Abercrombie & Fitch Co. (NYSE: ANF) today reported unaudited
results which reflected net income of $50.0 million and net income
per diluted share of $0.56 for the thirteen weeks ended October 30,
2010, compared to a net income of $38.8 million and net income per
diluted share of $0.44 for the thirteen weeks ended October 31,
2009. Net income for the thirteen weeks ended October 31, 2009
included a benefit of $0.21 per basic and diluted share associated
with the true up of the year-to-date tax rate and a net loss per
basic and diluted share of $0.12 from discontinued operations.
Third Quarter Sales Highlights
Total Company net sales, including direct-to-consumer net sales,
increased 18% to $885.8 million
Total Company domestic net sales, including direct-to-consumer
net sales, increased 8% to $721.7 million
Total Company international net sales, including
direct-to-consumer net sales, increased 87% to $164.1 million
Comparable store sales increased 7%
Total Company direct-to-consumer net merchandise sales increased
32% to $81.4 million
Abercrombie & Fitch net sales of $384.0 million; Abercrombie
& Fitch comparable store sales increased 8%
abercrombie kids net sales of $99.9 million; abercrombie kids
comparable store sales increased 2%
Hollister Co. net sales of $392.5 million; Hollister Co.
comparable store sales increased 7%
Mike Jeffries, Chief Executive Officer and Chairman of the Board
of Abercrombie & Fitch Co., said:
"We are pleased with our performance against our objectives for
the quarter, and remain very excited about the opportunities ahead
of us across all areas of our business. Our domestic business has
continued to improve, our international results are outstanding,
and our direct to consumer business is posting very strong
growth."
Third Quarter Financial Results
Net sales for the thirteen weeks ended October 30, 2010
increased 18% to $885.8 million from $753.7 million for the
thirteen weeks ended October 31, 2009. Total Company
direct-to-consumer net merchandise sales increased 32% to $81.4
million for the thirteen week period ended October 30, 2010. Total
Company third quarter comparable store sales increased 7%.
The gross profit rate for the third quarter was 63.7%, 40 basis
points lower than last year's third quarter gross profit rate. The
decrease in gross profit rate was primarily driven by an 11%
decrease in average unit retail, partially off-set by a reduction
in average unit cost.
Stores and distribution expense, as a percentage of net sales,
decreased to 43.5% from 46.4% for the third quarter. The decrease
in the stores and distribution expense rate was primarily driven by
lower store occupancy costs and payroll costs as a percentage of
net sales.
Marketing, general and administrative expense for the third
quarter was $102.6 million, a 17% increase compared to $87.9
million during the same period last year. The increase in
marketing, general and administrative expense was primarily due to
increases in compensation and benefits, including incentive and
equity compensation, and the favorable impact of an insurance
recovery in the prior year.
The effective tax rate for continuing operations for the
thirteen weeks ended October 30, 2010 was an expense of 35.6% as
compared to a benefit of 4.7% for the prior year comparable period.
The third quarter 2009 rate was favorably impacted by a true up in
the year-to-date tax rate, along with a benefit of $2.2 million
from the settlement of state tax audits.
The Company ended the third quarter of Fiscal 2010 with $618.2
million in cash and cash equivalents, borrowings under the credit
agreement of $57.2 million and outstanding letters of credit of
$10.6 million compared to $466.9 million in cash and cash
equivalents, borrowings under the credit agreement of $50.6 million
and outstanding letters of credit of $45.3 million at the
comparable point last year.
2010 Outlook
The Company continues to expect to open approximately 20
international mall-based Hollister stores in Fiscal 2010, 11 of
which will be opened in the fourth quarter. Since the beginning of
the fourth quarter, the Company has opened Abercrombie & Fitch
flagships in Fukuoka, Japan and Copenhagen, Denmark and will also
open its first international Gilly Hicks store in the United
Kingdom during the quarter.
The Company also expects to open its first Abercrombie &
Fitch store in Puerto Rico, a Hollister Epic store on 5th Avenue in
New York and one domestic Gilly Hicks store during the fourth
quarter.
