-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SAOYVPnRmj70spG3Ix0pncAvhmP28nyuRwPh/5bTTSlemRU264PZe2pzbBN6zb/8 FXq22UmIOFBqZJ0Kr6Y8/g== 0000950152-05-004614.txt : 20050519 0000950152-05-004614.hdr.sgml : 20050519 20050519171426 ACCESSION NUMBER: 0000950152-05-004614 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050517 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050519 DATE AS OF CHANGE: 20050519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABERCROMBIE & FITCH CO /DE/ CENTRAL INDEX KEY: 0001018840 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 311469076 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12107 FILM NUMBER: 05845726 BUSINESS ADDRESS: STREET 1: 6301 FITCH PATH CITY: NEW ALBANY STATE: OH ZIP: 43054 BUSINESS PHONE: 6145776500 MAIL ADDRESS: STREET 1: 6301 FITCH PATH CITY: NEW ALBANY STATE: OH ZIP: 43054 8-K 1 l14051ae8vk.txt ABERCROMBIE & FITCH CO. FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 17, 2005 -------------- ABERCROMBIE & FITCH CO. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-12107 31-1469076 -------------- ----------- -------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 6301 Fitch Path, New Albany, Ohio 43054 -------------------------------------------------------- (Address of principal executive offices) (Zip Code) (614) 283-6500 --------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable ---------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act(17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On May 17, 2005, Abercrombie & Fitch Co. (the "Registrant") issued a news release (the "Release") reporting the Registrant's unaudited financial results for the thirteen weeks (quarterly period) ended April 30, 2005. A copy of the Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. In addition, the Registrant's management conducted a conference call on May 17, 2005 at approximately 4:30 p.m., Eastern Time, to review the aforementioned financial results. An audio replay of the conference call will be available through May 30, 2005. To listen to the replay, dial (888) 203-1112 or internationally at (719) 457-0820 followed by the conference ID number 9675046. An audio replay of the conference call will also be available at www.abercrombie.com. A copy of the conference call transcript is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference. The Registrant also made available in conjunction with its May 17, 2005 conference call additional quarterly financial information as of and for the quarterly period ended April 30, 2005 and as of and for the quarterly periods during the fiscal years ended January 29, 2005, January 31, 2004 and February 1, 2003. This additional quarterly financial information is furnished as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein by reference. Item 7.01. Regulation FD Disclosure. The Registrant's management conducted a conference call on May 17, 2005, at approximately 4:30 p.m., Eastern Time, to review the Registrant's results for the thirteen weeks ended April 30, 2005. Additionally, the Registrant's management addressed plans for the remainder of the fiscal year ending January 28, 2006 on the conference call. A copy of the transcript of the conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (a) and (b) Not applicable. (c) Exhibits: -2- The following exhibits are furnished with this Current Report on Form 8-K: Exhibit No. Description ----------- ----------- 99.1 News Release issued by Abercrombie & Fitch Co. on May 17, 2005 99.2 Transcript of conference call held by management of Abercrombie & Fitch Co. on May 17, 2005 99.3 Additional Quarterly Financial Information made available by Abercrombie & Fitch Co. in conjunction with conference call held on May 17, 2005 The information in this Current Report on Form 8-K, including Exhibits 99.1, 99.2 and 99.3 furnished herewith, is being furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall such information be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, unless the Registrant specifically states that it is so incorporated by reference. -3- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ABERCROMBIE & FITCH CO. Dated: May 19, 2005 By: /s/ Robert S. Singer ----------------------- Robert S. Singer President and Chief Operating Officer -4- INDEX TO EXHIBITS Current Report on Form 8-K Dated May 19, 2005 Abercrombie & Fitch Co. Exhibit No. Description - ----------- ----------- 99.1 News Release issued by Abercrombie & Fitch Co. on May 17, 2005 99.2 Transcript of conference call held by management of Abercrombie & Fitch Co. on May 17, 2005 99.3 Additional Quarterly Financial Information made available by Abercrombie & Fitch Co. in conjunction with conference call held on May 17, 2005 -5- EX-99.1 2 l14051aexv99w1.txt EXHIBIT 99.1 Exhibit 99.1 ABERCROMBIE & FITCH CO. REPORTS RECORD FIRST QUARTER SALES AND EARNINGS NEW ALBANY, OHIO, MAY 17, 2005: Abercrombie & Fitch Co. (NYSE: ANF) today reported unaudited results which reflected record first quarter net income of $40.4 million and net income per share on a fully-diluted basis of $0.45 for the first quarter ended April 30, 2005. FIRST QUARTER HIGHLIGHTS o Total Company net sales increased 33% to $546.8 million; comparable store sales increased 19%. o Abercrombie & Fitch first quarter net sales increased 16% to $302.1 million; Abercrombie & Fitch comparable store sales increased by 16%. o abercrombie first quarter net sales increased 36% to $63.0 million; abercrombie comparable store sales increased by 32%. o Hollister first quarter net sales increased 71% to $179.2 million; Hollister comparable store sales increased by 21%. o The Company's operating income increased 46% to $68.3 million, reflecting a 13% operating margin. o Net income per share on a fully-diluted basis rose 50% to $0.45 from $0.30 in fiscal 2004. o Abercrombie & Fitch Co. repurchased 475,000 shares of its Class A Common Stock. Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said: "Our outstanding results this quarter reflect the success of our strategy. We continue to focus on achieving the highest quality products in the casual sector. I am very pleased with the improvement we have made in our organization both in merchandising where we have focused on building great strength in each category across our brands, as well as in the stores where our investment in additional staff and management hours as well as training have contributed to substantial improvements in store productivity. We believe we are well positioned for continued strong performance as the year progresses." FIRST QUARTER FINANCIAL RESULTS Net sales for the thirteen weeks ended April 30, 2005 increased 33% to $546.8 million from $411.9 million for the thirteen weeks ended May 1, 2004. Comparable store sales increased 19% in the quarter versus last year. In the first quarter, sales from the direct-to-consumer business, excluding shipping and handling revenue, increased 19% versus last year. International direct-to-consumer sales increased 20% versus the prior year. The gross margin rate for the quarter, reflecting the reclassification of certain costs as described below, was 65.3%, up 30 basis points compared to last year. Marketing, General and Administrative expense, as a percentage of sales, declined to 12.3% from 13.5% reflecting in part the charge in 2004 of $8 million associated with the previously announced settlement of three related diversity lawsuits. The effective tax rate for the first quarter was 41.9% as compared to 38.5% for the 2004 comparable period. The increase in the rate was primarily due to a $2.3 million charge related to the Company's change in estimate of the potential outcome of certain state tax matters. The company expects the full year effective tax rate to be approximately 39%. Net income for the quarter increased 38% to $40.4 million from $29.3 million for the first quarter of fiscal 2004. Net income per share on a fully-diluted basis for the first quarter ended April 30, 2005 rose 50% to $0.45 versus $0.30 for the comparable period last year. During the first quarter of fiscal 2005, Abercrombie & Fitch Co. repurchased 475,000 shares of its Class A Common Stock as part of its previously announced stock repurchase program. The total cost of the common stock repurchased was $26.9 million. The Company previously said it intends to manage its capital structure by maintaining a level of approximately $300 million to $350 million in cash and marketable securities. Based on its plan to increase inventory commitments for the back-to-school selling period, particularly in the denim category, the Company now expects its cash and marketable securities balance to be between $150 million and $200 million at the end of the second and third quarters of fiscal 2005. Based on seasonal shopping trends, the Company expects its cash and marketable securities level will increase during the fourth quarter of fiscal 2005 and at that time the Company expects to return to a level of $300 million to $350 million in cash and marketable securities. By the end of fiscal 2005, the Company plans to increase gross square-footage by approximately 11%, primarily through opening flagship Abercrombie & Fitch stores in New York and Los Angeles, as well as through the addition of approximately 60 new Hollister stores. In addition, the Company plans to convert approximately five Abercrombie & Fitch and five abercrombie kids stores into Hollister stores during fiscal 2005. The Company also expects to open approximately seven RUEHL stores by the end of fiscal 2005. The Company now expects total capital expenditures for fiscal 2005 to be between $250 million and $275 million. The majority of the expenditures are related to new store construction, remodels, and home office investments. These amounts do not reflect construction allowances which are recorded on the balance sheet as a deferred credit as opposed to a reduction in capital spending. OTHER DEVELOPMENTS The Company has signed leases for six Canadian locations during the quarter including three Abercrombie & Fitch and three Hollister stores expected to open in late 2005 or early 2006. The Company has established subsidiaries in Europe and Japan and has begun to seek locations for stores to open in late 2006 or 2007. The Company remains on plan to open its 34,000 gross square foot flagship Abercrombie & Fitch store, located on the corner of 5th Avenue and 56th Street in New