First Quarter Net Income Increases to $60.1 Million; NEW ALBANY,
Ohio, May 23 /PRNewswire-FirstCall/ -- Abercrombie & Fitch Co.
(NYSE:ANF) today reported unaudited results which reflected record
first quarter net income of $60.1 million and net income per
diluted share of $0.65 for the thirteen weeks ended May 5, 2007, a
7% increase over net income of $56.2 million and a 5% increase over
$0.62 per diluted share for the thirteen weeks ended April 29,
2006. First Quarter Developments -- Total Company net sales
increased 13% to $742.4 million; comparable store sales decreased
4% -- Total direct-to-consumer net sales increased 43% to $43.5
million -- Abercrombie & Fitch net sales increased 7% to $333.3
million; Abercrombie & Fitch comparable store sales decreased
4% -- abercrombie net sales increased 12% to $89.1 million;
abercrombie comparable store sales decreased 2% -- Hollister Co.
net sales increased 19% to $309.7 million; Hollister comparable
store sales decreased 5% -- RUEHL net sales increased 84% to $10.2
million; RUEHL comparable store sales decreased 3% -- Net income
for the first quarter increased 7% to $60.1 million from $56.2
million in Fiscal 2006 -- Net income per diluted share in the first
quarter increased 5% to $0.65 from $0.62 in Fiscal 2006 --
Abercrombie & Fitch Co. repurchased 1.0 million shares of its
Class A Common Stock -- The Company opened its first European
location, an Abercrombie & Fitch flagship at 7 Burlington
Gardens, London Mike Jeffries, Chief Executive Officer and Chairman
of the Board of Abercrombie & Fitch Co., said: "Our first
quarter financial results reflect the strength of our business
strategy and the execution of our plan. Despite difficult selling
conditions that impacted most retailers during this period, we
enhanced each of our brands while delivering record profit. We
achieved financial and operational progress by improving gross
margin and effectively managing variable expenses to increase
profit for the quarter. We continue to grow our business for the
long term by opening in new markets and developing new concepts,
while achieving our goal of delivering strong short term results as
we continue to build for the future." First Quarter Financial
Results Net sales for the thirteen weeks ended May 5, 2007
increased 13% to $742.4 million from $657.3 million for the
thirteen weeks ended April 29, 2006. Total Company
direct-to-consumer net sales increased 43% to $43.5 million for the
thirteen week period ended May 5, 2007, compared to the thirteen
week period ended April 29, 2006. Total Company comparable store
sales decreased 4% for the thirteen weeks ended May 5, 2007,
compared to the thirteen weeks ended May 6, 2006. The gross profit
rate for the quarter was 65.6%, up 20 basis points compared to last
year. The improvement in gross profit rate was due to an
improvement in initial markup partially offset by a slightly higher
markdown rate versus last year. Stores and Distribution expense, as
a percentage of sales, increased 220 basis points to 41.5% from
39.3%. The increase in rate versus last year resulted from the
inability to leverage fixed expenses due to the comparable store
sales decline. Contributing to the unfavorable rate were minimum
wage rate increases and pre-opening expenses associated with the
London flagship opening. Partially offsetting the increases was a
reduction in variable expenses including payroll hours, which were
reduced on a per store basis. Marketing, General and Administrative
expense, as a percentage of sales, decreased 150 basis points to
12.1% from 13.6%. The reduction in rate versus last year resulted
from a decrease in home office payroll, travel, and outside
services. Operating income for the first quarter increased 10% to
$92.7 million compared to $84.0 million. Net income for the quarter
increased 7% to $60.1 million compared to $56.2 million last year.
