensuring more
consistent delivery of the right product at the right time, with
the right brand voice, and through the right brand experience.
While we anticipate the second
quarter environment to remain promotional, we expect results to
improve further in the second half of the year, as we see returns
from our strategic investments in marketing and omnichannel.
The international roll-out of full omnichannel capabilities,
coupled with insights from multiple customer touchpoints online and
in-store, including our rapidly growing loyalty programs, means we
are better equipped to anticipate our customers' needs whenever,
wherever and however they choose to engage with our brands. We
continue to tightly manage costs and inventory, and focus on
execution to position our business for sustainable growth."
First Quarter Sales
Results
Net sales for the first quarter of
$661.1 million were down 4% over last year, with comparable sales
for the first quarter down 3%.
Fiscal 2017 Comparable Sales Summary (1) |
Brand |
|
Geography |
|
|
|
|
First Quarter |
|
|
|
First Quarter |
Hollister(2) |
|
3% |
|
United
States |
|
(3)% |
Abercrombie(3) |
|
(10)% |
|
International |
|
(2)% |
Total
Company |
|
(3)% |
|
Total
Company |
|
(3)% |
(1) Comparable
sales are calculated on a constant currency basis.
(2) Hollister
includes the Hollister and Gilly Hicks brands.
(3) Abercrombie
includes the Abercrombie & Fitch and abercrombie kids
brands.
By brand, net sales for the first
quarter increased 3% to $374.7 million for Hollister and decreased
11% to $286.4 million for Abercrombie versus last year.
By geography, net sales for the
first quarter decreased 4% to $409.1 million in the U.S. and
decreased 3% to $252.0 million in international markets versus last
year.
Direct-to-consumer sales grew to
approximately 27% of total company net sales for the first quarter,
compared to approximately 24% of total company net sales last
year.
Additional First
Quarter Results Commentary
The gross profit rate for the
first quarter was 60.3%, 130 basis points lower than last year on a
constant currency basis, primarily due to lower average unit
retail, partially offset by lower average unit cost.
Stores and distribution expense
for the first quarter was $359.9 million, down from $369.1 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.
Marketing, general and
administrative expense for the first quarter was $109.9 million,
down from $114.4 million last year, primarily due to expense
reduction efforts, partially offset by higher marketing
expense.
Asset impairment charges for the
first quarter were $0.7 million.
Net other operating income for the
first quarter was $1.7 million, compared to $2.9 million last
year.
Operating loss for the first
quarter was $69.9 million, compared to $54.9 million last year.
The effective tax rate for the
first quarter was 18%, reflecting a 31% core tax rate, which
remains highly sensitive at lower levels of full year pre-tax
earnings, and a discrete non-cash income tax charge of $9.3 million
related to a change in share-based compensation accounting
standards.
Net loss attributable to
Abercrombie & Fitch Co. for the first quarter was $61.7
million, compared to $39.6 million last year.
The company ended the quarter with
$421.4 million in cash and cash equivalents, and gross borrowings
under the company's term loan agreement of $268.3 million, compared
to $491.0 million in cash and cash equivalents and $293.3 million
in borrowings last year.
The company ended the quarter with
$398.8 million in inventory, a decrease of 8% versus last year.
Other
Developments
As previously announced, on May
19, 2017 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 12, 2017 to stockholders of record at
the close of business on June 2, 2017.
Outlook
For fiscal 2017, the company
expects:
-
Comparable sales to remain challenging in the
second quarter, with trend improvement in the second half of the
year
-
Continued adverse impact from foreign currency
on sales and operating income
-
A gross margin rate down slightly to last year's
adjusted non-GAAP rate of 61.0%, with continued pressure in the
second quarter
-
Operating expense to be down at least 3% from
last year's adjusted non-GAAP operating expense of $2.025 billion,
with approximately 65% of the full year reduction to occur in the
second half of the year
-
Net income attributable to noncontrolling
interests of approximately $4 million
-
A weighted average diluted share count of
approximately 68 million shares, excluding the effect of potential
share buybacks
On a full year basis, the company
now expects the effective tax rate to reflect a core tax rate in
the low 30s, which remains highly sensitive at lower levels of
pre-tax earnings. Additionally, the company expects discrete
non-cash income tax charges for the full year of approximately $11
million primarily related to a change in share-based compensation
accounting standards.
The company expects capital
expenditures to be approximately $100 million for the full
year.
The company plans to open seven
full-price stores in fiscal 2017, primarily in the U.S. The company
also plans to open two new outlet stores. In addition, the company
anticipates closing approximately 60 stores in the U.S. during the
fiscal year through natural lease expirations.
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.
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 undertake no obligation to publicly update or
revise any forward-looking statements. The following factors,
disclosed in "ITEM 1A. RISK FACTORS" of A&F's Annual Report on
Form 10-K for the fiscal year ended January 28, 2017, in
some cases have affected, and in the future could affect, the
company's financial performance and could cause actual results
for Fiscal 2017 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; our market share may be negatively impacted by
increasing competition and pricing pressures from companies with
brands or merchandise competitive with ours; 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 ability to conduct business in international markets may be
adversely affected by legal, regulatory, political and economic
risks; 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; changes in the cost,
availability and quality of raw materials, labor, transportation
and trade relations 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 DCs makes us susceptible to
disruptions or adverse conditions affecting our supply chain; 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.
About Abercrombie & Fitch
Co.
Abercrombie &
Fitch Co. (NYSE: ANF) is a leading, global specialty retailer of
apparel and accessories for Men, Women and Kids through three
renowned brands. The iconic Abercrombie & Fitch brand
embodies American casual luxury. With an updated attitude
that reflects the confidence of today's 20+ consumer, Abercrombie
& Fitch remains true to its 125-year heritage of creating
expertly crafted products with an effortless, American
style. The Hollister brand epitomizes the liberating and
carefree spirit of the endless California summer for the teen
market. abercrombie kids creates smart, playful apparel for
children ages 3-14, celebrating the wide-eyed wonder of childhood.
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.
The Company
operates approximately 900 stores under these brands across North
America, Europe, Asia and the Middle East, as well as the
e-commerce sites www.abercrombie.com and
www.hollisterco.com.
Today at 8:30 AM,
Eastern Daylight 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 (877) 857-6176 and ask for the
Abercrombie & Fitch Quarterly Call or go to
www.abercrombie.com. The international call-in number is
(719) 325-4879. 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 1371111
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 |
Q1 2017 ER Financials
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq 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
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From Feb 2024 to Mar 2024
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From Mar 2023 to Mar 2024