Third Quarter Net Income Increased 43%; NEW ALBANY, Ohio, Nov. 14
/PRNewswire-FirstCall/ -- Abercrombie & Fitch Co. (NYSE:ANF)
today reported unaudited results which reflected record third
quarter net income of $102.0 million and net income per diluted
share of $1.11 for the period ended October 28, 2006. Third Quarter
Developments - Total Company net sales increased 22% to $863.4
million; comparable store sales increased 5% versus a 25% increase
for the third quarter of fiscal 2005 - Abercrombie & Fitch net
sales increased 12% to $382.1 million; Abercrombie & Fitch
comparable store sales increased by 1% - abercrombie net sales
increased 13% to $109.1 million; abercrombie comparable store sales
increased by 8% - Hollister Co. net sales increased 39% to $364.0
million; Hollister Co. comparable store sales increased by 8% -
RUEHL net sales increased 97% to $8.1 million; RUEHL comparable
store sales increased by 20% - Net income for the third quarter
increased 43% to $102.0 million from $71.6 million in fiscal 2005 -
Net income per diluted share increased 41% to $1.11 in the third
quarter of fiscal 2006 from $0.79 in fiscal 2005 Mike Jeffries,
Chief Executive Officer and Chairman of the Board of Abercrombie
& Fitch Co., said: "I am pleased with our accomplishments for
the third quarter. We performed well from a financial standpoint
while enhancing the long term positioning of our brands. Our track
record is strong, and our opportunities going forward are
exceptional. We will continue to leverage our expertise, invest in
our growth potential and, as a result, we expect to continue to
deliver strong returns to our shareholders." Third Quarter
Financial Results Net sales for the thirteen weeks ended October
28, 2006 increased 22% to $863.4 million from $704.9 million for
the thirteen weeks ended October 29, 2005. Total Company comparable
store sales increased 5% versus last year. The gross profit rate
for the quarter was 65.8%, down 20 basis points compared to last
year. The decline in gross profit rate was primarily due to a
higher markdown rate versus last year. Stores and Distribution
expense, as a percentage of sales, decreased 20 basis points to
35.7% from 35.9%. The decrease in rate versus last year resulted
primarily from the Company's ability to leverage store payroll
expense, partially offset by increased store maintenance expenses
associated with store investment projects. Marketing, General and
Administrative expense, as a percentage of sales, decreased 260
basis points to 11.3% from 13.9%. During the third quarter of 2005,
the Company recorded a non-recurring charge of $13.5 million
related to an executive severance agreement. The decrease in rate
is primarily attributed to decreased home office and marketing
expenses. Operating income for the third quarter increased 41% to
$162.8 million compared to $115.9 million last year. Net income for
the third quarter increased 43% to $102.0 million, or $1.11 per
diluted share, from $71.6 million, or $0.79 per diluted share, for
the third quarter of fiscal 2005. 2006 Outlook The Company
reaffirmed its previously provided earnings guidance for the
second-half of fiscal 2006 of net income per diluted share to be in
the range of $3.25 to $3.30, including a charge of approximately
$0.02 attributable to FAS 123(R). The low end of the second half of
fiscal 2006 guidance reflects a flat comparable store sales
scenario for the fourth quarter of 2006. Based upon this guidance,
the Company expects its net income per diluted share for the year
to be in the range of $4.59 to $4.64, including approximately $0.10
attributable to FAS 123(R). The Company expects total capital
expenditures for fiscal 2006 to be between $410 million and $420
million with approximately $260 million of this amount allocated to
new store construction, store remodels, conversions and
improvements to existing stores, with the remainder related to home
office and distribution center investments. For fiscal 2006, the
Company expects to increase gross square-footage by approximately
11% primarily through the addition of approximately 70 new
Hollister Co. stores, 19 new abercrombie stores, eight new
Abercrombie & Fitch stores and seven new RUEHL stores. Other
Developments 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 19, 2006 to
shareholders of record at the close of business on November 28,
2006. The Company plans to open its first European location in
London in the first quarter of fiscal 2007. The Company operated
355 Abercrombie & Fitch stores, 171 abercrombie stores, 369
Hollister Co. stores, and 11 RUEHL stores in the United States at
the end of the third quarter of 2006. The Company operates three
Abercrombie & Fitch stores and three Hollister Co. stores in
Canada. 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
Investors 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 3554646 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 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 1A.
