Fourth Quarter Net Income Per Diluted Share of $0.78 After Taking
Non-Cash Asset Impairment Charge of $0.21 and Tax Expense Charge of
$0.11 NEW ALBANY, Ohio, Feb. 13 /PRNewswire-FirstCall/ --
Abercrombie & Fitch Co. (NYSE:ANF) today reported unaudited
results which reflected net income of $68.4 million and net income
per diluted share of $0.78 for the thirteen weeks ended January 31,
2009, including a non-cash, after-tax charge of $0.21 associated
with the impairment of store-related assets and a charge to tax
expense of $0.11 related to the execution of the Chairman and Chief
Executive Officer's new employment agreement. The Company also
reported net income of $272.3 million and net income per diluted
share of $3.05, after the above charges, for the fifty-two week
fiscal year ended January 31, 2009. Fourth Quarter Sales Highlights
-- Total Company net sales decreased 19% to $998 million;
comparable store sales decreased 25% -- Total direct-to-consumer
net sales decreased 12% to $95.1 million -- Abercrombie & Fitch
net sales of $404.4 million; Abercrombie & Fitch comparable
store sales decreased 23% -- abercrombie net sales of $120.1
million; abercrombie comparable store sales decreased 30% --
Hollister Co. net sales of $449.6 million; Hollister Co. comparable
store sales decreased 25% -- RUEHL net sales of $17.1 million;
RUEHL comparable store sales decreased 25% Mike Jeffries, Chief
Executive Officer and Chairman of the Board of Abercrombie &
Fitch Co., said: "The fourth quarter proved to be a catastrophe for
the retail industry; a nightmare that included unprecedented
promotional activity by other retailers in the malls and consumers
who continued to show reluctance to spend, especially for premium
brands. However, despite the unprecedented volatility, we are
satisfied with our results for the quarter. Our comparable store
sales decrease was lower than we had projected, our earnings per
diluted share, excluding the effect of one-time items, exceeded our
guidance and we maintained the aspirational nature of all of our
brands. As we look toward 2009, we continue to see a tumultuous
environment. We will again rely on our ability to manage the
aspects of the business that are under our control and continue to
protect and position our brands for more promising times." Fourth
Quarter and Fiscal Year 2008 Financial Results Net sales for the
thirteen weeks ended January 31, 2009 decreased 19% to $998 million
from $1.229 billion for the thirteen weeks ended February 2, 2008.
Total Company direct-to-consumer net sales decreased 12% to $95.1
million for the thirteen week period ended January 31, 2009,
compared to the thirteen week period ended February 2, 2008. Total
Company fourth quarter comparable store sales decreased 25%. For
the fifty-two week fiscal year ended January 31, 2009, the Company
reported a net sales decrease of 6% to $3.54 billion from $3.75
billion for the fifty-two week fiscal year ended February 2, 2008.
Total Company direct-to-consumer net sales increased 5% to $271.0
million for the fifty-two week fiscal year ended January 31, 2009,
compared to the fifty-two week fiscal year ended February 2, 2008.
Fiscal 2008 comparable store sales decreased 13%. The gross profit
rate for the quarter was 64.4%, 280 basis points lower than last
year. The decrease in gross profit rate was attributable to an
increase in markdowns taken to clear through seasonal inventory.
For Fiscal 2008, the gross profit rate was 66.7% versus 67.0% last
year. Stores and distribution expense for the quarter, as a
percentage of sales, increased to 42.3% from 31.6%. The Company was
able to achieve reductions in store payroll, but at less than the
rate of the sales decline. In addition, the Company recorded a
$30.6 million non-cash impairment charge related to long-lived
assets associated with 11 Abercrombie & Fitch stores, six
abercrombie stores, three Hollister stores and nine RUEHL stores.
The majority of the $30.6 million impairment charge is associated
with the nine RUEHL stores. For Fiscal 2008, stores and
distribution expense, as a percentage of sales, increased to 42.7%
versus 37.0% last year. Marketing, general and administrative
expense for the quarter was $101.0 million compared to $103.1
million during the same period last year. The reduction in expense
includes savings in incentive compensation and benefits, travel and
outside services. For Fiscal 2008, marketing, general and
administrative expense was $419.7 million compared to $395.8
million last year. Interest income for the quarter decreased to
$1.4 million compared to $6.4 million during the same period last
year. The decrease was attributable to a lower average rate of
return on investments compared to last year. For Fiscal 2008,
interest income decreased to $11.4 million compared to $18.8
million last year. The effective tax rate for the fourth quarter
was 45.7% compared to 36.9% for the Fiscal 2007 comparable period.
The fourth quarter tax rate reflects a charge of $9.9 million to
tax expense as a result of the Chairman and Chief Executive
Officer's new employment agreement, which pursuant to section
162(m) results in the exclusion of previously recognized tax
benefits. Under the previous employment agreement, the Company
recorded deferred tax assets based on the anticipated delivery of
benefits to the CEO in the calendar year following the year of his
retirement. As a result of the new employment agreement, the CEO
receives the benefits during his employment; therefore the expected
tax benefits will no longer be available. For Fiscal 2008, the
effective tax rate was 39.6% compared to 37.4% for Fiscal 2007.
