EX-99.1 2 l15675aexv99w1.htm EX-99.1 EX-99.1
 

Exhibit 99.1
ABERCROMBIE & FITCH REPORTS RECORD
SECOND QUARTER NET INCOME PER SHARE OF $0.63, UP 43%;
COMPANY INCREASES FULL YEAR NET INCOME PER SHARE GUIDANCE;
BOARD OF DIRECTORS INCREASES QUARTERLY DIVIDEND TO $0.175;
BOARD OF DIRECTORS AUTHORIZES REPURCHASE OF AN ADDITIONAL
SIX MILLION SHARES OF COMMON STOCK
New Albany, Ohio, August 16, 2005: Abercrombie & Fitch Co. (NYSE: ANF) today reported unaudited results which reflected record second quarter net income of $57.4 million and net income per share on a fully-diluted basis of $0.63 for the second quarter ended July 30, 2005.
Second Quarter Highlights
  •   Total Company net sales increased 42% to $571.6 million; comparable store sales increased by 30%
 
  •   Abercrombie & Fitch net sales increased 22% to $305.6 million; Abercrombie & Fitch comparable store sales increased by 26%
 
  •   abercrombie net sales increased 52% to $63.3 million; abercrombie comparable store sales increased by 57%
 
  •   Hollister net sales increased 82% to $199.8 million; Hollister comparable store sales increased by 29%
 
  •   The Company’s operating income increased 32% to $91.1 million from $68.8 million in fiscal 2004
 
  •   Net income increased 34% to $57.4 million from $42.9 million in fiscal 2004
 
  •   Net income per share on a fully-diluted basis increased 43% to $0.63 from $0.44 in fiscal 2004
 
  •   The Company raises guidance for full year net income per share on a fully-diluted basis for fiscal 2005 to be in the range of $3.10 to $3.30
 
  •   The Board of Directors declares a quarterly cash dividend of $0.175 per share on the Company’s common stock, an increase of 40%
 
  •   The Board of Directors authorizes the repurchase of an additional six million shares of Abercrombie & Fitch Common Stock

 

 

Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
“We achieved extraordinary like for like and total sales growth this quarter. This success was driven by our focus on core sportswear categories such as denim and knits across all brands and our determination to be the leading aspirational casual apparel company in each of our target customer age groups. We continue to emphasize the aspirational character of our brands by increasing the quality of our product and enhancing the environment, presentation and customer experience in our stores. This has enabled us to attain significant same store sales increases at the same time that we have eliminated sales promotions and realized double digit increases in average unit prices in Abercrombie & Fitch and abercrombie. We believe that the strategies we have put into place will enable us to continue to grow both our sales and profits in the coming months and years.”
Second Quarter Financial Results
Net sales for the thirteen weeks ended July 30, 2005 increased 42% to $571.6 million from $401.3 million for the thirteen weeks ended July 31, 2004. The main drivers of the growth were the comparable store sales increase of 30%, and the addition of 84 Hollister stores compared to last year’s second quarter and a 97% increase in total denim sales.
The gross margin rate for the quarter was 68.2%, a significant increase over the gross margin of 65.3% in the first quarter, and 66.4% for full fiscal year 2004.
Stores and Distribution expense, as a percentage of sales, increased to 40.6% from 40.0%. This increase is attributable primarily to increased staff and management in the stores which has enabled the Company to greatly improve store operations. This has been a key driver of the outstanding comparable store sales increase which has permitted the Company to achieve a significant reduction in fixed store costs like rent, depreciation and utilities as a percentage of sales.
Marketing, General and Administrative expense, as a percentage of sales, declined to 11.9% from 12.9% due primarily to the fact that general and administrative expenses in 2004 included a significant one time cost of approximately $5 million.
Net income for the quarter increased 34% to $57.4 million from $42.9 million for the second quarter of fiscal 2004.
Net income per share on a fully-diluted basis for the second quarter ended July 30, 2005 increased 43% to $0.63 versus $0.44 for the comparable period last year.
Inventories increased to $364 million from $227 million at the end of the first quarter of 2005 and $199 million at the end of the second quarter last year. Most of this increase is represented by denim and other basic merchandise categories which are not subject to significant markdown risk while fall fashion merchandise categories have been increased in line with the growth in sales. Remaining spring and summer merchandise levels are virtually unchanged from last year.
2005 Outlook
Based on a sales plan of approximately $2.7 billion for fiscal 2005, the company expects net income per share on a fully-diluted basis to be in the range of $3.10 to $3.30, an increase from its previously issued guidance of $2.80 to $3.00 per diluted share for fiscal 2005.