York, in the fall of 2005. The Board of Directors declared a quarterly dividend of $0.125 per share on the Class A Common Stock of Abercrombie & Fitch Co. payable on June 21, 2005 to shareholders of record at the close of business on June 1, 2005. During the first quarter, the Company opened seven new stores: four Hollister, two Abercrombie & Fitch and one RUEHL store. The Company temporarily closed six Abercrombie & Fitch stores during the first quarter due to remodeling. The six stores will reopen during the second and third quarters of fiscal 2005. Additionally, the Company closed two abercrombie stores and one Abercrombie & Fitch store. RECLASSIFICATION OF INCOME STATEMENT First quarter results reflect a reclassification of the Company's income statement. In prior periods the Company included buying and occupancy costs as well as certain home office expenses as part of the gross margin calculation. The Company believes that presenting gross profit as a function of sales reduced solely by cost of goods sold, as well as presenting as individual expense categories store and distribution expenses and marketing, general and administrative expenses, provides a clearer and more transparent representation of gross selling margin. Prior period results have been reclassified accordingly. The Company operated 351 Abercrombie & Fitch stores, 167 abercrombie stores, 260 Hollister stores and 5 RUEHL stores as of April 30, 2005. The Company operates e-commerce websites at www.abercrombie.com, www.abercrombiekids.com, and www.hollisterco.com. Today at 4:30 PM, 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 www.abercrombie.com, select the Investor Relations 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 9675046; or for 12 months by visiting the Company's website at www.abercrombie.com. # # # # For further information, call: Thomas D. Lennox Director, Investor Relations and Corporate Communications (614) 283-6751 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, A&F's Form 10-K 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 1. BUSINESS" of A&F's Annual Report on Form 10-K for the fiscal year ended January 29, 2005, in some cases have affected and in the future could affect the Company's financial performance and could cause actual results for the 2005 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; and 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 APRIL 30, 2005 AND THIRTEEN WEEKS ENDED MAY 1, 2004 (IN THOUSANDS EXCEPT PER SHARE DATA)
ACTUAL ACTUAL ----------------------- ------------------------- 2005 % of Sales 2004 % of Sales --------- ---------- --------- ---------- Net Sales $ 546,810 100.0% $ 411,930 100.0% --------- ----- --------- ----- Cost of Goods Sold 189,558 34.7% 144,005 35.0% Gross Profit 357,252 65.3% 267,924 65.0% --------- ----- --------- ----- Total Stores and Distribution Expense 222,223 40.6% 165,515 40.2% Total Marketing, General and Administrative Expense 67,146 12.3% 55,784 13.5% --------- ----- --------- ----- Other Operating Income, Net (406) -0.1% (97) 0.0% --------- --------- Operating Income 68,289 12.5% 46,722 11.3% Interest Income, Net (1,220) -0.2% (985) -0.2% --------- ----- --------- ----- Income Before Income Taxes 69,509 12.7% 47,707 11.6% Income Tax Expense 29,150 5.3% 18,390 4.5% Effective Rate 41.9% 38.5% --------- --------- Net Income $ 40,359 7.4% $ 29,317 7.1% --------- ----- --------- ----- Net Income Per Share: Basic $ 0.47 $ 0.31 Fully Diluted $ 0.45 $ 0.30 Weighted Average Shares Outstanding Basic 86,221 94,709 Fully Diluted 89,800 96,872
ABERCROMBIE & FITCH CO. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
(UNAUDITED) ASSETS APRIL 30, 2005 JANUARY 29, 2005 - ------ -------------- ---------------- Current Assets Cash and Cash Equivalents $ 136,578 $ 350,368 Marketable Securities 177,174 -- Receivables 32,284 26,127 Inventories 227,205 211,198 Store Supplies 38,944 36,536 Other 27,844 28,048 ---------- ---------- Total Current Assets 640,029 652,277 Property and Equipment, Net 693,802 687,011 Other Assets 8,420 8,413 ---------- ---------- TOTAL ASSETS $1,342,251 $1,347,701 ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current Liabilities Accounts Payable $ 129,982 $ 137,337 Accrued Expenses 177,182 194,729 Deferred Lease Credits 30,331 31,135 Income Taxes Payable 2,351 11,183 ---------- ---------- Total Current Liabilities 339,846 374,384 ---------- ---------- Long-Term Liabilities Debt -- -- Deferred Income Taxes 50,334 55,346 Deferred Lease Credits 183,482 177,923 Other 79,854 70,722 ---------- ---------- 313,670 303,991 ---------- ---------- Total Shareholders' Equity 688,735 669,326 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,342,251 $1,347,701 ---------- ----------
EX-99.2 3 l14051aexv99w2.txt EXHIBIT 99.2 EXHBIT 99.2 Thomson StreetEvents Transcript F I N A L V E R S I O N ANF - Abercrombie & Fitch Co. Q1 2005 Abercrombie & Fitch Co. Earnings Conference Call May. 17. 2005 / 4:30PM ET ================================================================================ Corporate Participants ================================================================================ * Tom Lennox Abercrombie & Fitch Co. - IR Director * Bob Singer Abercrombie & Fitch Co. - President and COO * Mike Jeffries Abercrombie & Fitch Co. - Chairman and CEO ================================================================================ Conference Call Participants ================================================================================ * Mark Friedman Merrill Lynch - Analyst * Jeff Klinefelter Piper Jaffray - Analyst * Jeff Black Lehman Brothers - Analyst * Paul Lejuez Credit Suisse First Boston - Analyst * Dana Telsey Bear Stearns - Analyst * Monica Brisnehan RBC Capital Markets - Analyst * Barbara Wyckoff Buckingham Research Group - Analyst * Joe Teklits Wachovia Securities - Analyst * Dorothy Lakner CIBC World Markets - Analyst * Janet Kloppenberg JJK Research - Analyst * Dana Cohen Banc of America Securities - Analyst * Lauren Levitan SG Cowen - Analyst * Margaret Mager Goldman Sachs - Analyst * Brian Tunick JP Morgan - Analyst * Josh Schwartz Flatbush Watermill LLC - Analyst * Marie Driscoll Standard & Poor's - Analyst * Jeff Feinberg JLF - Analyst * Christine Chen Pacific Growth Equities - Analyst * Stacy Pak Prudential Equity Group - Analyst * John Morris Harris Nesbitt - Analyst ================================================================================ Presentation - -------------------------------------------------------------------------------- Operator [1] - -------------------------------------------------------------------------------- Welcome to today's Abercrombie & Fitch first quarter earnings results conference call. Just a quick reminder, this conference is being recorded. [Operator Instructions]. We will open the call to take your questions at the end of the presentation. Now at this time I'd like to turn the call over to Mr. Tom Lennox. Please go ahead, sir. - -------------------------------------------------------------------------------- Tom Lennox, Abercrombie & Fitch Co. - IR Director [2] - -------------------------------------------------------------------------------- Good afternoon and welcome to our first quarter conference call. After the market closed, we e-mailed to your offices the quarterly sales and earnings release, balance sheet, income statement, and an updated financial history. If you haven't received these materials please call Jill Swansinger at 614-283-6751, and she will forward them to you. This call is being taped and can be replayed by dialing 888-203-1112. You will need to reference the conference ID number 9675046 to access the replay. You may also access the replay through the Internet at Abercrombie.com. With me today are Mike Jeffries, our Chairman and CEO, and Bob Singer, President and Chief Operating Officer. Today's earnings call will be limited in time to one hour. After our prepared comments, we will be available to take your questions for as long as time permits. Please limit yourself to one question so that we can speak with as many callers as possible. Before I begin, I remind you that any forward-looking statements we may make today are subject to the Safe Harbor statement found in our SEC filings. Now to Bob. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [3] - -------------------------------------------------------------------------------- Thank you, Tom, and good afternoon to everyone. I would like to begin by noting that we have reported our first quarter income statement using a reclassified format. We believe that the new format, which clearly shows the cost of merchandise sold as well as the told cost of our stores and distribution, provide a much clearer presentation of our results and more closely follows the metrics and margins which we use to manage and control our business. Prior period results have been reclassified accordingly. Now, turning to the results. Total company net sales for the first quarter were $546.8 million, a 33% increase versus last year's first quarter sales of $411.9 million. Total company comparable store sales increased 19% for the quarter as each of our brands enjoyed excellent same-store sales; 16% for Abercrombie & Fitch, 32% for Abercrombie, and 21% for Hollister. A key driver of our increased sales was the significant increase in average unit retail of 23% over last year's first quarter. This increase derived from the ever higher quality level of our product and the elimination of promotional activity, as well as increased unit sales of higher priced items, in particular denim. Hollister sales grew by 71%, derived both from increase average store sales as well as the opening of 87 new stores in the 12 months through April 30, 2005. The gross margin rate, which reflects above mentioned reclassification, was 65.3%, increasing 30 basis points from last year's rate of 65%. This increase in rate resulted primarily from lower shrink, offset partially by increased freight costs. Overall initial margin and markdowns as a percentage of sales remained relatively constant compared to last year. We ended the quarter with inventories up 56% per gross square foot versus last year at cost. This is the result of a deliberate program to build inventory levels. We believe our inventory levels were too low last April, particularly in key categories such as knits and denim. We believe that our increased inventory levels have contributed