2009 Outlook The Company anticipates a difficult selling
environment to persist throughout 2009 and believes there may be
significant volatility in sales levels. Due to the current economic
conditions, and in particular, their impact on sales trends, the
Company is not providing EPS guidance for Fiscal 2009. Based on
current lease commitments, the Company expects total capital
expenditures to be in the range of $165 to $175 million, including
$120 to $125 million related to new stores, store refreshes and
remodels, and $45 to $50 million related to information technology,
distribution center and other home office projects. The Company is
also in active discussions with regard to additional store openings
in Europe. The flagship openings to which the Company is committed
in 2009 include Hollister Co. in Soho, Abercrombie & Fitch and
abercrombie in Milan and Abercrombie & Fitch in Tokyo. The
Company now expects the Abercrombie & Fitch flagship in
Copenhagen and the abercrombie flagship in New York to open in
2010. The Company also confirmed it is in an on-going process of
reviewing operating expenses, and has already implemented a number
of cost reduction actions. 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
March 17, 2009 to shareholders of record at the close of business
on February 27, 2009. The Company operated 352 Abercrombie &
Fitch stores, 210 abercrombie stores, 507 Hollister Co. stores, 28
RUEHL stores and 14 Gilly Hicks stores in the United States at the
end of fiscal January. The Company operates three Abercrombie &
Fitch stores, two abercrombie stores and five Hollister Co. stores
in Canada, and one Abercrombie & Fitch store and three
Hollister Co. stores in the United Kingdom. The Company operates
e-commerce websites at http://www.abercrombie.com/,
http://www.abercrombiekids.com/, http://www.hollisterco.com/,
http://www.ruehl.com/ and http://www.gillyhicks.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 (888) 737-3662 or internationally
at (913) 312-9321. 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 6647238; 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 "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OEPRATIONS" in "ITEM 2. Safe Harbor
Statement Under the Private Securities Litigation Reform Act of
1995" of A&F's Quarterly Report on Form 10-Q for the quarterly
period ended November 1, 2008, in some cases have affected and in
the future could affect the Company's financial performance and
could cause actual results for the 2009 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
January 31, 2009 and Thirteen Weeks Ended February 2, 2008 (in
thousands, except per share data) ACTUAL ACTUAL 2008 % of Sales
2007 % of Sales Net Sales $997,955 100.0% $1,228,969 100.0% Cost of
Goods Sold 355,341 35.6% 403,352 32.8% Gross Profit 642,614 64.4%
825,617 67.2% Total Stores and Distribution Expense 422,459 42.3%
388,421 31.6% Total Marketing, General and Administrative Expense
100,978 10.1% 103,147 8.4% Other Operating Income, Net (5,468)
-0.5% (3,019) -0.2% Operating Income 124,645 12.5% 337,068 27.4%
Interest Income, Net (1,419) -0.1% (6,356) -0.5% Income Before
Income Taxes 126,064 12.6% 343,424 27.9% Income Tax Expense 57,657
5.8% 126,668 10.3% Effective Rate 45.7% 36.9% Net Income $68,407
6.9% $216,756 17.6% Net Income Per Share: Basic $0.79 $2.52 Diluted
$0.78 $2.40 Weighted-Average Shares Outstanding: Basic 87,052
86,122 Diluted 88,258 90,235 Abercrombie & Fitch Co. Condensed
Consolidated Statements of Income (Unaudited) Fifty-Two Weeks Ended
January 31, 2009 and Fifty-Two Weeks Ended February 2, 2008 (in
thousands, except per share data) ACTUAL ACTUAL 2008 % of Sales
2007 % of Sales Net Sales $3,540,276 100.0% $3,749,847 100.0% Cost
of Goods Sold 1,178,584 33.3% 1,238,480 33.0% Gross Profit
2,361,692 66.7% 2,511,367 67.0% Total Stores and Distribution
Expense 1,511,511 42.7% 1,386,846 37.0% Total Marketing, General
and Administrative Expense 419,659 11.9% 395,758 10.6% Other
Operating Income, Net (8,864) -0.3% (11,734) -0.3% Operating Income
439,386 12.4% 740,497 19.7% Interest Income, Net (11,382) -0.3%
(18,828) -0.5% Income Before Income Taxes 450,768 12.7% 759,325
20.2% Income Tax Expense 178,513 5.0% 283,628 7.6% Effective Rate
39.6% 37.4% Net Income $272,255 7.7% $475,697 12.7% Net Income Per
Share: Basic $3.14 $5.45 Diluted $3.05 $5.20 Weighted-Average
Shares Outstanding: Basic 86,816 87,248 Diluted 89,291 91,523
Condensed Consolidated Balance Sheets (in thousands) (Unaudited)
ASSETS January 31, 2009 February 2, 2008 Current Assets Cash and
Equivalents $522,122 $118,044 Marketable Securities - 530,486
Receivables 53,110 53,801 Inventories 372,422 333,153 Deferred
Income Taxes 43,408 36,128 Other Current Assets 93,763 68,643 Total
Current Assets 1,084,825 1,140,255 Property and Equipment, Net
1,398,655 1,318,291 Marketable Securities 229,081 - Other Assets
135,620 109,052 TOTAL ASSETS $2,848,181 $2,567,598 LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable and
Outstanding Checks $149,753 $151,798 Accrued Expenses 241,231
280,910 Deferred Lease Credits 42,358 37,925 Income Taxes Payable
16,455 72,480 Total Current Liabilities 449,797 543,113 Long-Term
Liabilities Deferred Income Taxes 34,085 22,491 Deferred Lease
Credits 211,978 213,739 Debt 100,000 - Other Liabilities 206,743
169,942 Total Long-Term Liabilities 552,806 406,172 Total
Shareholders' Equity 1,845,578 1,618,313 TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,848,181 $2,567,598 DATASOURCE: Abercrombie
& Fitch Co. CONTACT: Investor Inquiries: Eric Cerny, Manager,
Investor Relations, +1-614-283-6385 Web site:
http://www.abercrombie.com/ http://www.abercrombiekids.com/
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