Abercrombie & Fitch Co. (NYSE: ANF) today announced results for
the fourth quarter and fiscal year ended January 30, 2021.
These compare to results for the fourth quarter and fiscal year
ended February 1, 2020. Descriptions of the use of non-GAAP
financial measures and reconciliations of GAAP and non-GAAP
financial measures accompany this release.
Fran Horowitz, Chief Executive Officer, said, “I
am proud of our execution in the fourth quarter, where we exceeded
initial internal expectations. We listened and remained close to
our customer, adjusting our product and messaging to align with
their new reality. We drove 34% digital sales growth, expanded
gross profit rate by 230 basis points and reduced operating expense
during the fourth quarter."
“For the year, we made significant progress on
our key transformation initiatives. We leaned into our
infrastructure to grow digital to 54% of annual revenues while
utilizing our lease flexibility to take approximately 1.1 million
gross square feet, or 17%, out of our base, including eight
tourist-dependent flagships. At the same time, we continued to make
strategic investments to support future growth including: opening
smaller, more omni-enabled experiences; adding senior level talent
in key areas including marketing, data and analytics and digital;
and further building-out regional teams in EMEA and APAC. We remain
focused on controlling what we can control and ended 2020 even
stronger than we started.”
“As we enter 2021, we are pleased with our start
to the first quarter and have proven strategies in place to build
on recent successes in product, marketing and digital. Our solid
foundation and strong liquidity position enable us to be on the
offense as we continue to focus on profitable topline growth,
square footage optimization, digital transformation and global
market share gains. While the landscape remains uncertain, I am
excited about the future and more confident than ever in our
ability to drive sustainable long-term operating margin
expansion.”
Details related to net income (loss) per diluted
share for the fourth quarter and full year are as follows:
|
|
Fourth Quarter |
|
Full Year |
|
|
2020 |
|
2019 |
|
2020 (1) |
|
2019
(2) |
GAAP |
|
$ |
1.27 |
|
|
$ |
1.29 |
|
|
$ |
(1.82 |
) |
|
$ |
0.60 |
|
Excluded items, net of tax effect (3) |
|
(0.23 |
) |
|
(0.01 |
) |
|
(1.10 |
) |
|
(0.13 |
) |
Adjusted non-GAAP |
|
$ |
1.50 |
|
|
$ |
1.31 |
|
|
$ |
(0.73 |
) |
|
$ |
0.73 |
|
Impact from changes in foreign currency exchange rates (4) |
|
— |
|
|
0.17 |
|
|
— |
|
|
0.29 |
|
Adjusted non-GAAP constant currency |
|
$ |
1.50 |
|
|
$ |
1.48 |
|
|
$ |
(0.73 |
) |
|
$ |
1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net loss per diluted share for the full year
of fiscal 2020 includes adverse tax impacts of $101 million, or
$1.61 per diluted share, related to valuation allowances on
deferred tax assets and other tax charges as a result of the
COVID-19 pandemic.(2) Net income per diluted share for the full
year of fiscal 2019 includes the adverse impact from flagship store
exit charges of $47 million, or $0.53 per diluted share, net of
estimated tax effect which is calculated as the difference between
the tax provision with and without these charges.(3) Excluded items
consist of certain pre-tax store asset impairment charges and the
tax effect of pre-tax excluded items.(4) The estimated impact from
foreign currency is calculated by applying current period exchange
rates to prior year results using a 26% tax rate.
A summary of results for the fourth quarter
ended January 30, 2021 as compared to the fourth quarter ended
February 1, 2020:
- Net
sales of $1.1 billion down 5% as compared to last year,
reflecting the adverse impact of COVID-19.
- Digital net
sales increased 34% to $639 million
reflecting robust growth in every month of the quarter.
- Gross
profit rate improved 230 basis points to
60.5% on higher average unit retail and slightly lower average unit
cost.
- Operating
expense, excluding other operating income, was
approximately flat and down 3% as compared to last year on a
reported and adjusted non-GAAP basis, respectively, reflecting an
ongoing focus on managing costs. Operating expense as a percentage
of sales deleveraged 260 basis points on a reported basis and 140
basis points on an adjusted non-GAAP basis as compared to last
year.
- Operating
income of $116 million and $131 million on a reported and
adjusted non-GAAP basis, respectively, as compared to $122 million
and $125 million last year, on a reported and adjusted non-GAAP
basis, respectively.
- Net income
per diluted share of $1.27 and $1.50 on a reported and
adjusted non-GAAP basis, respectively, as compared to net income
per diluted share last year of $1.29 and $1.31 on a reported and
adjusted non-GAAP basis, respectively.
A summary of results for the full year ended
January 30, 2021 as compared to the full year ended
February 1, 2020:
- Net
sales of $3.1 billion down 14% as compared to last year,
reflecting the adverse impact of COVID-19.
- Digital net
sales increased 39% to approximately $1.7
billion.
- Gross
profit rate improved by 110 basis points
to 60.5% on higher average unit retail and flat average unit
cost.
- Operating
expense, excluding other operating income, was down 8% and
11% as compared to last year on a reported and adjusted non-GAAP
basis, respectively. Operating expense as a percentage of sales
deleveraged 380 basis points on a reported basis and 190 basis
points on an adjusted non-GAAP basis as compared to last year.
Operating expense reflects $12 million of benefits from flagship
store exits this year compared to $47 million of flagship store
exit charges last year.
- Operating
loss of $20 million and operating income
of $52 million on a reported and adjusted non-GAAP basis,
respectively. This compares to operating income last year of $70
million and $83 million on a reported and adjusted non-GAAP basis,
respectively.
- Net loss
per diluted share of $1.82 and $0.73 on a reported and
adjusted non-GAAP basis, respectively, as compared to net income
per diluted share last year of $0.60 and $0.73 on a reported and
adjusted non-GAAP basis, respectively. Net loss per diluted share
for the full year of fiscal 2020 includes adverse tax impacts of
$101 million, or $1.61 per diluted share, related to valuation
allowances on deferred tax assets and other tax charges as a result
of the COVID-19 pandemic.
