Net Income Per Share Is $0.79 (Including a Non-Recurring Charge Of
$0.09 Per Share) and $0.88 Excluding The Charge; NEW ALBANY, Ohio,
Nov. 15 /PRNewswire-FirstCall/ -- Abercrombie & Fitch Co.
(NYSE:ANF) today reported unaudited results which reflected record
third quarter net income of $71.6 million and net income per share
on a fully- diluted basis of $0.79 for the third quarter ended
October 29, 2005, including the after-tax effect of a $0.09 per
share non-recurring charge. Excluding the charge, the Company's
third quarter non-GAAP net income was $79.8 million, or $0.88 per
fully diluted share. Reconciliation to GAAP results of certain non-
GAAP measures contained in this release is set forth in the
attached schedule. Third Quarter Highlights - Total Company net
sales increased 35% to $704.9 million; comparable store sales
increased by 25% - Abercrombie & Fitch net sales increased 13%
to $342.7 million; Abercrombie & Fitch comparable store sales
increased by 16% - abercrombie net sales increased 58% to $96.8
million; abercrombie comparable store sales increased by 62% -
Hollister net sales increased 69% to $261.3 million; Hollister
comparable store sales increased by 27% - Net income for the third
quarter increased 79% to $71.6 million from $39.9 million in fiscal
2004. Non-GAAP net income, excluding non-recurring charges in both
the third quarter of 2005 and 2004, was $79.8 million in the third
quarter of 2005, compared to $60.6 million in the comparable period
of 2004. - Net income per share on a fully-diluted basis increased
88% to $0.79 in the third quarter of 2005 from $0.42 in fiscal
2004. Non-GAAP net income per share on a fully-diluted basis,
excluding non-recurring charges, was $0.88 in the third quarter of
2005 compared to $0.64 in the prior-year period. Mike Jeffries,
Chief Executive Officer and Chairman of the Board of Abercrombie
& Fitch Co., said: "We are pleased with our performance for the
third quarter. These strong results reflect the broad momentum and
successful differentiation of our brands, confirming our entire
organization's dedication to building dominant iconic brands. We
are uniquely positioned as the top of mind premium provider of
sportswear with brands that appeal to a broad spectrum of customers
in the pre-teen through post-collegiate demographic. This is a
position we have worked hard to attain, and I can assure you, we
will defend vigorously." Third Quarter Financial Results Net sales
for the thirteen weeks ended October 29, 2005 increased 35% to
$704.9 million from $520.7 million for the thirteen weeks ended
October 30, 2004. The main driver of growth was the total company
comparable store sales increase of 25%. The gross margin rate for
the quarter was 66.0%, up 140 basis points compared to last year.
The improvement in gross margin was due to improved initial markup
combined with a lower markdown rate versus last year. Stores and
Distribution expense, as a percentage of sales, decreased 30 basis
points to 35.9% from 36.2%. The Company achieved leverage in store
related, direct-to-consumer and distribution expense categories
partially offset by increased staff and management in the Company's
stores. Marketing, General and Administrative expense, as a
percentage of sales, decreased 270 basis points to 13.9% from
16.6%. In the third quarter of 2005, the Company recorded a
non-recurring charge of $13.5 million related to an executive
severance agreement. In the third quarter of 2004, the Company
recorded a non-recurring charge of $32.9 million related to a legal
settlement. Excluding non-recurring charges in both periods,
MG&A as a percentage of sales, increased to 11.9% from 10.2%
compared to last year. The increase in rate is primarily attributed
to increased home office payroll. Net income for the quarter
increased 79% to $71.6 million, or $0.79 per share on a
fully-diluted basis, from $39.9 million, or $0.42 per share on a
fully-diluted basis, for the third quarter of fiscal 2004. Non-GAAP
net income, excluding non-recurring charges, was $79.8 million, or
$0.88 per share on a fully-diluted basis in the third quarter of
2005, compared to $60.6 million or $0.64 per share on a
fully-diluted basis, in the comparable period of 2004. 2005 Outlook
In August, the Company reaffirmed its guidance for the year of net
income per fully-diluted share to be in the range of $3.10 to
$3.30, based on a sales plan of approximately $2.7 billion for
fiscal 2005, excluding a non-recurring charge to be taken in the
third quarter for an executive severance agreement. Based on its