Net income per diluted share increased 5% to $0.65 compared to
$0.62 for the first quarter of Fiscal 2006. 2007 Outlook The
Company reaffirmed its previously disclosed earnings guidance which
stated it 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% to 13% earnings growth over the first half of Fiscal
2006. The low end of the guidance reflects a flat comparable store
sales scenario for the second quarter of Fiscal 2007. The Company
plans total capital expenditures for Fiscal 2007 to be between $395
million and $405 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 11% to 12%, primarily through the addition of ten new
Abercrombie & Fitch stores, 29 new abercrombie stores, 69 new
Hollister Co. stores, and nine new RUEHL stores. Other Developments
On March 22, 2007, the Company opened its first European location,
an Abercrombie & Fitch flagship at 7 Burlington Gardens,
London. The London flagship is off to an excellent start exceeding
the Company's initial productivity and profit expectations. During
the first quarter of Fiscal 2007, the Company repurchased 1.0
million shares of Class A Common Stock at a cost of $79 million as
part of its previously authorized stock repurchase program. The
Company has 4.67 million shares remaining under its existing
repurchase authorization. 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 June 26, 2007 to
shareholders of record at the close of business on June 5, 2007.
The Company operates 355 Abercrombie & Fitch stores, 180
abercrombie stores, 396 Hollister Co. stores and 16 RUEHL stores in
the United States. The Company operates three Abercrombie &
Fitch stores and three Hollister Co. stores in Canada, and one
Abercrombie & Fitch store in London, England. 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 5786431; 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 February 3, 2007, 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) Thirteen Weeks Ended
May 5, 2007 and Thirteen Weeks Ended April 29, 2006 (in thousands
except per share data) ACTUAL ACTUAL % of % of 2007 Sales 2006
Sales Net Sales $742,410 100.0% $657,271 100.0% Cost of Goods Sold
255,141 34.4% 227,356 34.6% Gross Profit 487,269 65.6% 429,915
65.4% Total Stores and Distribution Expense 308,238 41.5% 258,352
39.3% Total Marketing, General and Administrative Expense 90,175
12.1% 89,699 13.6% Other Operating Income, Net (3,854) -0.5%
(2,121) -0.3% Operating Income 92,710 12.5% 83,985 12.8% Interest
Income, Net (3,711) -0.5% (3,166) -0.5% Income Before Income Taxes
96,421 13.0% 87,151 13.3% Income Tax Expense 36,340 4.9% 30,911
4.7% Effective Rate 37.7% 35.5% Net Income $60,081 8.1% $56,240
8.6% Net Income Per Share: Basic $0.68 $0.64 Diluted $0.65 $0.62
Weighted-Average Shares Outstanding: Basic 87,746 87,858 Diluted
92,292 91,327 Abercrombie & Fitch Co. Condensed Consolidated
Balance Sheets (in thousands) (Unaudited) ASSETS May 5, 2007
February 3, 2007 Current Assets Cash and Equivalents $73,919
$81,959 Marketable Securities 268,052 447,793 Receivables 49,052
43,240 Inventories 401,753 427,447 Deferred Income Taxes 33,735
33,170 Other Current Assets 64,872 58,469 Total Current Assets
891,383 1,092,078 Property and Equipment, Net 1,174,751 1,092,282
Other Assets 65,028 63,707 Total Assets $2,131,162 $2,248,067
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts
Payable and Outstanding Checks $111,831 $128,310 Accrued Expenses
222,391 260,219 Deferred Lease Credits 36,385 35,423 Income Taxes
Payable 715 86,675 Total Current Liabilities 371,322 510,627
Long-Term Liabilities Deferred Income Taxes 33,734 30,394 Deferred
Lease Credits 205,885 203,943 Other Liabilities 129,083 97,806
Total Long-Term Liabilities 368,702 332,143 Total Shareholders'
Equity 1,391,138 1,405,297 TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $2,131,162 $2,248,067 DATASOURCE: Abercrombie & Fitch
Co. CONTACT: Thomas Lennox, Vice President, Corporate
Communications, of Abercrombie & Fitch Co., +1-614-283-6751 Web
site: http://www.abercrombie.com/ http://www.abercrombiekids.com/
http://www.hollisterco.com/
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