- Generated
positive operating cash flows of $405 million during the
full year ended January 30, 2021, ending the year with
liquidity of approximately $1.3 billion. During the fourth quarter
ended January 30, 2021, the Company corrected an error in the
presentation of the $50 million withdrawal of the excess funds from
the company’s Rabbi Trust assets relative to prior periods. Refer
to the "Cash Flow and Capital Allocation" section within this
release for further details.
Net sales by brand and region for
the fourth quarter and full year are as follows:
|
Fourth Quarter |
(in thousands) |
2020 |
|
2019 |
|
% Change |
Net sales by brand: (1) |
|
|
|
|
|
Hollister |
$ |
655,424 |
|
|
$ |
710,540 |
|
|
(8 |
)% |
Abercrombie |
466,620 |
|
|
474,011 |
|
|
(2 |
)% |
Total company |
$ |
1,122,044 |
|
|
$ |
1,184,551 |
|
|
(5 |
)% |
Net sales by region: |
2020 |
|
2019 |
|
% Change |
United States |
$ |
788,056 |
|
|
$ |
814,079 |
|
|
(3 |
)% |
EMEA |
235,286 |
|
|
255,639 |
|
|
(8 |
)% |
APAC |
58,868 |
|
|
76,059 |
|
|
(23 |
)% |
Other |
39,834 |
|
|
38,774 |
|
|
3 |
% |
International |
333,988 |
|
|
370,472 |
|
|
(10 |
)% |
Total company |
$ |
1,122,044 |
|
|
$ |
1,184,551 |
|
|
(5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
(in thousands) |
2020 |
|
2019 |
|
% Change |
Net sales by brand: (1) |
|
|
|
|
|
Hollister |
$ |
1,834,349 |
|
|
$ |
2,158,514 |
|
|
(15 |
)% |
Abercrombie |
1,291,035 |
|
|
1,464,559 |
|
|
(12 |
)% |
Total company |
$ |
3,125,384 |
|
|
$ |
3,623,073 |
|
|
(14 |
)% |
Net sales by region: |
2020 |
|
2019 |
|
% Change |
United States |
$ |
2,127,403 |
|
|
$ |
2,410,802 |
|
|
(12 |
)% |
EMEA |
709,451 |
|
|
822,202 |
|
|
(14 |
)% |
APAC |
176,636 |
|
|
264,895 |
|
|
(33 |
)% |
Other |
111,894 |
|
|
125,174 |
|
|
(11 |
)% |
International |
997,981 |
|
|
1,212,271 |
|
|
(18 |
)% |
Total company |
$ |
3,125,384 |
|
|
$ |
3,623,073 |
|
|
(14 |
)% |
|
|
|
|
|
|
|
|
|
|
|
(1) Hollister
includes the Hollister and Gilly Hicks by Hollister brands.
Abercrombie includes the Abercrombie & Fitch and abercrombie
kids brands.
Financial Position and Liquidity |
As of January 30, 2021 the company had:
- Cash and
equivalents of $1.1 billion as compared to $671 million
last year.
-
Inventories of $404 million, a decrease of
approximately 7% over last year.
- Long-term
gross borrowings under the company's senior secured notes
of $350 million (the "Senior Secured Notes") which mature in July
2025 and bear interest at a rate of 8.75% per annum.
-
Borrowing available under the
senior-secured asset-based revolving credit facility (the "ABL
Facility") of $215 million.
-
Liquidity, comprised of cash and equivalents and
borrowing available under the ABL Facility, of approximately $1.3
billion. This compares to liquidity of $914 million as of
February 1, 2020.
Cash Flow and Capital Allocation |
Details related to the company's cash flows for
the full year ended January 30, 2021 are as follows:
- Net cash
provided by operating activities of $405 million.
- Net cash
used for investing activities of $52 million. Capital
expenditures were $102 million in fiscal 2020 as compared to $203
million in fiscal 2019.
- Net cash
provided by financing activities of $70 million,
reflecting the issuance of the Senior Secured Notes of $350 million
which were used, along with existing cash on hand, to repay
outstanding borrowings under the credit facilities.
Depreciation and amortization was $166 million
for fiscal 2020 as compared to $174 million in fiscal 2019.
During the fourth quarter ended January 30,
2021, an error relating to the cash flow presentation of the $50
million withdrawal of the excess funds from the company’s Rabbi
Trust assets was identified in the year-to-date cash flows
presented in each of the fiscal 2020 interim periods. The
year-to-date cash flows presented in fiscal 2020 interim periods
incorrectly classified such withdrawal as a cash inflow from
operating activities, rather than a cash inflow from investing
activities. The fiscal 2020 annual cash flow statement reflects the
correct presentation.
Following the company's decision to suspend its
share repurchase and dividend programs in light of COVID-19 during
fiscal 2020, the company now plans to resume share repurchase
activity.
As of January 30, 2021, the Company had the
authority to repurchase approximately 3.2 million shares as part of
the A&F Board of Directors’ previously approved June 2019 share
repurchase authorization. On February 19, 2021, the A&F Board
of Directors replaced the then existing share repurchase
authorization with a new 10.0 million share authorization, bringing
total shares available for purchase as of February 19, 2021 to 10.0
million shares. The timing and amount of repurchases will depend on
various factors, including market and business conditions.
The company returned $28 million to shareholders
during fiscal 2020 through share repurchases and dividends.
Global Store Network Optimization Update |
As part of its ongoing global store network
optimization initiative and stated goal of repositioning from
larger format, tourist-dependent flagship locations to smaller,
omni-enabled stores that cater to local customers, the company
closed eight flagship locations during fiscal 2020. This leaves the
company with seven operating flagships at the end of fiscal 2020,
down from 15 at the beginning of the year. In addition, the company
closed 129 non-flagship locations, resulting in 137 total store
closures during fiscal 2020. These actions reduced total company
gross square footage by approximately 1.1 million gross square
feet, or 17%, as compared to fiscal 2019 year-end.