year-to-date results, the Company now expects net income per share
on a fully-diluted basis, including the non-recurring third quarter
charge, to be in the range of $3.35 to $3.40. Excluding the
non-recurring charge, the Company now expects net income per share
on a fully-diluted basis to be in the range of $3.44 to $3.49. The
Company now expects total capital expenditures for fiscal 2005 to
be between $270 million and $280 million. The majority of the
expenditures are related to new store construction, remodels, and
home office investments. These amounts do not reflect construction
allowances which are recorded on the balance sheet as a deferred
credit as opposed to a reduction in capital spending. Other
Developments By fiscal year-end, the Company plans to operate 360
Abercrombie & Fitch stores, 163 abercrombie stores, 318
Hollister stores, and eight RUEHL stores. During the third quarter
of fiscal 2005, the Company repurchased 1.3 million shares of Class
A Common Stock as part of its stock repurchase program. The Company
recently opened its 34,000 gross square foot flagship Abercrombie
& Fitch store, located on the corner of 5th Avenue and 56th
Street in New York. The Company recently opened a RUEHL accessories
store at 370 Bleecker Street in New York's West Village. The
Company plans to open its first international locations in Canada
in late fiscal 2005 and expects to open its first European location
in London in early 2007. The Board of Directors declared a
quarterly cash dividend of $0.175 per share on the Class A Common
Stock of Abercrombie & Fitch Co. payable on December 20, 2005
to shareholders of record at the close of business on November 29,
2005. The Company operated 354 Abercrombie & Fitch stores, 163
abercrombie stores, 297 Hollister stores, and six RUEHL stores at
the end of the third quarter 2005. The Company operates e-commerce
websites at http://www.abercrombie.com/,
http://www.abercrombiekids.com/, and http://www.hollisterco.com/.
Today at 4:30 PM, Eastern Time, the Company will conduct a
conference call. Management will discuss the Company's performance,
its plans for the future and will accept questions from
participants. To listen to the live conference call, dial (800)
811-0667 or internationally at (913) 981-4901. To listen via the
internet, go to http://www.abercrombie.com/, select the Investor
Relations page and click on Calendar of Events. Replays of the call
will be available shortly after its completion. The audio replay
can be accessed for two weeks following the reporting date by
calling (888) 203-1112 or internationally at (719) 457-0820
followed by the conference ID number 9447177; or for 12 months by
visiting the Company's website at http://www.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, A&F's Form 10-K
or made by management 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. The following factors, in addition to those included in
the disclosure under the heading "FORWARD- LOOKING STATEMENTS AND
RISK FACTORS" in "ITEM 1. BUSINESS" of A&F's Annual Report on
Form 10-K for the fiscal year ended January 29, 2005, in some cases
have affected and in the future could affect the Company's
financial performance and could cause actual results for the 2005
fiscal year and beyond to differ materially from those expressed or
implied in any of the forward- looking statements included in this
Press Release or otherwise made by management: changes in consumer
spending patterns and consumer preferences; the effects of
political and economic events and conditions domestically and in
foreign jurisdictions in which the Company operates, including, but
not limited to, acts of terrorism or war; the impact of competition
and pricing; changes in weather patterns; postal rate increases and
changes; paper and printing costs; market price of key raw
materials; ability to source product from its global supplier base;
political stability; currency and exchange risks and changes in
existing or potential duties, tariffs or quotas; availability of
suitable store locations at appropriate terms; ability to develop
new merchandise; and ability to hire, train and retain associates,
and the outcome of pending litigation. Future economic and industry
trends that could potentially impact revenue and profitability are
difficult to predict. Therefore, there can be no assurance that the
forward-looking statements included in this Press Release will
prove to be accurate. In light of the significant uncertainties in
the forward-looking statements included herein, 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. The forward-looking statements herein are based
