Fourth Quarter Net Income Increases to $198.2 Million; NEW ALBANY,
Ohio, Feb. 21 /PRNewswire-FirstCall/ -- Abercrombie & Fitch Co.
(NYSE:ANF) today reported unaudited results which reflected net
income of $198.2 million and net income per diluted share of $2.14
for the fourteen weeks ended February 3, 2007, a 20% increase over
net income of $164.6 million and a 19% increase over $1.80 per
diluted share for the thirteen week period ended January 28, 2006.
The Company also reported net income of $422.2 million and net
income per diluted share of $4.59 for the fifty-three week fiscal
year ended February 3, 2007, a 26% increase over net income of
$334.0 million and a 25% increase over $3.66 per diluted share for
the fifty-two week fiscal year ended January 28, 2006. Fourth
Quarter Highlights * Total Company net sales increased 18% to
$1.139 billion; comparable store sales declined 3%, versus a 28%
increase for the fourth quarter of Fiscal 2005 * Abercrombie &
Fitch net sales increased 6% to $504.0 million; Abercrombie &
Fitch comparable store sales decreased 6%, versus an 18% increase
for the fourth quarter of Fiscal 2005 * abercrombie net sales
increased 19% to $144.5 million; abercrombie comparable store sales
increased 2%, versus a 59% increase for the fourth quarter of
Fiscal 2005 * Hollister Co. net sales increased 33% to $476.8
million; Hollister Co. comparable store sales were flat to last
year, versus a 34% increase for the fourth quarter of Fiscal 2005 *
RUEHL net sales increased 89% to $13.4 million; RUEHL comparable
store sales increased 6%, versus an 18% increase for the fourth
quarter of Fiscal 2005 * Net income for the fourth quarter
increased 20% to $198.2 million from $164.6 million in Fiscal 2005
* Net income per diluted share increased 19% to $2.14 in the fourth
quarter of Fiscal 2006 from $1.80 in Fiscal 2005 Mike Jeffries,
Chief Executive Officer and Chairman of the Board of Abercrombie
& Fitch Co., said: "This was an excellent year for Abercrombie
& Fitch, capped off by a solid fourth quarter. Our strong
performance demonstrates the proper positioning of our brands and
strength of our business model. Investments made in our brands and
business continue to pay off in the form of high quality sales and
earnings growth. We are confident that this deliberate strategy
will continue to provide top-line expansion over the long term
resulting in more leveraged growth." Fourth Quarter and Fiscal Year
2006 Financial Results Net sales for the fourteen weeks ended
February 3, 2007 increased 18% to $1.139 billion from $961.4
million for the thirteen weeks ended January 28, 2006. Total
Company direct-to-consumer net sales increased 58% to $74.8 million
for the fourteen week period ended February 3, 2007, compared to
the thirteen week period ended January 28, 2006. The fiscal 2006
retail calendar includes a fifty-third week; fourth quarter comps
are compared to the fourteen week period ended February 4, 2006.
Total Company fourth quarter comparable store sales decreased 3%
for the corresponding fourteen week period ended February 4, 2006.
For the fifty-three week fiscal year ended February 3, 2007, the
Company reported a net sales increase of 19% to $3.318 billion from
$2.785 billion for the fifty-two week period ended January 28,
2006. Total Company direct-to-consumer net sales increased 42% to
$174.1 million for the fifty- three week period ended February 3,
2007, compared to the fifty-two week period ended January 28, 2006.
The fiscal 2006 retail calendar includes a fifty-third week; full
year Fiscal 2006 comps are compared to the fifty-three week period
ended February 4, 2006. Fiscal 2006 comparable store sales
increased 2%. The gross profit rate for the quarter was 66.4%,
decreasing 10 basis points compared to last year. The decline in
gross profit rate was primarily due to higher shrink and a slightly
higher markdown rate versus last year. For Fiscal 2006, the gross
profit rate was 66.6% versus 66.5% last year, an increase of 10
basis points. Stores and Distribution expense for the quarter, as a
percentage of sales, increased 20 basis points to 30.7% from 30.5%.
The increase in rate versus last year primarily resulted from
increased distribution center and direct-to- consumer expenses,
partially offset by decreased store expenses as a percentage of
sales. For Fiscal 2006, stores and distribution expense, as a
percentage of sales, decreased 10 basis points to 35.8% versus
35.9% last year. Marketing, General and Administrative expense
(MG&A) for the quarter, as a percentage of sales, increased 50
basis points to 8.9% from 8.4%. The increase in rate was primarily
attributed to an increase in home office payroll and consulting
expenses as a percentage of sales. For Fiscal 2006, MG&A
expense was 11.3% of sales, flat to last year's rate of 11.3%.
Operating income for the fourth quarter increased 15% to $308.8
million compared to $267.5 million last year. For Fiscal 2006,
operating income was $658.1 million versus $542.7 million last
year, an increase of 21%. The effective tax rate for the fourth
quarter was 36.8% compared to 39.0% for the 2005 comparable period.
The decrease in the effective tax rate relates to an increase in
tax-exempt income over the prior year comparable period, favorable
settlements of certain tax audits and favorable changes in
estimates of potential outcomes of certain state tax matters. The
Company expects the full year Fiscal 2007 effective tax rate to be
approximately 39%. Net income for the fourth quarter increased 20%
to $198.2 million compared to $164.6 million last year. Net income
per diluted share increased 19% to $2.14 compared to $1.80 per
diluted share for the fourth quarter of Fiscal 2005. Net income for
Fiscal 2006 increased 26% to $422.2 million compared to $334.0
million last year. For Fiscal 2006, net income per diluted share
increased 25% to $4.59 versus $3.66 last year. 2007 Outlook The
Company expects net income per diluted share for the first half of
Fiscal 2007 to be in the range of $1.47 to $1.52, representing
between 10% and 13% earnings growth over the first half of Fiscal
2006. Due to the impact of the Company's London pre-opening store
costs, along with the difficult comparisons to last year's tax rate
favorability, diluted earnings per share growth in the first
quarter of 2007 is expected to be in the mid-single digit range.