The company continues to thoughtfully open new
stores and invest in smaller omni-enabled store experiences that
align with local customer shopping preferences as stores are a
critical part of the omnichannel brand experience. During fiscal
2020, the company opened 15 new store locations, remodeled 4 store
locations and right-sized an additional 6 store locations.
The company continues to review opportunities to
further optimize its global square footage through a combination of
mall-based and flagship store closures and the rightsizing of
legacy store formats. The actions taken in fiscal 2020, combined
with ongoing digital sales growth, will continue to transform the
company's operating model and reposition the company for the
future.
Today at 8:30 AM, ET, the company will conduct a
conference call. To listen to the conference call, dial (800)
289-0571 or go to corporate.abercrombie.com. The international
call-in number is (323) 794-2093. This call will be recorded and
made available by dialing the replay number (888) 203-1112 or the
international number (719) 457-0820 followed by the conference ID
number 1719266 or through corporate.abercrombie.com. A presentation
of fourth quarter and full year results will be available in the
“Investors” section at corporate.abercrombie.com at approximately
7:30 AM, ET, today.
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 or spokespeople 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. Except as may be required by applicable
law, we undertake no obligation to publicly update or revise any
forward-looking statements. The following factors, in addition to
those disclosed in “ITEM 1A. RISK FACTORS” of A&F’s Annual
Report on Form 10-K for the fiscal year ended February 1, 2020, and
in A&F’s subsequently filed quarterly reports on Form 10-Q, in
some cases have affected, and in the future could affect, the
company’s financial performance and could cause actual results for
fiscal 2020 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: the
current outbreak of the novel coronavirus,
or COVID-19, has materially adversely impacted and
disrupted, and may continue to materially adversely
impact and cause disruption to, our business, financial performance
and condition, operating results, liquidity and cash flows; the
spread of the COVID-19 outbreak has caused significant
disruptions in the United States and global economy, the extent of
the impact and duration of which is not yet known and any future
outbreak of any other highly infectious or contagious disease could
have a similar impact; changes in global economic and
financial conditions, and the resulting impact on consumer
confidence and consumer spending, as well as other changes in
consumer discretionary spending habits could have a material
adverse impact on our business; failure to engage our customers,
anticipate customer demand and changing fashion trends, and manage
our inventory commensurately could have a material adverse impact
on our business; our failure to operate in a highly competitive and
constantly evolving industry could have a material adverse impact
on our business; fluctuations in foreign currency exchange rates
could have a material adverse impact on our business; our ability
to attract customers to our stores depends, in part, on the success
of the shopping malls or area attractions that our stores are
located in or around; the impact of war, acts of terrorism, mass
casualty events or civil unrest could have a material adverse
impact on our business; the impact of extreme weather, infectious
disease outbreaks, including COVID-19, and other unexpected events
could result in an interruption to our business, as well as to the
operations of our third-party partners, and have a material adverse
impact on our business; failure to successfully develop an
omnichannel shopping experience, a significant component of our
growth strategy, or failure to successfully invest in customer,
digital and omnichannel initiatives could have a material adverse
impact on our business; our failure to optimize our global store
network could have a material adverse impact on our business; our
failure to execute our international growth strategy successfully
and inability to conduct business in international markets as a
result of legal, tax, regulatory, political and economic risks
could have a material adverse impact on our business; failure to
protect our reputation could have a material adverse impact on our
business; if our information technology systems are disrupted or
cease to operate effectively it could have a material adverse
impact on our business; we may be exposed to risks and costs
associated with cyber-attacks, data protection, credit card fraud
and identity theft that could have a material adverse impact on our
business; our reliance on our distribution centers makes us
susceptible to disruptions or adverse conditions affecting our
supply chain; changes in the cost, availability and quality of raw
materials, labor, transportation, and trade relations could have a
material adverse impact on our business; we depend upon independent
third parties for the manufacture and delivery of all our
merchandise, and a disruption of the manufacture or delivery of our
merchandise could have a material adverse impact on our business;
we rely on the experience and skills of our executive officers and
associates, and the failure to attract or retain this talent, or
effectively manage succession could have a material adverse impact
on our business; fluctuations in our tax obligations and effective
tax rate may result in volatility in our results of operations
could have a material adverse impact on our business; our
litigation exposure, or any securities litigation and shareholder
activism, could have a material adverse impact on our business;
failure to adequately protect our trademarks could have a negative
impact on our brand image and limit our ability to penetrate new
markets which could have a material adverse impact on our business;
changes in the regulatory or compliance landscape could have a
material adverse impact on our business; and the agreements related
to our senior secured asset-based revolving credit facility and our
senior secured notes include restrictive covenants that limit our
flexibility in operating our business and our inability to obtain
credit on reasonable terms in the future could have an adverse
impact on our business.
About Abercrombie & Fitch Co. |
Abercrombie & Fitch Co. (NYSE: ANF) is a
leading, global specialty retailer of apparel and accessories for
men, women and kids through four brands. Abercrombie & Fitch
believes that every day should feel as exceptional as the start of
the long weekend. Since 1892, the brand has been a specialty
retailer of quality apparel, outerwear and fragrance - designed to
inspire our global customers to feel confident, be comfortable and
face their Fierce. The quintessential retail brand of the global
teen consumer, Hollister Co. believes in liberating the
spirit of an endless summer inside everyone. At Hollister, summer
isn’t just a season, it’s a state of mind. Hollister creates
carefree style designed to make all teens feel celebrated and
comfortable in their own skin, so they can live in a summer mindset
all year long, whatever the season. A global specialty retailer of
quality, comfortable, made-to-play favorites, abercrombie kids sees
the world through kids’ eyes, where play is life and every day is
an opportunity to be anything and better everything. Hollister also
carries an intimates brand, Gilly Hicks by Hollister, which offers
intimates, loungewear and sleepwear. Its products are designed to
invite everyone to embrace who they are underneath it all.