The Company now expects total capital expenditures to be
approximately $190 million, including approximately $140 million
related to new stores, store refreshes and remodels, and
approximately $50 million related to information technology,
distribution center and other home office projects.
A summary of store openings and closings for the thirteen and
thirty-nine week periods ended October 30, 2010 is included with
the financial statement schedules following this release.
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 December 14, 2010 to shareholders of record at
the close of business on November 26, 2010.
An investor presentation of third quarter results will be
available in the "Investors" section of the Company's website at
www.abercrombie.com at approximately 8:00 AM, Eastern Time,
today.
At the end of October 2010, the Company operated a total of
1,106 stores. The Company operated 340 Abercrombie & Fitch
stores, 201 abercrombie kids stores, 510 Hollister Co. stores and
17 Gilly Hicks stores domestically. The Company also operated seven
Abercrombie & Fitch stores, four abercrombie kids stores and 27
Hollister Co. stores internationally. The Company operates
e-commerce websites at www.abercrombie.com,
www.abercrombiekids.com, www.hollisterco.com and
www.gillyhicks.com.
Today at 8:30 AM, Eastern Time, the Company will conduct a
conference call. Management will discuss the Company's performance
and its plans for the future and will accept questions from
participants. To listen to the live conference call, dial (800)
289-0468 or internationally at (913) 312-93211. To listen via the
Internet, go to 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 4069400; or for 12 months by visiting the
Company's website at 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 30, 2010, in some cases have affected and
in the future could affect the Company's financial performance and
could cause actual results for the 2010 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: general economic and financial
conditions could have a material adverse effect on the Company's
business, results of operations and liquidity; loss of the services
of skilled senior executive officers could have a material adverse
effect on the Company's business; ability to hire, train and retain
qualified associates could have a material adverse effect on the
Company's business; equity-based compensation awarded under the
employment agreement with the Company's Chief Executive Officer
could adversely impact the Company's cash flows, financial position
or results of operations and could have a dilutive effect on the
Company's outstanding Common Stock; failure to anticipate, identify
and respond to changing consumer preferences and fashion trends in
a timely manner could cause the Company's profitability to decline;
unseasonable weather conditions affecting consumer preferences
could have a material adverse effect on the Company's business;
disruptive weather conditions affecting the consumers' ability to
shop could have a material adverse effect on the Company's
business; the Company's market share may be adversely impacted at
any time by a significant number of competitors; the Company's
international expansion plan is dependent on many factors, any of
which could delay or prevent successful penetration into new
markets and strain its resources; the Company's growth strategy
relies on the addition of new stores, which may strain the
Company's resources and adversely impact current store performance;
the Company may incur costs related to store closures; availability
and market prices of key raw materials could have a material
adverse effect on the Company's business and results of operations;
the interruption of the flow of merchandise from key vendors and
international manufacturers could disrupt the Company's supply
chain; the Company does not own or operate any manufacturing
facilities and therefore depends upon independent third parties for
the manufacture of all its merchandise; the Company's reliance on
two distribution centers domestically located in the same vicinity,
and one distribution center internationally, makes it susceptible
to disruptions or adverse conditions affecting its distribution
centers; the Company's reliance on third parties to deliver
merchandise from its distribution centers to its stores and
direct-to-consumer customers could result in disruptions to its
business; the Company's development of new brand concepts could
have a material adverse effect on the Company's financial condition
or results of operations; fluctuations in foreign currency exchange
rates could adversely impact financial results; the Company's net
sales and inventory levels fluctuate on a seasonal basis, causing
its results of operations to be particularly susceptible to changes
to back-to-school and holiday shopping patterns; the Company's
ability to attract customers to its stores depends heavily on the
success of the shopping centers in which they are located;
comparable store sales will continue to fluctuate on a regular
basis; the Company's net sales are affected by direct-to-consumer
sales; the Company may be exposed to risks and costs associated
with credit card fraud and identity theft; the Company's litigation
exposure could exceed expectations, having a material adverse
effect on the Company's financial condition or results of
operations; the Company's failure to adequately protect its
trademarks could have a negative impact on its brand image and
limit its ability to penetrate new markets; the Company's unsecured
credit agreement includes financial and other covenants that impose
restrictions on its financial and business operations; changes in
taxation requirements could adversely impact financial results; the
Company's inability to obtain commercial insurance at acceptable
prices or failure to adequately reserve for self-insured exposures
might increase expense and adversely impact financial results;
modifications and/or upgrades to information technology systems may
disrupt operations; the Company could suffer if the Company's
computer systems are disrupted or cease to operate effectively;
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
could have a material adverse effect on the Company's business;
potential disruption of the Company's business due to the
occurrence of, or fear of, a health pandemic could have a material
adverse effect on the Company's business; changes in the regulatory
or compliance landscape could adversely affect the Company's
business or results of operations; and the Company's operations may
be effected by greenhouse emissions and climate change.