to our significantly improved sales levels in all brands. Building inventories has allowed us not only to grow sales, but also ensure the quality of our store presentation and environment. We intend to continue this trend in the coming months. Total store and distribution expense as a percentage of sales was 40.6%, increasing 40 basis points from last year's rate of 40.2%. As many of you know, we have significantly increased staff hours in our stores. Average weekly hours per store grew 53% in the first quarter of 2005 over the first quarter of 2004, and total store payroll grew to 13% of sales compared to 10.7% in 2004. On the other hand, we are obtaining significant leverage as fixed store costs, including store rent, landlord charges and depreciation decreased as a percentage of sales. Most importantly, the increased investment in staff hours and training has permitted us to significantly improve store presentation and customer service and has also contributed to reduced merchandise shrink. Marketing, general, & administrative expenses were 12.3% of sales, 120 basis points lower than last year's 13.5% rate. Excluding the legal costs of the Diversity lawsuit accrual in 2004, and the derivative shareholder lawsuit in 2005, these costs were relatively flat as a percentage of sales, reflecting increased home office payroll expense offset by leverage on sales. We believe that last year's G&A level was maintained at an unsustainably low level, and we have moved aggressively to build our infrastructure; particularly in design, sourcing, and merchandising. The people we are bringing on board now are already making a significant contribution, and they will also provide the basis for our future success. Operating income for the quarter was $68.3 million versus $46.7 million, an increase of 46% versus last year. Net income for the quarter increased 38% to $40.4 million from $29.3 million, and net income per share on a fully diluted basis increased 50% to $0.45 from $0.30 last year. During the first quarter, we repurchased 475,000 shares as part of our stock repurchase program at a cost of $26.9 million. We have made progress in our international development program. We have executed six leases for stores in Canada, which we expect to open in late 2005 or early 2006, and we are continuing to search for other locations. We are also actively pursuing European store locations as well as space for a European distribution center in preparation for our planned rollout by fiscal year end 2006. Finally, we recently established a Japanese subsidiary and we are currently assessing real-estate opportunities in Japan where we hope to open our first stores in late 2006 or early 2007. Now, I'll turn it over to Mike. - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [4] - -------------------------------------------------------------------------------- Thank you, Bob. As you have heard we've achieved outstanding results in the first quarter, building on a significantly improving trend which began in the second half of 2004. I believe this success is the result of the disciplined application of our key strategies across all our brands. We intend to continue on this path, and I believe that it will be the key to future success. The four main pillars of the strategy are, one, constant attention to building and reinforcing our brand. Two, our nearly obsessive focus on each brand's core market position, aspirational American casual apparel and accessories targeted to specific age groups. Three, a rapidly developing design, merchandising, sourcing, and planning organization built across, around expertise in each product category across brands. And four, a strong commitment to presentation and customer experience in our stores. Our new merchandise organization, which is centered around product experts, allows us to develop and leverage greater skills in each category while at the same time being able to better identify the unique characteristics of each brand. We have continued to increase quality levels throughout our assortments, particularly in Abercrombie & Fitch, and have further enhanced this positioning through the development of Ezra Fitch. In our stores we have improved service presentation standards, and by eliminating promotion activity, we have both enhanced our brand's image as the premium casual brand in each target age category while also improving sales margins. These characteristics clearly differentiate us from the competition. From a comp standpoint, our kids business Abercrombie performed the strongest of all brands during the quarter. The business has improved dramatically driven by excellent product and improved customer service. I see our store investment program paying off in all brands and the kids business has benefited from the increased staff hours and training, which have permitted us to greatly improve the store environment as well as customer service. With a 70% sales increase driven by a 21% comp store sales increase as well as 83 new stores opened since April 2004, Hollister had an outstanding quarter. In 2005, we plan to open approximately 16 new Hollister stores, taking the total store count to over 300 stores. We see great opportunity for additional stores in the coming years and expect that Hollister sales will approach or exceed $1 billion in 2006, making it the truly dominant lifestyle brand for the high school-aged guy and girl. We continue to foresee significant further growth opportunities for Hollister. We have continued to make progress in developing RUEHL. A key step which we are now undertaking is the integration of RUEHL's merchandise team in our product category teams. This will provide RUEHL with greater expertise -- excuse me, expertise in each product category and give us greater leverage with our suppliers. This should permit to us improve the focus of RUEHL's collections and improve product quality and delivery schedules. In addition, we will open our first RUEHL leather accessories store on Bleecker Street by the end of 2005. Our commitment to RUEHL is confirmed by the important store locations we will be opening in the coming months; including major malls in Honolulu, San Diego, and Chicago in 2005 and Long Island and Las Vegas in 2006. As we previously stated, we do not expect RUEHL to break even until the end of 2007. We remain pleased with its progress and anticipate the brand will be a great contributor to the Company's success over the long term. Results at Abercrombie & Fitch were truly outstanding as we generated exceptional growth, notwithstanding our relatively constant store count. Net sales for the quarter exceeded 300 million, with comp store sales increasing 16%. I believe this is an amazing accomplishment given the size, maturity, and historical margin structure of this business. It is particularly extraordinary given that we have achieved this growth by moving completely away from any promotional activity. Customers have responded extremely well to our continually enhanced quality emphasized by our casual luxury marketing and the continued development of Ezra Fitch. We continue to seek improved quality and fashion while maintaining our high gross margins. We expect the opening of our flagship stores on Fifth Avenue in New York and at the Grove in Los Angeles will further enhance the brand image while also generating outstanding sales volume. Now we are available to take your questions. Please limit yourself to one question so that we can speak to as many callers as possible. After everyone has had a chance we will be happy to take follow-up questions. Thank you. ================================================================================ Questions and Answers - -------------------------------------------------------------------------------- Operator [1] - -------------------------------------------------------------------------------- [Operator Instructions]. Mark Friedman, Merrill Lynch. - -------------------------------------------------------------------------------- Mark Friedman, Merrill Lynch - Analyst [2] - -------------------------------------------------------------------------------- Mike, I was wondering if you could talk a little bit about the gross margin, IMU flat, yet saw some great gains; they're slowing. Are there opportunities going forward? And from a RUEHL standpoint, where's the big breakthrough on the gross margin line from-- in the near term? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [3] - -------------------------------------------------------------------------------- Start with RUEHL. It is a constantly improving gross margin. I'm not going to give you the number. We think that the -- it will constantly improve and by 2007, we'll be at a rate that-- that is acceptable in the mix of our profit with the number of stores we'll have. Our target there is to attain the Abercrombie & Fitch corporate IMU and markdown rate, and I think we should achieve that shortly after 2007. In terms of the IMU for the total business we have seen market improvement. It flattened out the first quarter. I have never projected an improvement in IMU in the business, and I will not do so now. I think that we are building a huge amount of quality in our product, increased amount of quality in our product, and I really believe that's why the IMU rate has flattened out. I would expect to not see huge improvement in IMU for the rest of the year for that reason. - -------------------------------------------------------------------------------- Operator [4] - -------------------------------------------------------------------------------- Jeff Klinefelter, Piper Jaffray. - -------------------------------------------------------------------------------- Jeff Klinefelter, Piper Jaffray - Analyst [5] - -------------------------------------------------------------------------------- Question on store expenses. Mike or Bob, however you want to approach it, but, you know, with your average hours up 53% and your payroll up to 13% of sales, can you talk a little bit about what you've learned from stepping that up dramatically outside of the obvious here this year versus last year? Are you finding that you're going to be able to bring that back down to some level as you move though the year, or do you feel like you're now at the appropriate level and will be staying there in order to create the best level of service? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [6] - -------------------------------------------------------------------------------- I think what we've certainly learned is that, by managing the stores with the amount of time that they need to be managed properly, rather than focusing on a percentage of sales, we're getting much better-- we're getting a much better presentation in the store, we're creating a much better experience in the store, we have much greater staff morale and I think we're going to be able to build on that over time. And, on the other hand, clearly, we would not expect -- we would expect because of the sales in the second half of the year, are significantly better than the sales in the first half of the year, just normal seasonality. We would expect, I think, to have some further leverage. So there's nothing magical about 13%. It's much more a question of the level that we think we need to manage the stores. And I think the sales increases in the second half will be more significant than will be the increase in the number of hours in the store. - -------------------------------------------------------------------------------- Operator [7] - -------------------------------------------------------------------------------- Jeff Black, Lehman Brothers. - -------------------------------------------------------------------------------- Jeff Black, Lehman Brothers - Analyst [8] - -------------------------------------------------------------------------------- I just had question for Mike about the evolution of the casual luxury theme. I mean, if we look out across the three brands that we have now, and I guess you could add RUEHL if you like, you know, should we understand this as a price point game and taking up price points to a certain level, and tell me what that is, should we understand this in terms of mix changes? And secondarily, how do you rate where each brand is on this evolution curve in terms of the maturity into the casual luxury theme? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [9] - -------------------------------------------------------------------------------- Okay, that's a great question. Historic casual luxury is a marketing theme for the Abercrombie & Fitch brand. We will continue to use it. We will continue to enhance the quality level of the Abercrombie & Fitch brand. We will raise average unit retail with the introduction of a greater percentage of Ezra product in the mix. It's interesting that we are being paid very handsomely for doing this. There isn't an infinite level of price increase that we can sustain, and that price increase after this year will clearly moderate. It is not a concept that we're employing in the other two brands, being abercrombie and Hollister. We are looking to enhance the quality levels of those brands, but our average unit retails will stay the same on a classification by classification basis. We are seeing increases in average unit retails in those brands because of mix. So the only increase in the average unit retails in Hollister and abercrombie will be mix issues. That's a very good question. - -------------------------------------------------------------------------------- Operator [10] - -------------------------------------------------------------------------------- Stacy Pak, Prudential Equity Group. - -------------------------------------------------------------------------------- Stacy Pak, Prudential Equity Group - Analyst [11] - -------------------------------------------------------------------------------- I have one clarification and then one question. Bob, what did you say on inventories, because on the balance sheet they look a little light, but I thought you gave some huge number on a per square foot. So if you could just repeat that. And then I'm wondering how to read the decreasing transactions at Hollister and at core during the quarter. It looked to me like Hollister's transactions got somewhat worse on a two year, and I'm just wondering how to interpret that and how much of the AUR for the Company was due to denim? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [12] - -------------------------------------------------------------------------------- I think it's more than one question there. Would you like the first one answered, Stacy? - -------------------------------------------------------------------------------- Stacy Pak, Prudential Equity Group - Analyst [13] - -------------------------------------------------------------------------------- The one was a clarification. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [14] - -------------------------------------------------------------------------------- - -- comparison was to last year's first quarter, not to the balance sheet at the 31st of January. That's where the 50% increase is. - -------------------------------------------------------------------------------- Stacy Pak, Prudential Equity Group - Analyst [15] - -------------------------------------------------------------------------------- The 56% on per square foot is year-over-year? Is that what you're saying? - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [16] - -------------------------------------------------------------------------------- That's correct, Stacy. And I could also point out that on a unit basis, it's, in fact, much lower than that; because the average price of our -- cost of our inventory units has grown substantially. So which of your questions do you want us to answer? - -------------------------------------------------------------------------------- Stacy Pak, Prudential Equity Group - Analyst [17] - -------------------------------------------------------------------------------- Why don't you answer the transaction question about Hollister and core and how to read that. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [18] - -------------------------------------------------------------------------------- I think that basically what you see is that we have more transactions in product with higher unit prices, particularly in the denim. And the other thing is that, I think, by having the lower promotional expense, we have more sales dollars for fewer transactions. So I don't-- and we're not concerned about -- all the businesses have shown remarkable growth, and that's in dollars that we're doing and I think that's what we're totally focused on, the dollars rather than the number of transactions. The traffic in the stores has continued to be extraordinary, and I don't think we're concerned at all. - -------------------------------------------------------------------------------- Operator [19] - -------------------------------------------------------------------------------- Paul Lejuez, CS First Boston. - -------------------------------------------------------------------------------- Paul Lejuez, Credit Suisse First Boston - Analyst [20] - -------------------------------------------------------------------------------- Wonder if you could talk a little bit about any sourcing improvements that you might be seeing? A little strange that the IMUs are holding constant. Just wondering what you're seeing on the sourcing side. - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [21] - -------------------------------------------------------------------------------- I don't know what you mean by extraordinary that they're staying constant. As I said, we're building a huge amount of additional quality into our product. To do so, we have to continually push and -- continually develop our sourcing pace or push forward with it. I think we've made remarkable progress in identifying and bringing up new quality factors across the business. So our continued push into new markets, new quality factories is clearly paying off. We've taken that in more quality than IMU improvement for the first quarter. I would expect that -- I don't want to project the balance of the year in terms of IMU. - -------------------------------------------------------------------------------- Operator [22] - -------------------------------------------------------------------------------- Dana Telsey, Bear Stearns. - -------------------------------------------------------------------------------- Dana Telsey, Bear Stearns - Analyst [23] - -------------------------------------------------------------------------------- Mike, can you talk a little bit about hindsight spring '05, and as look towards planning your business for even holiday season, anything you take away from spring '05 in learnings for how you plan holiday? And if you look at the increase in denim that you're doing for back-to-school and I guess even a little go forward what price point should we look at, and what new should we see in denim, and is there tops to match the newness in denim? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [24] - -------------------------------------------------------------------------------- Okay. I'm not going to reveal price points in denim because that's competitive issue. I think that we've worked very hard on our denim assortments for back-to-school. You'll see more fashion and you've certainly seen that in our existing stocks, but we'll continue to push the fashion quotient in denim; as well as the basic part of that business with intriguing washes and everything that's necessary to drive the business. In terms of intriguing tops to go with those bottoms, I think that we are continuing to push more newness in the stocks. I think we're very on track in terms of key categories in the tops business, and I'm assuming you're talking about women's tops. I feel that we're very much on track and we'll go right into back-to-school with that momentum. In terms of learning from spring 2005, I think that we have covered with increased inventory more pockets across-- consistently across our business. I think we have been more sporadic in the past, in terms of how we have had programs come and go in our inventories. We are looking very hard at how we manage basics verse fashion and I think with our cross merchandising organization we are more consistent, category by category, on a week by week basis than we've ever been. Good question. - -------------------------------------------------------------------------------- Operator [25] - -------------------------------------------------------------------------------- Monica Brisnehan, RBC Capital Markets. - -------------------------------------------------------------------------------- Monica Brisnehan, RBC Capital Markets - Analyst [26] - -------------------------------------------------------------------------------- I was wondering if could you outline for us some of the increases in the home office expenses that you mentioned in your prepared remarks. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [27] - -------------------------------------------------------------------------------- Sure. I think the main component has been increasing the staff and-- and therefore our payroll costs in the main home office functions, particularly the product-oriented areas like merchandising and design and sourcing, and planning. And I think, as I had said before in the opening remarks, the issue here is not adding to a level which was already high. It's really a question of catching up in the situation where the Company was not building the structure in a commensurate way with the growth of the Company; and so really what we've been doing is catching up and there's a substantial difference between the first quarter of 2005 and first quarter of 2004. It's a process that really started to accelerate starting at the end of last spring. That is the major change. Otherwise, we keep a very tight control over all of our G&A costs throughout the Company. - -------------------------------------------------------------------------------- Operator [28] - -------------------------------------------------------------------------------- Barbara Wyckoff, Buckingham Research Group. - -------------------------------------------------------------------------------- Barbara Wyckoff, Buckingham Research Group - Analyst [29] - -------------------------------------------------------------------------------- Mike, could you talk about the product teams? Did I hear right that merchandising, sourcing, technical are going to be consolidated for all brands? Is design still going to be separate or is that also consolidated? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [30] - -------------------------------------------------------------------------------- Designs-- design operates in separate silohs, absolutely separate silohs. - -------------------------------------------------------------------------------- Barbara Wyckoff, Buckingham Research Group - Analyst [31] - -------------------------------------------------------------------------------- Okay, but the others all consolidated? Makes a lot of sense. - -------------------------------------------------------------------------------- Operator [32] - -------------------------------------------------------------------------------- Joe Teklits, Wachovia Securities. - -------------------------------------------------------------------------------- Joe Teklits, Wachovia Securities - Analyst [33] - -------------------------------------------------------------------------------- Back to the inventory question real quick. It was down a lot last year at the end of the first quarter on a per square foot basis. It's up two times what it was down last year. I know your comps are running very positive right now, but can you give us some insight into how those flows might change in the second quarter? You bring more in up-front, or are you going to be flowing the same as you did last year, and maybe where you're going to end Q2 at this point? Does that make sense? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [34] - -------------------------------------------------------------------------------- Yes, sure, Joe. You want to give second quarter guide -- guidance? - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [35] - -------------------------------------------------------------------------------- Well, I think-- one of the things you noticed in the press release, probably, Joe is that we believe that our cash balance will go below the $300 million level because we're going to continue to increase inventories in the second quarter; and the growth is going to be primarily in basic categories like denim, knits, and-- that we think are going to really drive the business very well going into the second half of the year. So we do expect it to continue to grow in the next three months, and then hopefully the sales that will result will drive us back to the proper level, the appropriate level at the end of the year. This is the appropriate level, though. I think we feel very strongly that last year we didn't have sufficient inventory really to meet demand and-- and, as a consequence, the business results were not as good as they might have been. - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [36] - -------------------------------------------------------------------------------- I want to talk a minute about that. Clearly, we're going to give a little more flavor, we are going to intensify the denim inventories. You all know that we just lived back-to-school from hand to mouth and had virtually empty stores. We're also intensifying what we would call core items in the inventory, and I alluded to that in my last conversation about being consistent from brand-to-brand, by-- category-by-category on a week-to-week basis that. That is a significant increase in inventory. But we're making a significant increase in inventory in what we would classify as non-risk classifications. We are continuing to be very conservative in our fashion classifications which carry markdown risks. So you all know that we're very risk adverse. We continue to be hugely risk adverse and look at the downside in the fashion inventories over a short period of time. I'm very comfortable with we-- with where we are; although they sound like big numbers, they do sound like big numbers to me, too. But these inventories are being really well managed. - -------------------------------------------------------------------------------- Operator [37] - -------------------------------------------------------------------------------- Dorothy Lakner, CIBC World Markets. - -------------------------------------------------------------------------------- Dorothy Lakner, CIBC World Markets - Analyst [38] - -------------------------------------------------------------------------------- I have a question for Bob. Any thoughts on the CFO search? - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [39] - -------------------------------------------------------------------------------- Yes, my thought is that I hope to find a CFO -- that we will find a CFO as soon as possible, because it's not easy doing two jobs at the same time. We're proceeding with all due haste and I hope that maybe the next time we speak we'll be able to have somebody already selected. - -------------------------------------------------------------------------------- Operator [40] - -------------------------------------------------------------------------------- Janet Kloppenberg, JJK Research. - -------------------------------------------------------------------------------- Janet Kloppenberg, JJK Research - Analyst [41] - -------------------------------------------------------------------------------- Mike, I heard what you just said about fashion and risks associated with it. My view is that your basics have become more fashion oriented, with your tops, part of your denim with the ornamentation, the graphic T's even. So I'm wondering if what you call basics-- what you called basics two years ago has shifted. I'm wondering about the novelty component. I'm wondering if we should expect then to see the novelty component of the mix, including the denim assortment, to decline if you're investing more in basics; or if it's just a matter of what a basic is-- the definition of a basic. - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [42] - -------------------------------------------------------------------------------- I think there s a fashion quotient to our basics, but I would view them, as we view our business now, as riskless in terms of seasonality or future. To understand this best, I think you have to look at our store tiers. And we have not done well over recent years in our lower volume, less sophisticated stores. We have starved those inventories -- those stores for inventories and, in fact, the kind of merchandise that those stores sell best is what we would classify as basic. That's really where we're seeing the increased inventories, and by the way, absolute results in our business. That tier of stores that had been decreasing and was really responsible -- a great deal responsible for our total comps being not very good, because over recent years our more sophisticated stores have trended very well; those stores, not very well. The basic inventory investment is going into those stores and we're seeing payback. - -------------------------------------------------------------------------------- Operator [43] - -------------------------------------------------------------------------------- Dana Cohen, Banc of America Securities. - -------------------------------------------------------------------------------- Dana Cohen, Banc of America Securities - Analyst [44] - -------------------------------------------------------------------------------- Just clarifying again on the inventory. Looking at it on a two-year basis it's up 22% per square foot, which is not that different from where your comps were in the first quarter, but as you moved through the year, I mean, while inventories were down in subsequent quarters they weren't down as much. So, Bob, when you talk about increased investment, is it the 56? Is it the two-year per square foot. How should we think about that? And then secondarily, given that we all came into today with models that look very different from the numbers that you reported, there was about 100 million that shifted last year from sort of gross margin to SG&A. Should we think it's about the same for this year just so we can sort of true up the numbers we came into today with? - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [45] - -------------------------------------------------------------------------------- Dana, I honestly have not gone back to look at what it was last year from that point of view. We simply determined what we would put into the categories, and we focused on those, and then we reclassified the previous period. So I think what we would like you to do, to be honest, is to think about the expense categories and the way that we're thinking about them. That is, cost of inventory that we sell, cost to manage the stores. And in the 10-Q, Dana, it is our intention to give some further color on how much the store expense was, people as opposed to occupancy and depreciation. So you will be able to see that, and you can think about those in their variable and fixed components. And as far as D & A I think, again, it's largely fixed, but there is the fact that we're building the home office structure and we will continue to do that. So I'm not sure I've answered your question, but I can't really think about it the other way. - -------------------------------------------------------------------------------- Operator [46] - -------------------------------------------------------------------------------- Lauren Levitan, SG Cowen. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [47] - -------------------------------------------------------------------------------- The other thing is, if I can just sort of -- Dana asked this other question about the inventories, and I think that here again what we expect is we will have an increase in inventories in the second quarter as a-- as a per square foot because we are building inventories, as Mike described, and that's what we think is appropriate to be able to keep ourselves-- keep the stores properly stocked, but as we go through the year we would expect that to then decline towards the end of the year. - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [48] - -------------------------------------------------------------------------------- I'd like to clarify. I was thinking about my comment also to Janet. We are intensifying the basic inventories in all stores, but primarily basics in what we call the second and third tier stores. But we will continue to flow and increase the fashion component of our business on a sales basis as much as the basic business. But we will be more conservative with the fashion stocks, they will turn much more quickly than the basic stocks to limit our fashion risk. But expect us to continue to flow current fashion very aggressively. We are totally committed to trend in this country, and I think we're really up and going there. - -------------------------------------------------------------------------------- Operator [49] - -------------------------------------------------------------------------------- Lauren, your line is open. - -------------------------------------------------------------------------------- Lauren Levitan, SG Cowen - Analyst [50] - -------------------------------------------------------------------------------- I was hoping you could give us some additional color on what you're currently contemplating in terms of your strategy in Japan. Do you expect that you'll be launching your own stores, or is there any sort of a partnership or cooperative relationship that you're entertaining? And also I notice you didn't comment on your previous guidance that you provided for $2.80 to $3 on 20% sales growth. Should we assume that that's still your target, or is that worth updating? - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [51] - -------------------------------------------------------------------------------- Okay. Our plan in Japan is to identify and open some key stores in major cities like Tokyo, Nagoya, Osaka, and we've already begun to look for those stores. It is absolutely our intention to do this through a 100% controlled subsidiary. We don't intend to take on partners. We will hire our own management and manage the stores, and this will allow us to achieve a fundamental goal that we have, which is that our stores in Japan should be essentially the same-- to be essentially the same as our stores in the United States or anywhere else in the world. And we're firmly convinced that we can do this. It's going to be an interesting project but we believe we'll be able to do this successfully. And as far as guidance goes, we didn't say anything because we don't have anything to say. We said at the end of the -- well, at the end of the year, that we were going to give annual guidance, and we would have a legal obligation to make any -- to give adjustments to that if we perceived that that was appropriate. But since we haven't said anything, you can draw your own conclusion, I think. - -------------------------------------------------------------------------------- Operator [52] - -------------------------------------------------------------------------------- John Morris, Harris Nesbitt. - -------------------------------------------------------------------------------- John Morris, Harris Nesbitt - Analyst [53] - -------------------------------------------------------------------------------- Just a clarification. Let me ask Dana's question a little bit differently. Can you give us what either the gross margin or the SG&A would have been on a pre-classification basis-- just, I think, to be fair for comparative purposes, just for the current quarter? - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [54] - -------------------------------------------------------------------------------- Well, okay. I'm going to do this now, but I'm never going to do it again, so-- because that's not the way we want to you think about the business. And I think we've given you a way to think about the business that is much more rational because I think what we had before was just, excuse my expression, a mishmash of costs that have nothing to do with each other, and I think now you have a basis for really thinking about the business in a rational way, which I stress is exactly the way we think about it. But if we had used the same system as last time, then our cost of goods sold would have been 58.1% of sales and, again, that means cost of goods sold, occupancy, and depreciation and all the other things that were in there. So gross profit would have been 41.9% as opposed to 40.1%. So you can see there's some improvement, and if-- if you'll permit me, I'll try to comment. If you remember in the opening remarks, I mentioned that we got substantial leverage on the occupancy costs and depreciation and the rental charges and landlord charges in the stores, and that would account for most of that increase; whereas our true product margin, as we also mentioned at the beginning, remained relatively similar with both IMU and markdown levels being relatively the same. - -------------------------------------------------------------------------------- Operator [55] - -------------------------------------------------------------------------------- Margaret Mager, Goldman Sachs. - -------------------------------------------------------------------------------- Margaret Mager, Goldman Sachs - Analyst [56] - -------------------------------------------------------------------------------- One of the things that is so striking about what's transpired over the past year is how robustly your business responded to some of the operational changes that you made, as well as raising your prices. I'm just wondering, how do you think about keeping things going as you start to anniversary these changes? I'm listening carefully to your discussion about inventory and the management of categories, et cetera, but I'm also interested in understanding how you think about it from a pricing standpoint, because I'm under the impression you're not raising your prices any further. So can you help me just think about how you anniversary the changes and keep the momentum going? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [57] - -------------------------------------------------------------------------------- Well, the issue about prices is that you will see increased prices by category in the Abercrombie & Fitch brand. You not see increases in prices on a category-by-category basis in the Hollister or abercrombie brands, but there will be an increase-- a continual increase in AUR in all three of the brands because of mix. That's the balance of this year. We will not see that next year, but it is our point of view that with the systems and processes that we're putting in place, the cross-merchandising, which is also a key driver of our business currently, we will get, I believe, better and better at doing that, at offering consistency in product category across our business on a week-by-week basis. This machine is becoming more and more efficient from the ability to predict, to plan, to source and deliver consistency in product. There's less risk to the business than there has been before, and we're offering more fashion. So I believe that that momentum will clearly carry us into the future. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [58] - -------------------------------------------------------------------------------- If I could just throw in one additional thought, I think there's enormous opportunity still in greater productivity in our stores, and I think if you look at what we've been able to accomplish in the last few months, I think it's an indication that there's still substantial room for growth. The space in our stores is not a substantial constraint, in most cases and, therefore, if we're able to deliver the product, as Mike is describing, in the right way and also create the proper experience in the store then I think there's substantial room for further sales increases in the space that we already own. So the prospects, if we're able to execute what we're saying, are quite good. - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [59] - -------------------------------------------------------------------------------- I will expand on that. I believe that our product has improved but not to the extent that it looks as if we're being paid, with the expenditures that are being made in the store-- in the stores, it looks a lot better, and customers are perceiving it as better. - -------------------------------------------------------------------------------- Operator [60] - -------------------------------------------------------------------------------- Brian Tunick, JP Morgan. - -------------------------------------------------------------------------------- Brian Tunick, JP Morgan - Analyst [61] - -------------------------------------------------------------------------------- Bob or Mike, just from a strategy standpoint, trying to understand RUEHL versus Abercrombie & Fitch. Mike, where do you think the delta should be in the price points between Abercrombie & Fitch and RUEHL? Obviously denim could be one example and, you know, the accessories, obviously, why not open, you know, a bigger store on Bleecker? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [62] - -------------------------------------------------------------------------------- Well, there are a number of questions there. One, I think the important thing to look at at RUEHL, is the target customer, and you remember that opening, I had said we're going after 22 to 30-year old. We're now seeing that that business is skewing a little older than we thought, so we're saying it is really a 22 to 35-year-old customer, which is good for the potential of that business, and we're really targeting dead on 30. In terms of the price points, we are still working on them. We have raised them since opening because we saw that we could. They will average -- other than hand bags, because we don't have hand bags in Abercrombie & Fitch, probably 35 to 40% higher than A&F in total, including Ezra and A&F. The larger store on Bleecker-- Bleecker Street is going to be a handbag store and is truly a marketing device for us. The handbags are doing extraordinarily well. We think it is a way to start building the reputation of that brand as we're -- as we're building the store base, but the store base will not grow as fast as the reputation of the brand. - -------------------------------------------------------------------------------- Operator [63] - -------------------------------------------------------------------------------- Josh Schwartz, Flatbush Watermill LLC. - -------------------------------------------------------------------------------- Josh Schwartz, Flatbush Watermill LLC - Analyst [64] - -------------------------------------------------------------------------------- Mike, just one clarification. You said-- you made a comment in responding to a question that there's less risk in the business. I was just wondering if you could expand on that? My main question was, what is going on with the kids business? What changes have you made that are resulting in the results there? And how are you thinking now about that business's future relative to maybe a year or year and a half ago? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [65] - -------------------------------------------------------------------------------- Okay. First, risk in the business. By that, I mean that we're being -- we're better at predicting our conceptual form of the business is getting better. We're developing more talent in the business, more and better talent. We're building this home office in design and merchandising and sourcing, which is giving us just more professionalism. And third, the cross-merchandising of the brands is offering us really great expertise on a classification-by-classification basis. We're bringing more expertise to bear on a classification-by-classification basis, and I think is giving us-- that is giving us more stability in the business. Intensifying the basics in the business is a less risky proposition than intensifying greatly the fashion quotient of the business. I said we're going to aggressively go after both. The increased base in -- basic volume gives us more stability in the business. The second issue is the kids business. I think we have more growth potential in the kids business than I would have said a year ago. There is terrific momentum in this business. We are seeing that a fashion kids business is playing in many more locations than we thought possible this time last year, but we're not announcing any expansion of that business at this point. - -------------------------------------------------------------------------------- Operator [66] - -------------------------------------------------------------------------------- Marie Driscoll, Standard & Poor's. - -------------------------------------------------------------------------------- Marie Driscoll, Standard & Poor's - Analyst [67] - -------------------------------------------------------------------------------- My question is on your Internet sales. How is the average ticket compared to the average ticket in the stores? And if that's my only question, that's it. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [68] - -------------------------------------------------------------------------------- They're relatively similar, but I think the number of units per transaction are somewhat higher, which you would expect people are ordering for. And also the international component of Internet business would tend to have somewhat higher number of units per transaction, but in terms of the mix of product, it's pretty much similar to what we have in the stores. - -------------------------------------------------------------------------------- Operator [69] - -------------------------------------------------------------------------------- Jeff Feinberg, JLF. - -------------------------------------------------------------------------------- Jeff Feinberg, JLF - Analyst [70] - -------------------------------------------------------------------------------- Just a clarification on the inventory intensification so we can have reasonable expectations. Should the inventory preferred, if I understood correctly from the comments in the press release, be up a little more than this 56% over this next couple quarters as we have the investment in there for the full quarter, and then down dramatically in Q4? Is that the way to think about it? - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [71] - -------------------------------------------------------------------------------- It will increase in the second quarter, and we're definitely planning that. And then, clearly, where we'll be at the end of the third quarter will depend a lot on how the sales go in the second -- I'm sorry, in the third quarter. But ultimately, yes, we would expect inventories at the end of the year to have come down fairly significantly; that's correct, Jeff. - -------------------------------------------------------------------------------- Operator [72] - -------------------------------------------------------------------------------- Christine Chen, Pacific Growth Equities. - -------------------------------------------------------------------------------- Christine Chen, Pacific Growth Equities - Analyst [73] - -------------------------------------------------------------------------------- I wanted to ask about SG&A. You had previously said you expected SG&A on a dollar basis to be up for first half. Do you still stick by that statement so the SG&A spending is mostly in the first half of this year versus the second half? - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [74] - -------------------------------------------------------------------------------- Well, I'm not quite sure what you're referring to. We reported now our store expenses, in there we reported separately marketing, general administration expenses. Are you referring-- - -------------------------------------------------------------------------------- Christine Chen, Pacific Growth Equities - Analyst [75] - -------------------------------------------------------------------------------- I'm talking about the combined-- the combined; because before you were just lumping them into SG&A total. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [76] - -------------------------------------------------------------------------------- Well, again, what you have in the store expenses is the combination of expenses that were in different places before, and I believe we explained previously how we think they will grow, and occupancy will grow with the increase in the number of stores and you can estimate that pretty reasonably. And then the staffing in the stores will grow somewhat in the second half but not as intensely as the expected increase in sales. And as far as G&A goes, we manage our costs in the home office very carefully, but we will continue-- do expect to continue to increase the staff, particularly in the product areas by a substantial amount in the second half of the year. - -------------------------------------------------------------------------------- Operator [77] - -------------------------------------------------------------------------------- Stacy Pak, Prudential Equity Group. - -------------------------------------------------------------------------------- Stacy Pak, Prudential Equity Group - Analyst [78] - -------------------------------------------------------------------------------- So I guess we can ask the denim question there. On the AUR, how much of the increase in AUR can we assume was due to denim? - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [79] - -------------------------------------------------------------------------------- In Hollister and kids, a huge percentage, and in Abercrombie & Fitch, a lesser percentage. - -------------------------------------------------------------------------------- Stacy Pak, Prudential Equity Group - Analyst [80] - -------------------------------------------------------------------------------- That specific, huh. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [81] - -------------------------------------------------------------------------------- Okay. This will be the -- should be the next question, the last question, thank you. Thank you very much. I think we've gone through everybody's questions, and - --. - -------------------------------------------------------------------------------- Mike Jeffries, Abercrombie & Fitch Co. - Chairman and CEO [82] - -------------------------------------------------------------------------------- Thank you. - -------------------------------------------------------------------------------- Bob Singer, Abercrombie & Fitch Co. - President and COO [83] - -------------------------------------------------------------------------------- Bye. - -------------------------------------------------------------------------------- Operator [84] - -------------------------------------------------------------------------------- That does conclude this conference call. 