The brands share a commitment to offering
products of enduring quality and exceptional comfort that allow
consumers around the world to express their own individuality and
style. The company operates over 730 stores under these brands
across North America, Europe, Asia and the Middle East, as well as
the e-commerce sites www.abercrombie.com and
www.hollisterco.com.
Investor Contact: |
|
Media Contact: |
|
|
|
Pamela Quintiliano |
|
Mackenzie Gusweiler |
Abercrombie & Fitch Co. |
|
Abercrombie & Fitch Co. |
(614) 283-6751 |
|
(614) 283-6192 |
Investor_Relations@anfcorp.com |
|
Public_Relations@anfcorp.com |
Abercrombie & Fitch Co. |
Condensed Consolidated Statements of
Operations |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Thirteen Weeks Ended |
|
January 30, 2021 |
|
% of Net Sales |
|
February 1, 2020 |
|
% of Net Sales |
Net sales |
$ |
1,122,044 |
|
|
100.0 |
% |
|
$ |
1,184,551 |
|
|
100.0 |
% |
Cost of sales, exclusive of depreciation and amortization |
443,025 |
|
|
39.5 |
% |
|
495,287 |
|
|
41.8 |
% |
Gross profit |
679,019 |
|
|
60.5 |
% |
|
689,264 |
|
|
58.2 |
% |
Stores and distribution expense |
412,827 |
|
|
36.8 |
% |
|
440,587 |
|
|
37.2 |
% |
Marketing, general and administrative expense |
137,334 |
|
|
12.2 |
% |
|
122,899 |
|
|
10.4 |
% |
Flagship store exit charges |
854 |
|
|
0.1 |
% |
|
234 |
|
|
0.0 |
% |
Asset impairment, exclusive of flagship store exit charges |
15,597 |
|
|
1.4 |
% |
|
4,148 |
|
|
0.4 |
% |
Other operating income, net |
(3,492 |
) |
|
(0.3 |
)% |
|
(935 |
) |
|
(0.1 |
)% |
Operating income |
115,899 |
|
|
10.3 |
% |
|
122,331 |
|
|
10.3 |
% |
Interest expense, net |
8,997 |
|
|
0.8 |
% |
|
2,829 |
|
|
0.2 |
% |
Income before income taxes |
106,902 |
|
|
9.5 |
% |
|
119,502 |
|
|
10.1 |
% |
Income tax expense |
21,646 |
|
|
1.9 |
% |
|
34,302 |
|
|
2.9 |
% |
Net income |
85,256 |
|
|
7.6 |
% |
|
85,200 |
|
|
7.2 |
% |
Less: Net income attributable to noncontrolling interests |
2,864 |
|
|
0.3 |
% |
|
2,068 |
|
|
0.2 |
% |
Net income attributable to Abercrombie & Fitch Co. |
$ |
82,392 |
|
|
7.3 |
% |
|
$ |
83,132 |
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
Net income per share attributable to Abercrombie & Fitch
Co.: |
|
|
|
|
|
|
|
Basic |
$ |
1.32 |
|
|
|
|
$ |
1.32 |
|
|
|
Diluted |
$ |
1.27 |
|
|
|
|
$ |
1.29 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
Basic |
62,581 |
|
|
|
|
62,916 |
|
|
|
Diluted |
64,788 |
|
|
|
|
64,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Abercrombie & Fitch Co. |
Condensed Consolidated Statements of
Operations |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Fifty-Two Weeks Ended |
|
Fifty-Two Weeks Ended |
|
January 30, 2021 |
|
% of Net Sales |
|
February 1, 2020 |
|
% of Net Sales |
Net sales |
$ |
3,125,384 |
|
|
100.0 |
% |
|
$ |
3,623,073 |
|
|
100.0 |
% |
Cost of sales, exclusive of depreciation and amortization |
1,234,179 |
|
|
39.5 |
% |
|
1,472,155 |
|
|
40.6 |
% |
Gross profit |
1,891,205 |
|
|
60.5 |
% |
|
2,150,918 |
|
|
59.4 |
% |
Stores and distribution expense |
1,391,584 |
|
|
44.5 |
% |
|
1,551,243 |
|
|
42.8 |
% |
Marketing, general and administrative expense |
463,843 |
|
|
14.8 |
% |
|
464,615 |
|
|
12.8 |
% |
Flagship store exit (benefit) charges |
(11,636 |
) |
|
(0.4 |
)% |
|
47,257 |
|
|
1.3 |
% |
Asset impairment, exclusive of flagship store exit charges |
72,937 |
|
|
2.3 |
% |
|
19,135 |
|
|
0.5 |
% |
Other operating income, net |
(5,054 |
) |
|
(0.2 |
)% |
|
(1,400 |
) |
|
0.0 |
% |
Operating (loss) income |
(20,469 |
) |
|
(0.7 |
)% |
|
70,068 |
|
|
1.9 |
% |
Interest expense, net |
28,274 |
|
|
0.9 |
% |
|
7,737 |
|
|
0.2 |
% |
(Loss) income before income taxes |
(48,743 |
) |
|
(1.6 |
)% |
|
62,331 |
|
|
1.7 |
% |
Income tax expense |
60,211 |
|
|
1.9 |
% |
|
17,371 |
|
|
0.5 |
% |
Net (loss) income |
(108,954 |
) |
|
(3.5 |
)% |
|
44,960 |
|
|
1.2 |
% |
Less: Net income attributable to noncontrolling interests |
5,067 |
|
|
0.2 |
% |
|
5,602 |
|
|
0.2 |
% |
Net (loss) income attributable
to Abercrombie & Fitch Co. |
$ |
(114,021 |
) |
|
(3.6 |
)% |
|
$ |
39,358 |
|
|
1.1 |
% |
|
|
|
|
|
|
|
|
Net (loss) income per share
attributable to Abercrombie & Fitch Co.: |
|
|
|
|
|
|
|
Basic |
$ |
(1.82 |
) |
|
|
|
$ |
0.61 |
|
|
|
Diluted |
$ |
(1.82 |
) |
|
|
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
Basic |
62,551 |
|
|
|
|
64,428 |
|
|
|
Diluted |
62,551 |
|
|
|
|
65,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting and Use of GAAP and Non-GAAP
Measures
The company believes that each of the non-GAAP
financial measures presented are useful to investors as they
provide a measure of the company’s operating performance excluding
the effect of certain items which the company believes do not
reflect its future operating outlook, such as certain asset
impairment charges related to the company’s flagship stores,
therefore supplementing investors’ understanding of comparability
of operations across periods. Management used these non-GAAP
financial measures during the periods presented to assess the
company’s performance and to develop expectations for future
operating performance. Non-GAAP financial measures should be used
supplemental to, and not as an alternative to, the company’s GAAP
financial results, and may not be calculated in the same manner as
similar measures presented by other companies.