Abercrombie & Fitch Co.
Condensed Consolidated Statements of Income
(Unaudited)
Thirteen Weeks Ended October 30, 2010 and Thirteen Weeks Ended October 31,
2009
(in thousands, except per share data)
ACTUAL ACTUAL
--------- ---------
% of Net % of Net
2010 Sales 2009 Sales
--------- --------- --------- ---------
Net Sales $ 885,778 100.0% $ 753,684 100.0%
Cost of Goods Sold 321,346 36.3% 270,597 35.9%
--------- --------- --------- ---------
Gross Profit 564,432 63.7% 483,087 64.1%
Total Stores and Distribution
Expense 385,135 43.5% 349,362 46.4%
Total Marketing, General and
Administrative Expense 102,612 11.6% 87,867 11.7%
Other Operating Income, Net (1,692) -0.2% (1,609) -0.2%
--------- --------- --------- ---------
Operating Income 78,377 8.8% 47,467 6.3%
Interest Expense, Net 671 0.1% 461 0.1%
--------- --------- --------- ---------
Income from Continuing
Operation Before Taxes 77,706 8.8% 47,005 6.2%
Tax Expense (Benefit) for
Continuing Operations 27,666 3.1% (2,217) -0.3%
--------- --------- --------- ---------
Net Income from Continuing
Operations 50,040 5.6% 49,222 6.5%
Net Loss from Discontinued
Operations (net of taxes) - 0.0% (10,439) -1.4%
--------- --------- --------- ---------
Net Income $ 50,040 5.6% $ 38,784 5.1%
--------- --------- --------- ---------
Net Income Per Share from
Continuing Operations:
Basic $ 0.57 $ 0.56
Diluted $ 0.56 $ 0.55
Net Loss Per Share from
Discontinued Operations:
Basic $ - $ (0.12)
Diluted $ - $ (0.12)
Net Income Per Share:
Basic $ 0.57 $ 0.44
Diluted $ 0.56 $ 0.44
Weighted-Average Shares
Outstanding:
Basic 88,236 87,943
Diluted 90,069 88,730
Abercrombie & Fitch Co.
Condensed Consolidated Statements of Income
(Unaudited)
Thirty-Nine Weeks Ended October 30, 2010 and Thirty-Nine Weeks Ended
October 31, 2009
(in thousands, except per share data)
ACTUAL ACTUAL
----------- -----------
% of Net % of Net
2010 Sales 2009 Sales
----------- ----------- ----------- -----------
Net Sales $ 2,319,381 100.0% $ 1,992,635 100.0%
Cost of Goods Sold 838,186 36.1% 703,579 35.3%
----------- ----------- ----------- -----------
Gross Profit 1,481,195 63.9% 1,289,055 64.7%
Total Stores and
Distribution Expense 1,104,027 47.6% 1,011,968 50.8%
Total Marketing,
General and
Administrative Expense 294,450 12.7% 260,878 13.1%
Other Operating Income,
Net (4,507) -0.2% (6,266) -0.3%
----------- ----------- ----------- -----------
Operating Income 87,225 3.8% 22,476 1.1%
Interest Expense
(Income), Net 2,303 0.1% (2,691) -0.1%
----------- ----------- ----------- -----------
Income from Continuing
Operation Before Taxes 84,922 3.7% 25,167 1.3%
Tax Expense for
Continuing Operations 27,232 1.2% 7,239 0.4%
----------- ----------- ----------- -----------
Net Income from
Continuing Operations 57,690 2.5% 17,927 0.9%
Net Loss from
Discontinued
Operations (net of
taxes) - 0.0% (65,131) -3.3%
----------- ----------- ----------- -----------
Net Income (Loss) $ 57,690 2.5% $ (47,204) -2.4%
----------- ----------- ----------- -----------
Net Income Per Share
from Continuing
Operations:
Basic $ 0.65 $ 0.20
Diluted $ 0.64 $ 0.20
Net Loss Per Share from
Discontinued
Operations:
Basic $ - $ (0.74)