on information presently available to the management of the
Company. Except as may be required by applicable law, the Company
assumes no obligation to publicly update or revise its
forward-looking statements even if experience or future changes
make it clear that any projected results expressed or implied
therein will not be realized. Abercrombie & Fitch Co. Condensed
Consolidated Statements of Income (Unaudited) Thirteen Weeks Ended
October 29, 2005 and Thirteen Weeks Ended October 30, 2004 (in
thousands except per share data) ACTUAL ACTUAL % of % of 2005 Sales
2004 Sales Net Sales $704,918 100.0% $520,724 100.0% Cost of Goods
Sold 239,832 34.0% 184,107 35.4% Gross Profit 465,086 66.0% 336,617
64.6% Total Stores and Distribution Expense 252,947 35.9% 188,381
36.2% Total Marketing, General and Administrative Expense 97,644
13.9% 86,273 16.6% Other Operating Income, Net (1,379) -0.2% (15)
0.0% Operating Income 115,874 16.4% 61,978 11.9% Interest Income,
Net (1,516) -0.2% (1,574) -0.3% Income Before Income Taxes 117,390
16.7% 63,552 12.2% Income Tax Expense 45,790 6.5% 23,641 4.5%
Effective Rate 39.0% 37.2% Net Income $71,600 10.2% $39,911 7.7%
Net Income Per Share: Basic $0.81 $0.43 Fully-Diluted $0.79 $0.42
Weighted Average Shares Outstanding Basic 87,862 93,449
Fully-Diluted 90,458 95,351 Abercrombie & Fitch Co. Condensed
Consolidated Statements of Income (Unaudited) Thirty-nine Weeks
Ended October 29, 2005 and Thirty-nine Weeks Ended October 30, 2004
(in thousands except per share data) ACTUAL ACTUAL % of % of 2005
Sales 2004 Sales Net Sales $1,823,319 100.0% $1,333,999 100.0% Cost
of Goods Sold 611,321 33.5% 448,542 33.6% Gross Profit 1,211,998
66.5% 885,457 66.4% Total Stores and Distribution Expense 707,267
38.8% 514,411 38.6% Total Marketing, General and Administrative
Expense 232,674 12.8% 193,760 14.5% Other Operating Income, Net
(3,193) -0.2% (174) 0.0% Operating Income 275,250 15.1% 177,460
13.3% Interest Income, Net (4,296) -0.2% (3,919) -0.3% Income
Before Income Taxes 279,546 15.3% 181,379 13.6% Income Tax Expense
110,186 6.0% 69,263 5.2% Effective Rate 39.4% 38.2% Net Income
$169,360 9.3% $112,116 8.4% Net Income Per Share: Basic $1.95 $1.19
Fully-Diluted $1.87 $1.16 Weighted Average Shares Outstanding Basic
87,002 94,490 Fully-Diluted 90,422 96,522 Abercrombie & Fitch
Co. Condensed Consolidated Balance Sheets (in thousands)
(unaudited) ASSETS October 29, 2005 January 29, 2005 Current Assets
Cash and Cash Equivalents $67,443 $350,368 Marketable Securities
210,393 - Receivables 29,633 26,127 Inventories 415,621 211,198
Store Supplies 40,800 36,536 Deferred Income Taxes 34,696 31,246
Other Current Assets 34,357 28,048 Total Current Assets 832,943
683,523 Property and Equipment, Net 798,391 687,011 Other Assets
8,478 8,413 TOTAL ASSETS $1,639,812 $1,378,947 LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable and
Outstanding Checks $167,721 $137,337 Accrued Expenses 234,529
194,729 Deferred Lease Credits 31,504 31,135 Income Taxes Payable
56,935 55,587 Total Current Liabilities 490,689 418,788 Long-Term
Liabilities Debt - - Deferred Income Taxes 32,329 42,188 Deferred
Lease Credits 192,407 177,923 Other Liabilities 88,333 70,722
313,069 290,833 Total Shareholders' Equity 836,054 669,326 TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $1,639,812 $1,378,947
Abercrombie & Fitch Co. Non-GAAP Reconciliation (Unaudited)
Thirteen Weeks Ended October 29, 2005 and Thirteen Weeks Ended
October 30, 2004 (in thousands except per share data) ACTUAL ACTUAL
% of % of 2005 Sales 2004 Sales Marketing, General and
Administrative Expense, as reported 97,644 13.9% 86,273 16.6%
Non-Recurring Charge (13,462) -1.9% (32,900) -6.3% Non-GAAP
Marketing, General and Administrative Expense 84,182 11.9% 53,373
10.2% Operating Income, as reported 115,874 16.4% 61,978 11.9%
Non-Recurring Charge 13,462 1.9% 32,900 6.3% Non-GAAP Operating
Income 129,336 18.3% 94,878 18.2% Net Income, as reported 71,600
10.2% 39,911 7.7% Non-Recurring Charge (tax effected at 39% and
37%, respectively) 8,212 1.2% 20,661 4.0% Non-GAAP Net Income
79,812 11.3% 60,572 11.6% Net Income Per Share: Fully-Diluted, as
reported $0.79 $0.42 Non-Recurring Charge $0.09 $0.22 Non-GAAP
Fully-Diluted $0.88 $0.64 DATASOURCE: Abercrombie & Fitch
CONTACT: Thomas D. Lennox, Director, Investor Relations and
Corporate Communications of Abercrombie & Fitch,
+1-614-283-6751 Web site: http://www.abercrombie.com/
http://www.abercrombiekids.com/
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