In addition, at times the company provides
comparable sales, defined as the percentage year-over-year change
in the aggregate of: (1) sales for stores that have been open as
the same brand at least one year and whose square footage has not
been expanded or reduced by more than 20% within the past year,
with prior year’s net sales converted at the current year’s foreign
currency exchange rate to remove the impact of foreign currency
rate fluctuation, and (2) direct-to-consumer sales with prior
year’s net sales converted at the current year’s foreign currency
exchange rate to remove the impact of foreign currency rate
fluctuation.
The company also provides certain financial
information on a constant currency basis to enhance investors’
understanding of underlying business trends and operating
performance, by removing the impact of foreign currency exchange
rate fluctuations. The effect from foreign currency, calculated on
a constant currency basis, is determined by applying current year
average exchange rates to prior year results and is net of the
year-over-year impact from hedging. The per diluted share effect
from foreign currency is calculated using a 26% tax rate.
At times, the company may also refer to certain
non-GAAP store-level metrics, including 4-wall operating margins.
Store-level 4-wall operating margins exclude certain components of
the company’s results of operations, including but not limited to,
amounts related to marketing, depreciation and amortization of
home-office and IT assets, distribution center expense,
direct-to-consumer expense, and other corporate overhead expenses
that are considered normal operating costs as well as all asset
impairment and flagship store exit charges. This measure also
excludes certain product costs related to direct-to-consumer,
wholesale, licensing and franchise operations as well as variances
from estimated freight and import costs, and provisions for
inventory shrink and lower of cost or net realizable value. In
addition, this metric excludes revenue other than store sales and
does not include gift card breakage. As such, store-level 4-wall
operating margin is not indicative of the overall results of the
company and does not accrue directly to the benefit of shareholders
because of these exclusions. The company provides store-level
4-wall operating margins on occasion because it believes that it
provides a meaningful supplement to the company’s operating
results.
Abercrombie & Fitch Co. |
Schedule of Non-GAAP Financial Measures |
Thirteen Weeks Ended January 30, 2021 |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
GAAP (1) |
|
Excluded items |
|
Adjusted non-GAAP |
Asset impairment, exclusive of flagship store exit charges (2) |
$ |
15,597 |
|
|
$ |
15,597 |
|
|
$ |
— |
|
Operating income |
115,899 |
|
|
(15,597 |
) |
|
131,496 |
|
Income before income taxes |
106,902 |
|
|
(15,597 |
) |
|
122,499 |
|
Income tax expense (3) |
21,646 |
|
|
(664 |
) |
|
22,310 |
|
Net income attributable to Abercrombie & Fitch Co. |
$ |
82,392 |
|
|
$ |
(14,933 |
) |
|
$ |
97,325 |
|
|
|
|
|
|
|
Net income per diluted share attributable to Abercrombie &
Fitch Co. |
$ |
1.27 |
|
|
$ |
(0.23 |
) |
|
$ |
1.50 |
|
Diluted weighted-average shares outstanding: |
64,788 |
|
|
|
|
64,788 |
|
|
|
|
|
|
|
|
|
(1) “GAAP” refers to accounting principles
generally accepted in the United States of
America.(2) Excluded items consist of pre-tax store asset
impairment charges of $15.6 million, which are principally the
result of the impact of COVID-19 on store cash flows.(3) The
tax effect of excluded items is the difference between the tax
provision calculated on a GAAP basis and an adjusted non-GAAP
basis.
Abercrombie & Fitch Co. |
Schedule of Non-GAAP Financial Measures |
Thirteen Weeks Ended February 1, 2020 |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
GAAP (1) |
|
Excluded items |
|
Adjusted non-GAAP |
Asset impairment, exclusive of flagship store exit charges (2) |
$ |
4,148 |
|
|
$ |
2,284 |
|
|
$ |
1,864 |
|
Operating income |
122,331 |
|
|
(2,284 |
) |
|
124,615 |
|
Income before income taxes (2) |
119,502 |
|
|
(2,284 |
) |
|
121,786 |
|
Income tax expense (3) |
34,302 |
|
|
(1,528 |
) |
|
35,830 |
|
Net income attributable to
Abercrombie & Fitch Co. |
$ |
83,132 |
|
|
$ |
(756 |
) |
|
$ |
83,888 |
|
|
|
|
|
|
|
Net income per diluted share attributable to Abercrombie &
Fitch Co. |
$ |
1.29 |
|
|
$ |
(0.01 |
) |
|
$ |
1.31 |
|
Diluted weighted-average shares outstanding: |
64,198 |
|
|
|
|
64,198 |
|
|
|
|
|
|
|
|
|
(1) “GAAP” refers to accounting principles
generally accepted in the United States of
America.(2) Excluded items consist of pre-tax store asset
impairment charges of $2.3 million related to certain of the
company’s flagship stores.(3) The tax effect of excluded items
is the difference between the tax provision calculated on a GAAP
basis and an adjusted non-GAAP basis.