Diluted $ - $ (0.74)
Net Income (Loss) Per
Share:
Basic $ 0.65 $ (0.54)
Diluted $ 0.64 $ (0.54)
Weighted-Average Shares
Outstanding:
Basic 88,184 87,839
Diluted 89,731 87,839
Abercrombie & Fitch Co.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
October 30, January 30,
ASSETS 2010 2010
------------ ------------
Current Assets
Cash and Equivalents $ 618,222 $ 680,113
Marketable Securities - 32,356
Receivables 82,264 90,865
Inventories 511,821 310,645
Deferred Income Taxes 69,943 44,570
Other Current Assets 83,849 77,297
------------ ------------
Total Current Assets 1,366,099 1,235,846
Property and Equipment, Net 1,220,103 1,244,019
Non-Current Marketable Securities 124,837 141,794
Other Assets 211,738 200,207
------------ ------------
TOTAL ASSETS $ 2,922,777 $ 2,821,866
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Outstanding Checks $ 202,044 $ 150,134
Accrued Expenses 242,835 246,289
Deferred Lease Credits 43,336 43,597
Income Taxes Payable 57,096 9,352
------------ ------------
Total Current Liabilities 545,311 449,372
Long-Term Liabilities
Deferred Income Taxes 47,178 47,142
Deferred Lease Credits 202,596 212,052
Long-term Debt 81,670 71,213
Other Liabilities 199,191 214,170
------------ ------------
Total Long-Term Liabilities 530,635 544,577
Total Shareholders' Equity 1,846,831 1,827,917
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,922,777 $ 2,821,866
------------ ------------
Abercrombie & Fitch Co.
Domestic Store Count
(Unaudited)
Thirteen and Thirty-Nine Week Periods Ended October 30, 2010
Abercrombie
Store Activity & Fitch abercrombie Hollister Gilly Hicks Total
-------------- ----------- ----------- ---------- ----------- -----
July 31, 2010 339 202 509 17 1,067
New 1 1 1 3
Remodels/Conversi-
ons (net
activity) - (2) - - (2)
Closed - - - - -
----------- ----------- ---------- ----------- -----
October 30, 2010 340 201 510 17 1,068
=========== =========== ========== =========== =====
January 30, 2010 340 205 507 16 1,068
New 5 3 4 1 13
Remodels/Conversi-
ons (net
activity) - (2) - - (2)
Closed (5) (5) (1) - (11)
----------- ----------- ---------- ----------- -----
October 30, 2010 340 201 510 17 1,068
=========== =========== ========== =========== =====
Abercrombie & Fitch Co.
International Store Count
(Unaudited)
Thirteen and Thirty-Nine Week Periods Ended October 30, 2010
Abercrombie Gilly
Store Activity & Fitch abercrombie Hollister Hicks Total
-------------- ------------ ----------- ---------- ---------- ---------
July 31, 2010 6 4 21 - 31
New 1 - 6 7
Remodels/Conversi-
ons (net
activity) - - - - -
Closed - - - - -
------------ ----------- ---------- ---------- ---------
October 30, 2010 7 4 27 - 38
============ =========== ========== ========== =========
January 30, 2010 6 4 18 - 28
New 1 - 9 - 10
Remodels/Conversi-
ons (net
activity) - - - - -
Closed - - - - -
------------ ----------- ---------- ---------- ---------
October 30, 2010 7 4 27 - 38
============ =========== ========== ========== =========
For further information, call: Eric Cerny Manager, Investor
Relations (614) 283-6385
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