The low end of the earnings guidance reflects a flat comparable
store sales scenario for the first half of Fiscal 2007. The Company
plans total capital expenditures for Fiscal 2007 to be between $360
million and $370 million with approximately $220 million of this
amount allocated to new store construction and store remodels.
Approximately $60 million is allocated to "refresh" improvements
and other brand enhancing investments planned for existing stores
with the balance related to home office, information technology,
and direct-to-consumer infrastructure investments. For Fiscal 2007,
the Company expects to increase gross square-footage by
approximately 12%, primarily through the addition of six new
Abercrombie & Fitch stores, 67 new Hollister Co. stores, 27 new
abercrombie stores, and ten new RUEHL stores. The Company also
intends to introduce its next concept in January 2008 with the
opening of three stores. Dividend Declared 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 March 27,
2007 to shareholders of record at the close of business on March 6,
2007. London Flagship Store On March 22, 2007, the Company plans to
open its first European location, a flagship store in London, at 7
Burlington Gardens. The Company will hold a security analyst tour
of the store on March 20, 2007. Analysts interested in attending
the event should contact Jill Swansegar, Investor Relations and
Communications Coordinator at (614) 283-6751 or via email at . The
Company operated 357 Abercrombie & Fitch stores, 177
abercrombie stores, 390 Hollister Co. stores, and 14 RUEHL stores
in the United States at the end of Fiscal 2006. The Company also
operated 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 6004097 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 2007 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) Fourteen Weeks Ended
February 3, 2007 and Thirteen Weeks Ended January 28, 2006 (in
thousands except per share data) ACTUAL ACTUAL % of % of 2006 Sales
2005 Sales Net Sales $1,138,744 100.0% $961,392 100.0% Cost of
Goods Sold 383,109 33.6% 321,974 33.5% Gross Profit 755,635 66.4%
639,418 66.5% Total Stores and Distribution Expense 349,770 30.7%
293,488 30.5% Total Marketing, General and Administrative Expense
101,623 8.9% 80,783 8.4% Other Operating Income, Net (4,592) -0.4%
(2,341) -0.2% Operating Income 308,834 27.1% 267,488 27.8% Interest
Income, Net (4,714) -0.4% (2,376) -0.2% Income Before Income Taxes
313,548 27.5% 269,864 28.1% Income Tax Expense 115,356 10.1%
105,240 10.9% Effective Rate 36.8% 39.0% Net Income $198,192 17.4%
$164,624 17.1% Net Income Per Share: Basic $2.25 $1.88 Diluted
$2.14 $1.80 Weighted-Average Shares Outstanding: Basic 88,159
87,647 Diluted 92,572 91,275 Abercrombie & Fitch Co. Condensed
Consolidated Statements of Income (Unaudited) Fifty-Three Weeks
Ended February 3, 2007 and Fifty-Two Weeks Ended January 28, 2006
(in thousands except per share data) ACTUAL ACTUAL % of % of 2006
Sales 2005 Sales Net Sales $3,318,158 100.0% $2,784,711 100.0% Cost
of Goods Sold 1,109,152 33.4% 933,295 33.5% Gross Profit 2,209,006
66.6% 1,851,416 66.5% Total Stores and Distribution Expense
1,187,071 35.8% 1,000,755 35.9% Total Marketing, General and
Administrative Expense 373,828 11.3% 313,457 11.3% Other Operating
Income, Net (9,983) -0.3% (5,534) -0.2% Operating Income 658,090
19.8% 542,738 19.5% Interest Income, Net (13,896) -0.4% (6,672)
-0.2% Income Before Income Taxes 671,986 20.3% 549,410 19.7% Income
Tax Expense 249,800 7.5% 215,426 7.7% Effective Rate 37.2% 39.2%
Net Income $422,186 12.7% $333,984 12.0% Net Income Per Share:
Basic $4.79 $3.83 Diluted $4.59 $3.66 Weighted Average Shares
Outstanding Basic 88,052 87,161 Diluted 92,010 91,221 Abercrombie
& Fitch Co. Condensed Consolidated Balance Sheets (in
thousands) (unaudited) ASSETS February 3, 2007 January 28, 2006
Current Assets Cash and Equivalents $81,959 $50,687 Marketable
Securities 447,793 411,167 Receivables 43,240 41,855 Inventories
427,447 362,536 Deferred Income Taxes 33,196 29,654 Other Current
Assets 58,469 51,185 Total Current Assets 1,092,104 947,084
Property and Equipment, Net 1,092,282 813,603 Other Assets 63,707
29,031 Total Assets $2,248,093 $1,789,718 LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable and
Outstanding Checks $128,310 $145,313 Accrued Expenses 260,219
215,034 Deferred Lease Credits 35,423 31,727 Income Taxes Payable
86,675 99,480 Total Current Liabilities 510,627 491,554 Long-Term
Liabilities Deferred Income Taxes 30,394 38,496 Deferred Lease
Credits 203,943 191,225 Other Liabilities 97,806 73,326 Total
Long-Term Liabilities 332,143 303,047 Total Shareholders' Equity
1,405,323 995,117 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$2,248,093 $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/
http://www.hollisterco.com/
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