Abercrombie & Fitch Co. |
Schedule of Non-GAAP Financial Measures |
Fifty-Two Weeks Ended January 30, 2021 |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
GAAP (1) |
|
Excluded items |
|
Adjusted non-GAAP |
Asset impairment, exclusive of flagship store exit charges (2) |
$ |
72,937 |
|
|
$ |
72,937 |
|
|
$ |
— |
|
Operating (loss) income |
(20,469 |
) |
|
(72,937 |
) |
|
52,468 |
|
(Loss) income before income taxes |
(48,743 |
) |
|
(72,937 |
) |
|
24,194 |
|
Income tax expense (3) |
60,211 |
|
|
(4,299 |
) |
|
64,510 |
|
Net loss attributable to
Abercrombie & Fitch Co. |
$ |
(114,021 |
) |
|
$ |
(68,638 |
) |
|
$ |
(45,383 |
) |
|
|
|
|
|
|
Net loss per diluted share attributable to Abercrombie & Fitch
Co. |
$ |
(1.82 |
) |
|
$ |
(1.10 |
) |
|
$ |
(0.73 |
) |
Diluted weighted-average shares outstanding: |
62,551 |
|
|
|
|
62,551 |
|
|
|
|
|
|
|
|
|
(1) “GAAP” refers to accounting principles
generally accepted in the United States of
America.(2) Excluded items consist of pre-tax store asset
impairment charges of $72.9 million, which are principally the
result of the impact of COVID-19 on store cash flows.(3) The
tax effect of excluded items is the difference between the tax
provision calculated on a GAAP basis and an adjusted non-GAAP
basis.
Abercrombie & Fitch Co. |
Schedule of Non-GAAP Financial Measures |
Fifty-Two Weeks Ended February 1, 2020 |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
GAAP (1) |
|
Excluded Items |
|
AdjustedNon-GAAP |
Asset impairment, exclusive of flagship store exit charges (2) |
$ |
19,135 |
|
|
$ |
12,752 |
|
|
$ |
6,383 |
|
Operating income |
70,068 |
|
|
(12,752 |
) |
|
82,820 |
|
Income before income taxes |
62,331 |
|
|
(12,752 |
) |
|
75,083 |
|
Income tax expense (3) |
17,371 |
|
|
(4,013 |
) |
|
21,384 |
|
Net income attributable to Abercrombie & Fitch Co. |
$ |
39,358 |
|
|
$ |
(8,739 |
) |
|
$ |
48,097 |
|
|
|
|
|
|
|
Net income per diluted share attributable to Abercrombie &
Fitch Co. |
$ |
0.60 |
|
|
$ |
(0.13 |
) |
|
$ |
0.73 |
|
Diluted weighted-average shares outstanding: |
65,778 |
|
|
|
|
65,778 |
|
|
|
|
|
|
|
|
|
(1) “GAAP” refers to accounting principles
generally accepted in the United States of
America.(2) Excluded items consist of pre-tax store asset
impairment charges of $12.8 million related to certain of the
company's flagship stores.(3) The tax effect of excluded items
is the difference between the tax provision calculated on a GAAP
basis and an adjusted non-GAAP basis.
Abercrombie & Fitch Co. |
Reconciliation of Constant Currency Financial
Measures |
Thirteen Weeks Ended January 30, 2021 |
(in thousands, except percentage and basis point changes
and per share data) |
(Unaudited) |
|
|
|
|
|
|
Net sales |
2020 |
|
2019 |
|
% Change |
GAAP (1) |
$ |
1,122,044 |
|
|
$ |
1,184,551 |
|
|
|
(5 |
)% |
Impact from changes in foreign currency exchange rates (2) |
— |
|
|
19,511 |
|
|
|
(2 |
)% |
Net sales on a constant currency basis |
$ |
1,122,044 |
|
|
$ |
1,204,062 |
|
|
|
(7 |
)% |
Gross profit |
2020 |
|
2019 |
|
BPS Change (3) |
GAAP (1) |
$ |
679,019 |
|
|
$ |
689,264 |
|
|
|
230 |
|
Impact from changes in foreign currency exchange rates (2) |
— |
|
|
19,199 |
|
|
|
(60 |
) |
Gross profit on a constant currency basis |
$ |
679,019 |
|
|
$ |
708,463 |
|
|
|
170 |
|
Operating income |
2020 |
|
2019 |
|
BPS Change (3) |
GAAP (1) |
$ |
115,899 |
|
|
$ |
122,331 |
|
|
|
— |
|
Excluded items (4) |
(15,597 |
) |
|
(2,284 |
) |
|
|
(120 |
) |
Adjusted non-GAAP |
$ |
131,496 |
|
|
$ |
124,615 |
|
|
|
120 |
|
Impact from changes in foreign currency exchange rates (2) |
— |
|
|
15,104 |
|
|
|
(110 |
) |
Adjusted non-GAAP on a constant currency basis |
$ |
131,496 |
|
|
$ |
139,719 |
|
|
|
10 |
|
Net income per diluted share attributable to Abercrombie
& Fitch Co. |
2020 |
|
2019 |
|
$ Change |
GAAP (1) |
$ |
1.27 |
|
|
$ |
1.29 |
|
|
$ |
(0.02 |
) |
Excluded items, net of tax (4) |
(0.23 |
) |
|
(0.01 |
) |
|
|
(0.22 |
) |
Adjusted non-GAAP |
$ |
1.50 |
|
|
$ |
1.31 |
|
|
$ |
0.19 |
|
Impact from changes in foreign currency exchange rates (2) |
— |
|
|
0.17 |
|
|
|
(0.17 |
) |
Adjusted non-GAAP on a constant currency basis |
$ |
1.50 |
|
|
$ |
1.48 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) “GAAP” refers to accounting principles
generally accepted in the United States of America.(2) The
estimated impact from foreign currency is determined by applying
current period exchange rates to prior year results and is net of
the year-over-year impact from hedging. The per diluted share
estimated impact from foreign currency is calculated using a 26%
tax rate.(3) The estimated basis point change has been rounded
based on the percentage change.(4) Excluded items this year
consist of pre-tax asset impairment charges which are principally
the result of the impact of COVID-19 on store cash flows. Excluded
items last year consist of pre-tax asset impairment charges related
to certain of the company's flagship stores.The tax effect of
excluded items is calculated as the difference between the tax
provision on a GAAP basis and an adjusted non-GAAP basis.
