Fourth Quarter Net Income Increases to $216.8 Million; NEW ALBANY,
Ohio, Feb. 15 /PRNewswire-FirstCall/ -- Abercrombie & Fitch Co.
(NYSE:ANF) today reported unaudited results which reflected net
income of $216.8 million and net income per diluted share of $2.40
for the thirteen weeks ended February 2, 2008, a 9% increase over
net income of $198.2 million and a 12% increase over net income per
diluted share of $2.14 for the fourteen week period ended February
3, 2007. Fourth quarter Fiscal 2007 results include $0.04 per
diluted share of favorable tax adjustments. The Company also
reported net income of $475.7 million and net income per diluted
share of $5.20 for the fifty-two week fiscal year ended February 2,
2008, a 13% increase over 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. Fourth Quarter Highlights -- Total
Company net sales increased 8% to $1.229 billion; comparable store
sales decreased 1% -- Total direct-to-consumer net sales increased
45% to $108.6 million -- Abercrombie & Fitch net sales
increased 4% to $522.4 million; Abercrombie & Fitch comparable
store sales increased 1% -- abercrombie net sales increased 11% to
$159.8 million; abercrombie comparable store sales decreased 3% --
Hollister Co. net sales increased 11% to $530.9 million; Hollister
Co. comparable store sales decreased 2% -- RUEHL net sales
increased 16% to $15.6 million; RUEHL comparable store sales
decreased 19% -- Net income for the fourth quarter increased 9% to
$216.8 million -- Net income per diluted share for the fourth
quarter increased 12% to $2.40 -- Launched newest concept, Gilly
Hicks, in January, with the opening of stores at Natick Collection,
Smith Haven Mall and Mall of America Mike Jeffries, Chief Executive
Officer and Chairman of the Board of Abercrombie & Fitch Co.,
said: "Our brands represent highly productive, consistent
businesses that are the result of an unyielding focus on
merchandise quality and customer experience. We continue to make
strategic investments in the business to sustain and to enhance
brand quality and to support future growth, both domestically and
internationally." Fourth Quarter and Fiscal Year 2007 Financial
Results Net sales for the thirteen weeks ended February 2, 2008
increased 8% to $1.229 billion from $1.139 billion for the fourteen
weeks ended February 3, 2007. Total Company direct-to-consumer net
sales increased 45% to $108.6 million for the thirteen week period
ended February 2, 2008, compared to the fourteen week period ended
February 3, 2007. Total Company fourth quarter comparable store
sales decreased 1% compared to the thirteen week period ended
February 3, 2007. For the fifty-two week fiscal year ended February
2, 2008, the Company reported a net sales increase of 13% to $3.750
billion from $3.318 billion for the fifty-three week fiscal year
ended February 3, 2007. Total Company direct-to-consumer net sales
increased 49% to $258.9 million for the fifty-two week fiscal year
ended February 2, 2008, compared to the fifty-three week fiscal
year ended February 3, 2007. Fiscal 2007 comparable store sales
decreased 1%. The gross profit rate for the quarter was 67.2%, 80
basis points higher compared to last year. The increase in gross
profit rate was attributable to both a higher initial markup rate
and a lower shrink rate, partially offset by a higher markdown rate
versus last year. For Fiscal 2007, the gross profit rate was 67.0%
versus 66.6% last year, an increase of 40 basis points. Stores and
distribution expense for the quarter, as a percentage of sales,
increased 90 basis points to 31.6% from 30.7%. The increase in rate
versus last year reflects the impact of minimum wage rate and
management salary increases and higher store occupancy related
expenses. For Fiscal 2007, stores and distribution expense, as a
percentage of sales, increased 120 basis points to 37.0% versus
35.8% last year. Marketing, general and administrative expense for
the quarter, as a percentage of sales, decreased 50 basis points to
8.4% from 8.9%. The decrease in rate resulted from lower travel,
samples, outside services and marketing expense rates versus last
year. For Fiscal 2007, marketing, general and administrative
expense, as a percentage of sales, decreased 70 basis points to
10.6% versus 11.3% last year. Operating income for the fourth
quarter increased 9% to $337.1 million compared to $308.8 million
last year. The fourth quarter operating income rate, as a
percentage of sales, was 27.4%, a 30 basis point increase over last
year's rate of 27.1%. For Fiscal 2007, operating income was $740.5
million versus $658.1 million last year, an increase of 13%. The
effective tax rate for the fourth quarter was 36.9% compared to
36.8% for the Fiscal 2006 comparable period. In addition to
favorable tax adjustments in both periods, the fourth quarter
Fiscal 2007 tax rate was lower as a result of international
operations versus last year. Net income for the fourth quarter
increased 9% to $216.8 million compared to $198.2 million last
year. Net income per diluted share increased 12% to $2.40 compared
to $2.14 per diluted share for the fourth quarter of Fiscal 2006.
Net income for Fiscal 2007 increased 13% to $475.7 million compared
to $422.2 million last year. For Fiscal 2007, net income per
diluted share increased 13% to $5.20 versus $4.59 last year. 2008
Outlook The Company expects net income per diluted share for the
first half of Fiscal 2008 to be in the range of $1.61 to $1.65,
representing a 5% to 8% increase in earnings over the first half of
Fiscal 2007. The low end of the earnings guidance reflects a
negative 1% comparable store sales scenario for the first half of
Fiscal 2008. The Company plans total capital expenditures for
Fiscal 2008 to be between $420 million and $425 million.
