First Quarter Net Income Increases to $62.1 Million; NEW ALBANY,
Ohio, May 16 /PRNewswire-FirstCall/ -- Abercrombie & Fitch Co.
(NYSE:ANF) today reported unaudited results which reflected record
first quarter net income of $62.1 million and net income per
diluted share of $0.69 for the thirteen weeks ended May 3, 2008, a
3% increase over net income of $60.1 million and a 6% increase over
net income per diluted share of $0.65 for the thirteen weeks ended
May 5, 2007. First Quarter Highlights -- Total Company net sales
increased 8% to $800.2 million; comparable store sales decreased 3%
-- Total direct-to-consumer net sales increased 44% to $62.5
million -- Abercrombie & Fitch net sales increased 7% to $357.7
million; Abercrombie & Fitch comparable store sales increased
3% -- abercrombie net sales increased 8% to $96.2 million;
abercrombie comparable store sales decreased 7% -- Hollister Co.
net sales increased 7% to $330.2 million; Hollister comparable
store sales decreased 8% -- RUEHL net sales increased 27% to $13.0
million; RUEHL comparable store sales decreased 17% -- Net income
for the first quarter increased 3% to $62.1 million -- Net income
per diluted share in the first quarter increased 6% to $0.69 Mike
Jeffries, Chief Executive Officer and Chairman of the Board of
Abercrombie & Fitch Co., said: "Our first quarter financial
results demonstrate our ability to effectively position our brands.
Despite a tough selling environment, we produced bottom-line growth
while still remaining true to the aspirational positioning of our
brands. We continue to focus on improving the quality of our
product and the emotional store experience, which gives us our
competitive advantage and is critical to our long-term
sustainability." First Quarter Financial Results Net sales for the
thirteen weeks ended May 3, 2008 increased 8% to $800.2 million
from $742.4 million for the thirteen weeks ended May 5, 2007. Total
Company direct-to-consumer net sales increased 44% to $62.5 million
for the thirteen week period ended May 3, 2008, compared to the
thirteen week period ended May 5, 2007. Total Company comparable
store sales decreased 3% for the thirteen weeks ended May 3, 2008.
The gross profit rate for the quarter was 66.8%, up 120 basis
points compared to last year. The improvement in gross profit rate
was due to a higher initial markup rate and lower shrink rate,
partially offset by a higher markdown rate versus last year. Stores
and Distribution expense, as a percentage of sales, increased 120
basis points to 42.7% from 41.5%. 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 Tokyo flagship lease. 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, increased 100
basis points to 13.1% from 12.1%. The increase in rate versus last
year was driven by increases in home office payroll and outside
services expense rates, partially offset by decreases in travel
expense rate. Operating income for the first quarter decreased 2%
to $90.6 million compared to $92.7 million. Interest income for the
first quarter increased to $7.6 million compared to $3.7 million
last year. The increase was attributed to both a higher average
investment balance and a higher average interest rate compared to
last year. The effective tax rate for the first quarter was 36.8%
compared to 37.7% last year. The rate favorability was primarily
attributed to higher tax exempt investment income. Net income for
the first quarter increased 3% to $62.1 million compared to $60.1
million last year. Net income per diluted share for the first
quarter increased 6% to $0.69 compared to $0.65 last year. 2008
Outlook The Company reaffirmed its previously disclosed earnings
guidance which stated it 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 guidance reflects a negative 2%
comparable store sales scenario for the second quarter of Fiscal
2008. The Company plans total capital expenditures for Fiscal 2008
to now be between $410 million and $415 million with approximately
$290 million of this amount allocated to new store construction and
store remodels. 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 now expects to increase
gross square-footage by approximately 10%, revised from the
previous estimate of 11%. In North America, the Company expects to
open 104 new non-flagship stores including three new Abercrombie
& Fitch stores, 66 new Hollister Co. stores, 13 new abercrombie
stores, six new RUEHL stores and 14 new Gilly Hicks stores and two
new outlet stores. The Company also plans to open four new,
non-flagship Hollister Co. stores in the United Kingdom in Fiscal
2008. 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 June 17, 2008 to
shareholders of record at the close of business on May 30, 2008.
The Company plans to open its second European Abercrombie &
Fitch flagship in 2009. The 16,000 square foot store will be
located at Kobmagergade 11, Copenhagen, Denmark. The Company is
also in the process of securing locations in Italy, France,
Germany, Spain and Sweden. The Company plans to open its first
abercrombie flagship on Fifth Avenue in New York in 2010. The
Company operated 353 Abercrombie & Fitch stores, 202
abercrombie stores, 457 Hollister Co. stores, 23 RUEHL stores and
five Gilly Hicks stores in the United States at the end of the
first quarter. 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 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 3028248; 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 2, 2008, in some cases have affected and
in the future could affect the Company's financial performance and
could cause actual results for the 2008 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 3, 2008 and Thirteen Weeks Ended May 5, 2007 (in thousands,
except per share data) ACTUAL ACTUAL 2008 % of Sales 2007 % of
Sales Net Sales $800,178 100.0% $742,410 100.0% Cost of Goods Sold
266,012 33.2% 255,141 34.4% Gross Profit 534,166 66.8% 487,269
65.6% Total Stores and Distribution Expense 341,788 42.7% 308,238
41.5% Total Marketing, General and Administrative Expense 104,698
13.1% 90,175 12.1% Other Operating Income, Net (2,941) -0.4%
(3,854) -0.5% Operating Income 90,621 11.3% 92,710 12.5% Interest
Income, Net (7,646) -1.0% (3,711) -0.5% Income Before Income Taxes
98,267 12.3% 96,421 13.0% Income Tax Expense 36,151 4.5% 36,340
4.9% Effective Rate 36.8% 37.7% Net Income $62,116 7.8% $60,081
8.1% Net Income Per Share: Basic $0.72 $0.68 Diluted $0.69 $0.65
Weighted-Average Shares Outstanding: Basic 86,335 87,746 Diluted
90,138 92,292 Abercrombie & Fitch Co. Condensed Consolidated
Balance Sheets (in thousands) (Unaudited) ASSETS May 3, 2008
February 2, 2008 Current Assets Cash and Equivalents $187,217
$118,044 Marketable Securities - 530,486 Receivables 68,643 53,801
Inventories 347,628 333,153 Deferred Income Taxes 38,160 36,128
Other Current Assets 72,346 68,643 Total Current Assets 713,994
1,140,255 Property and Equipment, Net 1,341,259 1,318,291
Marketable Securities 318,136 - Other Assets 112,454 109,052 TOTAL
ASSETS $2,485,843 $2,567,598 LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities Accounts Payable and Outstanding Checks
$161,123 $151,798 Accrued Expenses 208,777 280,910 Deferred Lease
Credits 42,018 37,925 Income Taxes Payable 6,459 72,480 Total
Current Liabilities 418,377 543,113 Long-Term Liabilities Deferred
Income Taxes 23,179 22,491 Deferred Lease Credits 218,902 213,739
Other Liabilities 181,068 169,942 Total Long-Term Liabilities
423,149 406,172 Total Shareholders' Equity 1,644,317 1,618,313
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,485,843 $2,567,598
DATASOURCE: Abercrombie & Fitch CONTACT: Investor Inquiries,
Brian Logan, Sr. Director, Investor Relations and Controller,
+1-614-283-6877; Media Inquiries, Thomas Lennox, Vice President,
Corporate Communications, +1-614-283-6493, both of Abercrombie
& Fitch Co. Web site: http://www.abercrombie.com/
http://www.abercrombiekids.com/
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