Abercrombie & Fitch Co. |
Reconciliation of Constant Currency Financial
Measures |
Fifty-two Weeks Ended January 30, 2021 |
(in thousands, except percentage and basis point changes
and per share data) |
(Unaudited) |
|
|
|
|
|
|
Net sales |
2020 |
|
2019 |
|
% Change |
GAAP (1) |
$ |
3,125,384 |
|
|
$ |
3,623,073 |
|
|
|
(14 |
)% |
Impact from changes in foreign currency exchange rates (2) |
— |
|
|
22,459 |
|
|
|
(1 |
)% |
Net sales on a constant currency basis |
$ |
3,125,384 |
|
|
$ |
3,645,532 |
|
|
|
(14 |
)% |
Gross profit |
2020 |
|
2019 |
|
BPS Change (3) |
GAAP (1) |
$ |
1,891,205 |
|
|
$ |
2,150,918 |
|
|
|
110 |
|
Impact from changes in foreign currency exchange rates (2) |
— |
|
|
26,522 |
|
|
|
(30 |
) |
Gross profit on a constant currency basis |
$ |
1,891,205 |
|
|
$ |
2,177,440 |
|
|
|
80 |
|
Operating (loss) income |
2020 |
|
2019 |
|
BPS Change (3) |
GAAP (1) |
$ |
(20,469 |
) |
|
$ |
70,068 |
|
|
|
(260 |
) |
Excluded items (4) |
(72,937 |
) |
|
(12,752 |
) |
|
|
(200 |
) |
Adjusted non-GAAP |
$ |
52,468 |
|
|
$ |
82,820 |
|
|
|
(60 |
) |
Impact from changes in foreign currency exchange rates (2) |
— |
|
|
20,325 |
|
|
|
(50 |
) |
Adjusted non-GAAP on a constant currency basis |
$ |
52,468 |
|
|
$ |
103,145 |
|
|
|
(110 |
) |
Net (loss) income per diluted share attributable to
Abercrombie & Fitch Co. |
2020 |
|
2019 |
|
$ Change |
GAAP (1) |
$ |
(1.82 |
) |
|
$ |
0.60 |
|
|
$ |
(2.42 |
) |
Excluded items, net of tax (4) |
(1.10 |
) |
|
(0.13 |
) |
|
|
(0.97 |
) |
Adjusted non-GAAP |
$ |
(0.73 |
) |
|
$ |
0.73 |
|
|
$ |
(1.46 |
) |
Impact from changes in foreign currency exchange rates (2) |
— |
|
|
0.29 |
|
|
|
(0.29 |
) |
Adjusted non-GAAP on a constant currency basis |
$ |
(0.73 |
) |
|
$ |
1.02 |
|
|
$ |
(1.75 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(1) “GAAP” refers to accounting principles
generally accepted in the United States of America.(2) The
estimated impact from foreign currency is determined by applying
current period exchange rates to prior year results and is net of
the year-over-year impact from hedging. The per diluted share
estimated impact from foreign currency is calculated using a 26%
tax rate.(3) The estimated basis point change has been rounded
based on the percentage change.(4) Excluded items this year
consist of pre-tax asset impairment charges which are principally
the result of the impact of COVID-19 on store cash flows. Excluded
items last year consist of pre-tax asset impairment charges related
to certain of the company's flagship stores.The tax effect of
excluded items is calculated as the difference between the tax
provision on a GAAP basis and an adjusted non-GAAP basis.