RISK FACTORS" of A&F's Annual Report on Form 10-K for the
fiscal year ended January 28, 2006, in some cases have affected and
in the future could affect the Company's financial performance and
could cause actual results for the 2006 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; 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 28, 2006 and Thirteen Weeks Ended October 29, 2005 (in
thousands except per share data) ACTUAL ACTUAL % of % of 2006 Sales
2005 Sales Net Sales $863,448 100.0% $704,918 100.0% Cost of Goods
Sold 295,250 34.2% 239,832 34.0% Gross Profit 568,198 65.8% 465,086
66.0% Total Stores and Distribution Expense 308,456 35.7% 252,947
35.9% Total Marketing, General and Administrative Expense 97,167
11.3% 97,644 13.9% Other Operating Income, Net (266) 0.0% (1,379)
-0.2% Operating Income 162,841 18.9% 115,874 16.4% Interest Income,
Net (3,252) -0.4% (1,516) -0.2% Income Before Income Taxes 166,093
19.2% 117,390 16.7% Income Tax Expense 64,062 7.4% 45,790 6.5%
Effective Rate 38.6% 39.0% Net Income $102,031 11.8% $71,600 10.2%
Net Income Per Share: Basic $1.16 $0.81 Diluted $1.11 $0.79
Weighted-Average Shares Outstanding: Basic 88,106 87,862 Diluted
92,146 90,458 Abercrombie & Fitch Co. Condensed Consolidated
Statements of Income (Unaudited) Thirty-nine Weeks Ended October
28, 2006 and Thirty-nine Weeks Ended October 29, 2005 (in thousands
except per share data) ACTUAL ACTUAL % of % of 2006 Sales 2005
Sales Net Sales $2,179,415 100.0% $1,823,319 100.0% Cost of Goods
Sold 726,043 33.3% 611,321 33.5% Gross Profit 1,453,372 66.7%
1,211,998 66.5% Total Stores and Distribution Expense 837,302 38.4%
707,267 38.8% Total Marketing, General and Administrative Expense
272,206 12.5% 232,674 12.8% Other Operating Income, Net (5,392)
-0.2% (3,193) -0.2% Operating Income 349,256 16.0% 275,250 15.1%
Interest Income, Net (9,183) -0.4% (4,296) -0.2% Income Before
Income Taxes 358,439 16.4% 279,546 15.3% Income Tax Expense 134,445
6.2% 110,186 6.0% Effective Rate 37.5% 39.4% Net Income $223,994
10.3% $169,360 9.3% Net Income Per Share: Basic $2.55 $1.95 Diluted
$2.44 $1.87 Weighted Average Shares Outstanding Basic 87,982 87,002
Diluted 91,675 90,422 Abercrombie & Fitch Co. Condensed
Consolidated Balance Sheets (in thousands) (unaudited) ASSETS
October 28, 2006 January 28, 2006 Current Assets Cash and
Equivalents $65,466 $50,687 Marketable Securities 308,906 411,167
Receivables 59,495 41,855 Inventories 431,002 362,536 Deferred
Income Taxes 29,692 29,654 Other Current Assets 60,716 51,185 Total
Current Assets 955,277 947,084 Property and Equipment, Net
1,058,740 813,603 Other Assets 51,808 29,031 Total Assets
$2,065,825 $1,789,718 LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities Accounts Payable and Outstanding Checks $178,700
$145,313 Accrued Expenses 259,543 215,034 Deferred Lease Credits
35,160 31,727 Income Taxes Payable 50,939 99,480 Total Current
Liabilities 524,342 491,554 Long-Term Liabilities Deferred Income
Taxes 28,641 38,496 Deferred Lease Credits 208,373 191,225 Other
Liabilities 92,596 73,326 Total Long-Term Liabilities 329,610
303,047 Total Shareholders' Equity 1,211,873 995,117 TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $2,065,825 $1,789,718
DATASOURCE: Abercrombie & Fitch CONTACT: Thomas D. Lennox, Vice
President, Corporate Communications of Abercrombie & Fitch,
+1-614-283-6751 Web site: http://www.abercrombie.com/
http://www.abercrombiekids.com/
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