Approximately $300 million of this amount is allocated to new store
construction and store remodels, including the Hollister Co.
flagship in Soho, and Abercrombie & Fitch flagships in Europe
and Japan. Approximately $50 million is allocated to "refresh"
improvements and other brand enhancing investments planned for
existing stores and the balance is allocated to home office,
information technology, and direct-to- consumer infrastructure
investments. For Fiscal 2008, the Company expects to increase gross
square-footage by approximately 11%, primarily through the addition
of 110 new North American, non-flagship stores including four new
Abercrombie & Fitch stores, 67 new Hollister Co. stores, 17 new
abercrombie stores, six new RUEHL stores and 16 new Gilly Hicks
stores. The Company also plans to open four new, non-flagship
Hollister Co. stores in the United Kingdom in Fiscal 2008. 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 18, 2008 to shareholders of record
at the close of business on February 29, 2008. The Company operated
355 Abercrombie & Fitch stores, 201 abercrombie stores, 447
Hollister Co. stores, 22 RUEHL stores and three Gilly Hicks stores
in the United States at the end of Fiscal 2007. The Company also
operated 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/,
http://www.hollisterco.com/ and http://www.ruehl.com/. Today at
8:30 AM, 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 scroll
through the 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 2942254; 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
February 2, 2008 and Fourteen Weeks Ended February 3, 2007 (in
thousands, except per share data) ACTUAL ACTUAL % of % of 2007
Sales 2006 Sales Net Sales $1,228,969 100.0% $1,138,744 100.0% Cost
of Goods Sold 403,352 32.8% 383,109 33.6% Gross Profit 825,617
67.2% 755,635 66.4% Total Stores and Distribution Expense 388,421
31.6% 349,770 30.7% Total Marketing, General and Administrative
Expense 103,147 8.4% 101,623 8.9% Other Operating Income, Net
(3,019) -0.2% (4,592) -0.4% Operating Income 337,068 27.4% 308,834
27.1% Interest Income, Net (6,356) -0.5% (4,714) -0.4% Income
Before Income Taxes 343,424 27.9% 313,548 27.5% Income Tax Expense
126,668 10.3% 115,356 10.1% Effective Rate 36.9% 36.8% Net Income
$216,756 17.6% $198,192 17.4% Net Income Per Share: Basic $2.52
$2.25 Diluted $2.40 $2.14 Weighted-Average Shares Outstanding:
Basic 86,122 88,159 Diluted 90,235 92,572 Abercrombie & Fitch
Co. Condensed Consolidated Statements of Income (Unaudited)
Fifty-Two Weeks Ended February 2, 2008 and Fifty-Three Weeks Ended
February 3, 2007 (in thousands, except per share data) ACTUAL
ACTUAL % of % of 2007 Sales 2006 Sales Net Sales $3,749,847 100.0%
$3,318,158 100.0% Cost of Goods Sold 1,238,480 33.0% 1,109,152
33.4% Gross Profit 2,511,367 67.0% 2,209,006 66.6% Total Stores and
Distribution Expense 1,386,846 37.0% 1,187,071 35.8% Total
Marketing, General and Administrative Expense 395,758 10.6% 373,828
11.3% Other Operating Income, Net (11,734) -0.3% (9,983) -0.3%
Operating Income 740,497 19.7% 658,090 19.8% Interest Income, Net
(18,828) -0.5% (13,896) -0.4% Income Before Income Taxes 759,325
20.2% 671,986 20.3% Income Tax Expense 283,628 7.6% 249,800 7.5%
Effective Rate 37.4% 37.2% Net Income $475,697 12.7% $422,186 12.7%
Net Income Per Share: Basic $5.45 $4.79 Diluted $5.20 $4.59
Weighted-Average Shares Outstanding: Basic 87,248 88,052 Diluted
91,523 92,010 Abercrombie & Fitch Co. Condensed Consolidated
Balance Sheets (in thousands) (Unaudited) ASSETS February 2,
February 3, 2008 2007 Current Assets Cash and Equivalents $118,044
$81,959 Marketable Securities 530,486 447,793 Receivables 53,801
43,240 Inventories 333,153 427,447 Deferred Income Taxes 36,128
33,170 Other Current Assets 68,643 58,469 Total Current Assets
1,140,255 1,092,078 Property and Equipment, Net 1,318,291 1,092,282
Other Assets 109,052 63,707 TOTAL ASSETS $2,567,598 $2,248,067
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts
Payable and Outstanding Checks $151,798 $128,310 Accrued Expenses
280,910 260,219 Deferred Lease Credits 37,925 35,423 Income Taxes
Payable 72,480 86,675 Total Current Liabilities 543,113 510,627
Long-Term Liabilities Deferred Income Taxes 22,491 30,394 Deferred
Lease Credits 213,739 203,943 Other Liabilities 169,942 97,806
Total Long-Term Liabilities 406,172 332,143 Total Shareholders'
Equity 1,618,313 1,405,297 TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $2,567,598 $2,248,067 DATASOURCE: Abercrombie & Fitch
Co. CONTACT: Investors - Brian Logan, Sr. Director, Investor
Relations & Controller, +1-614-283-6877; Media, Thomas Lennox,
Vice President, Corporate Communications, +1-614-283-6751, both of
Abercrombie & Fitch Co. Web site: http://www.abercrombie.com/
http://www.abercrombiekids.com/
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