Abercrombie & Fitch Co. |
Condensed Consolidated Balance Sheets |
(in thousands) |
(Unaudited) |
|
|
|
|
|
January 30, 2021 |
|
February 1, 2020 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and equivalents |
$ |
1,104,862 |
|
|
$ |
671,267 |
|
Receivables |
83,857 |
|
|
80,251 |
|
Inventories |
404,053 |
|
|
434,326 |
|
Other current assets |
68,857 |
|
|
78,905 |
|
Total current assets |
1,661,629 |
|
|
1,264,749 |
|
Property and equipment, net |
550,587 |
|
|
665,290 |
|
Operating lease right-of-use assets |
893,989 |
|
|
1,230,954 |
|
Other assets |
208,697 |
|
|
388,672 |
|
Total assets |
$ |
3,314,902 |
|
|
$ |
3,549,665 |
|
Liabilities and stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
289,396 |
|
|
$ |
219,919 |
|
Accrued expenses |
396,365 |
|
|
302,214 |
|
Short-term portion of operating lease liabilities |
248,846 |
|
|
282,829 |
|
Income taxes payable |
24,792 |
|
|
10,392 |
|
Total current liabilities |
959,399 |
|
|
815,354 |
|
Long-term liabilities: |
|
|
|
Long-term portion of operating lease liabilities |
$ |
957,588 |
|
|
$ |
1,252,634 |
|
Long-term portion of borrowings, net |
343,910 |
|
|
231,963 |
|
Other liabilities |
104,693 |
|
|
178,536 |
|
Total long-term liabilities |
1,406,191 |
|
|
1,663,133 |
|
Total Abercrombie & Fitch Co. stockholders' equity |
936,628 |
|
|
1,058,810 |
|
Noncontrolling interests |
12,684 |
|
|
12,368 |
|
Total stockholders' equity |
949,312 |
|
|
1,071,178 |
|
Total liabilities and stockholders’ equity |
$ |
3,314,902 |
|
|
$ |
3,549,665 |
|
|
|
|
|
|
|
|
|
Abercrombie & Fitch Co. |
Condensed Consolidated Statements of Cash
Flows |
(in thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Fifty-Two Weeks Ended |
|
January 30, 2021 |
|
February 1, 2020 |
Operating activities |
|
|
|
Net cash provided by operating activities (1) |
$ |
404,918 |
|
|
$ |
300,685 |
|
|
|
|
|
Investing activities |
|
|
|
Purchases of property and equipment |
$ |
(101,910 |
) |
|
$ |
(202,784 |
) |
Withdrawal of Rabbi Trust assets (1) |
50,000 |
|
|
— |
|
Net cash used for investing activities (1) |
$ |
(51,910 |
) |
|
$ |
(202,784 |
) |
|
|
|
|
Financing activities |
|
|
|
Proceeds from issuance of senior secured notes |
$ |
350,000 |
|
|
$ |
— |
|
Proceeds from borrowings under the asset-based senior secured
credit facility |
210,000 |
|
|
— |
|
Repayment of term loan facility borrowings |
(233,250 |
) |
|
(20,000 |
) |
Repayment of borrowings under the asset-based senior secured credit
facility |
(210,000 |
) |
|
— |
|
Payment of debt issuance costs and fees |
(7,318 |
) |
|
— |
|
Purchases of common stock |
(15,172 |
) |
|
(63,542 |
) |
Dividends paid |
(12,556 |
) |
|
(51,510 |
) |
Other financing activities |
(11,987 |
) |
|
(12,821 |
) |
Net cash provided by (used for) financing activities |
$ |
69,717 |
|
|
$ |
(147,873 |
) |
|
|
|
|
Effect of foreign currency exchange rates on cash |
$ |
9,168 |
|
|
$ |
(3,593 |
) |
Net increase (decrease) in cash and equivalents, and restricted
cash and equivalents |
$ |
431,893 |
|
|
$ |
(53,565 |
) |
Cash and equivalents, and restricted cash and equivalents,
beginning of period |
$ |
692,264 |
|
|
$ |
745,829 |
|
Cash and equivalents, and restricted cash and equivalents, end of
period |
$ |
1,124,157 |
|
|
$ |
692,264 |
|
|
|
|
|
|
|
|
|
(1) During the fourth quarter ended January
30, 2021, an error relating to the cash flow presentation of the
$50 million withdrawal of the excess funds from the company’s Rabbi
Trust assets was identified in the year-to-date cash flows
presented in each of the fiscal 2020 interim periods. The
year-to-date cash flows presented in fiscal 2020 interim periods
incorrectly classified such withdrawal as a cash inflow from
operating activities, rather than a cash inflow from investing
activities. The fiscal 2020 annual cash flow statement reflects the
correct presentation.
Abercrombie & Fitch
Co.Store Count Activity
|
Thirteen Weeks Ended January 30, 2021 |
|
Hollister (1) |
|
Abercrombie (2) |
|
Total
(3) |
|
United States |
|
International |
|
United States |
|
International |
|
United States |
|
International |
October 31, 2020 (4) |
388 |
|
|
154 |
|
|
256 |
|
|
55 |
|
|
644 |
|
|
209 |
|
New |
— |
|
|
1 |
|
|
— |
|
|
1 |
|
|
— |
|
|
2 |
|
Closed |
(41 |
) |
|
(5 |
) |
|
(66 |
) |
|
(8 |
) |
|
(107 |
) |
|
(13 |
) |
January 30, 2021 |
347 |
|
|
150 |
|
|
190 |
|
|
48 |
|
|
537 |
|
|
198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fifty-Two Weeks Ended January 30, 2021 |
|
Hollister (1) |
|
Abercrombie (2) |
|
Total (3) |
|
United States |
|
International |
|
United States |
|
International |
|
United States |
|
International |
February 1, 2020 (4) |
392 |
|
|
155 |
|
|
257 |
|
|
53 |
|
|
649 |
|
|
208 |
|
New |
3 |
|
|
3 |
|
|
4 |
|
|
5 |
|
|
7 |
|
|
8 |
|
Closed |
(48 |
) |
|
(8 |
) |
|
(71 |
) |
|
(10 |
) |
|
(119 |
) |
|
(18 |
) |
January 30, 2021 |
347 |
|
|
150 |
|
|
190 |
|
|
48 |
|
|
537 |
|
|
198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Hollister includes the Hollister and
Gilly Hicks by Hollister brands. Locations with Gilly Hicks
carveouts within Hollister stores are represented as a single store
count. Excludes 9 international franchise stores as of each of
January 30, 2021, October 31, 2020, and February 1,
2020. Excludes 12 Company operated temporary stores as of
January 30, 2021, 13 as of October 31, 2020, and 15 as of
February 1, 2020.(2) Abercrombie includes the company's
Abercrombie & Fitch and abercrombie kids brands. Locations with
abercrombie kids carveouts within Abercrombie & Fitch stores
are represented as a single store count. Excludes 10 international
franchise stores as of January 30, 2021, 8 international
franchise stores as of October 31, 2020, and 7 international
franchise stores as of February 1, 2020. Excludes 2 Company
operated temporary stores as of January 30, 2021, 3 as of
October 31, 2020, and 6 as of February 1,
2020.(3) This store count excludes one international
third-party operated multi-brand outlet store as of January 30,
2021.(4) Prior period numbers have been revised due to a
change in the temporary store definition to only include store
leases with original terms of 18 months or less.
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