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------------------------------------------------------------------------------------------------------------------ PERIOD 2002 2003 2004 2005 ------------------------------------------------------------------------------------------------------------------ (% CHANGE) (TOTAL) (% CHANGE) (TOTAL) (% CHANGE) (TOTAL) (% CHANGE) (TOTAL) 1. SALES (COMP STORES) (% CHANGE) (COMP STORES) (% CHANGE) (COMP STORES) (% CHANGE) (COMP STORES) (% CHANGE) ------------------------------------------------------------------------------------------------------------------ 1st Qtr -6% 312,792 19% -6% 346,722 11% 0% 411,930 19% 19% 546,810 33% 2nd Qtr -5% 329,154 18% -8% 355,719 8% -5% 401,346 13% 3rd Qtr -5% 419,329 18% -9% 444,979 6% 1% 520,724 17% 4th Qtr -4% 534,482 15% -11% 560,389 5% 9% 687,254 23% Year -5% 1,595,757 17% -9% 1,707,810 7% 2% 2,021,253 18% 6 Mos -6% 641,946 18% -7% 702,441 9% -3% 813,276 16% 9 Mos -5% 1,061,274 18% -8% 1,147,421 8% -1% 1,333,999 16% ------------------------------------------------------------------------------------------------------------------ 2. COST OF GOODS SOLD (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 122,840 39.3% 130,243 37.6% 144,005 35.0% 189,558 34.7% 2nd Qtr 119,028 36.2% 122,068 34.3% 120,429 30.0% 3rd Qtr 169,963 40.5% 167,328 37.6% 184,107 35.4% 4th Qtr 203,370 38.0% 205,001 36.6% 231,487 33.7% Year 615,201 38.6% 624,640 36.6% 680,028 33.6% 6 Mos 241,868 37.7% 252,311 35.9% 264,434 32.5% 9 Mos 411,831 38.8% 419,639 36.6% 448,541 33.6% ------------------------------------------------------------------------------------------------------------------ 3. GROSS PROFIT (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 189,952 60.7% 216,479 62.4% 267,925 65.0% 357,252 65.3% 2nd Qtr 210,126 63.8% 233,651 65.7% 280,917 70.0% 3rd Qtr 249,366 59.5% 277,651 62.4% 336,617 64.6% 4th Qtr 331,112 62.0% 355,388 63.4% 455,767 66.3% Year 980,554 61.4% 1,083,169 63.4% 1,341,226 66.4% 6 Mos 400,078 62.3% 450,130 64.1% 548,842 67.5% 9 Mos 649,443 61.2% 727,781 63.4% 885,457 66.4% ----------------------------------------------------------------------------------------------------------
ABERCROMBIE & FITCH QUARTERLY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)
------------------------------------------------------------------------------------------------------------------ PERIOD 2002 2003 2004 2005 ------------------------------------------------------------------------------------------------------------------ 4. TOTAL STORES AND DISTRIBUTION EXPENSE (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 119,575 38.2% 137,747 39.7% 165,515 40.2% 222,223 40.6% 2nd Qtr 125,684 38.2% 139,732 39.3% 160,515 40.0% 3rd Qtr 140,139 33.4% 155,937 35.0% 188,381 36.2% 4th Qtr 147,691 27.6% 163,999 29.3% 223,833 32.6% Year 533,089 33.4% 597,416 35.0% 738,244 36.5% 6 Mos 245,259 38.2% 277,479 39.5% 326,030 40.1% 9 Mos 385,397 36.3% 433,417 37.8% 514,411 38.6% ------------------------------------------------------------------------------------------------------------------ 5. TOTAL MARKETING, GENERAL AND ADMINISTRATIVE EXPENSE (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 33,844 10.8% 38,238 11.0% 55,784 13.5% 67,146 12.3% 2nd Qtr 35,491 10.8% 38,932 10.9% 51,703 12.9% 3rd Qtr 33,676 8.0% 41,323 9.3% 86,273 16.6% 4th Qtr 32,700 6.1% 37,060 6.6% 66,076 9.6% Year 135,711 8.5% 155,553 9.1% 259,836 12.9% 6 Mos 69,335 10.8% 77,170 11.0% 107,487 13.2% 9 Mos 103,011 9.7% 118,493 10.3% 193,760 14.5% ------------------------------------------------------------------------------------------------------------------ 6. OTHER OPERATING INCOME, NET (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr (146) 0.0% (186) -0.1% (95) 0.0% (406) -0.1% 2nd Qtr (102) 0.0% (147) 0.0% (63) 0.0% 3rd Qtr (194) 0.0% (187) 0.0% (15) 0.0% 4th Qtr (117) 0.0% (459) -0.1% (4,317) -0.6% Year (559) 0.0% (979) -0.1% (4,490) -0.2% 6 Mos (248) 0.0% (333) 0.0% (158) 0.0% 9 Mos (442) 0.0% (520) 0.0% (173) 0.0% ------------------------------------------------------------------------------------------------------------------
ABERCROMBIE & FITCH QUARTERLY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)
------------------------------------------------------------------------------------------------------------------ PERIOD 2002 2003 2004 2005 ------------------------------------------------------------------------------------------------------------------ 7. OPERATING INCOME (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 36,679 11.7% 40,680 11.7% 46,721 11.3% 68,289 12.5% 2nd Qtr 49,053 14.9% 55,134 15.5% 68,762 17.1% 3rd Qtr 75,745 18.1% 80,578 18.1% 61,978 11.9% 4th Qtr 150,838 28.2% 154,788 27.6% 170,175 24.8% Year 312,313 19.6% 331,179 19.4% 347,636 17.2% 6 Mos 85,732 13.4% 95,814 13.6% 115,483 14.2% 9 Mos 161,477 15.2% 176,392 15.4% 177,461 13.3% ------------------------------------------------------------------------------------------------------------------ 8. INTEREST INCOME, NET (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr (872) -0.3% (991) -0.3% (986) -0.2% (1,220) -0.2% 2nd Qtr (731) -0.2% (861) -0.2% (1,358) -0.3% 3rd Qtr (866) -0.2% (757) -0.2% (1,573) -0.3% 4th Qtr (1,300) -0.2% (1,099) -0.2% (1,299) -0.2% Year (3,770) -0.2% (3,708) -0.2% (5,216) -0.3% 6 Mos (1,603) -0.2% (1,852) -0.3% (2,344) -0.3% 9 Mos (2,469) -0.2% (2,609) -0.2% (3,917) -0.3% ------------------------------------------------------------------------------------------------------------------ 9. PRE-TAX INCOME (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 37,551 12.0% 41,671 12.0% 47,707 11.6% 69,509 12.7% 2nd Qtr 49,784 15.1% 55,995 15.7% 70,120 17.5% 3rd Qtr 76,611 18.3% 81,335 18.3% 63,551 12.2% 4th Qtr 152,138 28.5% 155,887 27.8% 171,474 25.0% Year 316,083 19.8% 334,887 19.6% 352,852 17.5% 6 Mos 87,335 13.6% 97,666 13.9% 117,827 14.5% 9 Mos 163,946 15.4% 179,001 15.6% 181,378 13.6% ------------------------------------------------------------------------------------------------------------------
ABERCROMBIE & FITCH QUARTERLY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)
------------------------------------------------------------------------------------------------------------------ PERIOD 2002 2003 2004 2005 ------------------------------------------------------------------------------------------------------------------ 10. TAXES (TAX RATE) (TAX RATE) (TAX RATE) (TAX RATE) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 14,447 38.5% 15,886 38.1% 18,390 38.5% 29,150 41.9% 2nd Qtr 18,953 38.1% 21,467 38.3% 27,232 38.8% 3rd Qtr 29,336 38.3% 31,401 38.6% 23,640 37.2% 4th Qtr 58,594 38.5% 61,304 39.3% 67,214 39.2% Year 121,330 38.4% 130,057 38.8% 136,476 38.7% 6 Mos 33,400 38.2% 37,353 38.2% 45,622 38.7% 9 Mos 62,737 38.3% 68,754 38.4% 69,262 38.2% ------------------------------------------------------------------------------------------------------------------ 11. NET INCOME (% OF SALES) (% OF SALES) (% OF SALES) (% OF SALES) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 23,104 7.4% 25,785 7.4% 29,317 7.1% 40,359 7.4% 2nd Qtr 30,831 9.4% 34,528 9.7% 42,888 10.7% 3rd Qtr 47,275 11.3% 49,934 11.2% 39,911 7.7% 4th Qtr 93,544 17.5% 94,583 16.9% 104,260 15.2% Year 194,753 12.2% 204,829 12.0% 216,376 10.7% 6 Mos 53,935 8.4% 60,313 8.6% 72,205 8.9% 9 Mos 101,210 9.5% 110,247 9.6% 112,116 8.4% ------------------------------------------------------------------------------------------------------------------ 12. NET INCOME (% INCREASE) (% INCREASE) (% INCREASE) (% INCREASE) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 23,104 15.6% 25,785 11.6% 29,317 13.7% 40,359 37.7% 2nd Qtr 30,831 25.5% 34,528 12.0% 42,888 24.2% 3rd Qtr 47,275 9.9% 49,934 5.6% 39,911 -20.1% 4th Qtr 93,544 18.4% 94,583 1.1% 104,260 10.2% Year 194,753 16.9% 204,829 5.2% 216,376 5.6% 6 Mos 53,935 21.1% 60,313 11.8% 72,205 19.7% 9 Mos 101,210 15.6% 110,247 8.9% 112,116 1.7% ------------------------------------------------------------------------------------------------------------------ 13. NET INCOME PER SHARE (% INCREASE) (% INCREASE) (% INCREASE) (% INCREASE) ------------------------------------------------------------------------------------------------------------------ 1st Qtr $0.23 21.1% $0.26 13.0% $0.30 15.4% $0.45 50.0% 2nd Qtr $0.30 25.0% $0.34 13.3% $0.44 29.4% 3rd Qtr $0.47 11.9% $0.50 6.4% $0.42 -16.0% 4th Qtr $0.94 20.5% $0.97 3.2% $1.15 18.6% Year $1.94 19.8% $2.06 6.2% $2.28 10.7% 6 Mos $0.53 23.3% $0.60 13.2% $0.74 23.3% 9 Mos $1.00 17.6% $1.10 10.0% $1.16 5.5% ------------------------------------------------------------------------------------------------------------------
ABERCROMBIE & FITCH QUARTERLY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)
------------------------------------------------------------------------------------------------------------------ PERIOD 2002 2003 2004 2005 ------------------------------------------------------------------------------------------------------------------ 14. DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------ 1st Qtr 102,130 99,835 96,872 89,800 2nd Qtr 101,465 100,128 97,590 3rd Qtr 99,568 99,102 95,351 4th Qtr 99,398 97,839 90,750 Year 100,631 99,580 95,110 6 Mos 101,879 100,542 97,118 9 Mos 100,994 100,095 96,522 ------------------------------------------------------------------------------------------------------------------ 15. ACTUAL SHARES OUTSTANDING - END OF PERIOD ------------------------------------------------------------------------------------------------------------------ 1st Qtr 99,053 98,004 94,788 86,324 2nd Qtr 98,076 96,438 95,773 3rd Qtr 97,229 96,326 90,556 4th Qtr 97,269 94,607 86,040 ------------------------------------------------------------------------------------------------------------------ 16. NUMBER OF STORES - END OF PERIOD (% INCREASE) (% INCREASE) (% INCREASE) (% INCREASE) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 507 42.8% 602 18.7% 706 17.3% 783 10.9% 2nd Qtr 533 31.6% 625 17.3% 727 16.3% 3rd Qtr 560 23.3% 651 16.3% 764 17.4% 4th Qtr 597 21.6% 700 17.3% 788 12.6% Year 597 700 788 6 Mos 533 625 727 9 Mos 560 651 764 ------------------------------------------------------------------------------------------------------------------ 17. GROSS SQUARE FEET - END OF PERIOD (% INCREASE) (% INCREASE) (% INCREASE) (% INCREASE) ------------------------------------------------------------------------------------------------------------------ 1st Qtr 3,772 32.1% 4,392 16.4% 5,065 15.3% 5,573 10.0% 2nd Qtr 3,937 25.3% 4,538 15.3% 5,192 14.4% 3rd Qtr 4,110 19.2% 4,709 14.6% 5,439 15.5% 4th Qtr 4,358 18.7% 5,021 15.2% 5,591 11.4% Year 4,358 5,021 5,591 6 Mos 3,937 4,538 5,192 9 Mos 4,110 4,709 5,439 ------------------------------------------------------------------------------------------------------------------
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