 

 

The Company now expects total capital expenditures for fiscal 2005 to be between $265 million and $285 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
During the second half of fiscal 2005, the Company plans to open approximately nine new Abercrombie & Fitch stores, four abercrombie stores, 39 new Hollister stores, and four RUEHL stores.
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 November 2005.
The Company plans to open its first international locations in Canada in late 2005 and has established subsidiaries in Europe and Japan and believes it will open its first European store in 2006.
The Board of Directors increased the quarterly dividend to $0.175 per share on the Class A Common Stock of Abercrombie & Fitch Co. payable on September 20, 2005 to shareholders of record at the close of business on August 30, 2005.
The Board of Directors authorized the repurchase of an additional six million shares of Abercrombie & Fitch Common Stock.
The Company operated 355 Abercrombie & Fitch stores, 163 abercrombie stores, 281 Hollister stores, and five RUEHL stores at the end of the second quarter 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 9846996; 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 July 30, 2005 and Thirteen Weeks Ended July 31, 2004
(in thousands except per share data)
                                 
    ACTUAL     ACTUAL  
    2005     % of Sales     2004     % of Sales  
Net Sales
   $ 571,591       100.0 %   $ 401,346       100.0 %
 
                        
 
                                
Cost of Goods Sold
     181,931       31.8 %     120,429       30.0 %
 
                                
Gross Profit
     389,660       68.2 %     280,917       70.0 %
 
                        
 
                                
Total Stores and Distribution Expense
     232,097       40.6 %     160,515       40.0 %
 
                                
Total Marketing, General and Administrative Expense
     67,884       11.9 %     51,703       12.9 %
 
                        
 
                                
Other Operating Income, Net
     (1,408 )     -0.2 %     (63 )     0.0 %
 
                        
 
                                
Operating Income
     91,087       15.9 %     68,762       17.1 %
 
                                
Interest Income, Net
     (1,560 )     -0.3 %     (1,358 )     -0.3 %
 
                        
 
                                
Income Before Income Taxes
     92,647       16.2 %     70,120       17.5 %
 
                                
Income Tax Expense
     35,246       6.2 %     27,232       6.8 %
 
                                
Effective Rate
     38.0 %             38.8 %        
 
                                
Net Income
   $ 57,401       10.0 %   $ 42,888       10.7 %
 
                        
 
                                
Net Income Per Share:
                                
Basic
   $ 0.66             $ 0.45          
Fully-Diluted
   $ 0.63             $ 0.44          
 
                                
Weighted Average Shares Outstanding
                               
Basic
     86,951               95,306          
Fully-Diluted
     91,501               97,590          

 

 

Abercrombie & Fitch Co.
Condensed Consolidated Statements of Income
(Unaudited)
Twenty-six Weeks Ended July 30, 2005 and Twenty-six Weeks Ended July 31, 2004
(in thousands except per share data)
                                 
    ACTUAL     ACTUAL  
    2005     % of Sales     2004     % of Sales  
Net Sales
   $ 1,118,401       100.0 %   $ 813,276       100.0 %
 
                        
 
                                
Cost of Goods Sold
     371,489       33.2 %     264,435       32.5 %
 
                                
Gross Profit
     746,912       66.8 %     548,841       67.5 %
 
                        
 
                                
Total Stores and Distribution Expense
     454,320       40.6 %     326,030       40.1 %
 
                                
Total Marketing, General and Administrative Expense
     135,030       12.1 %     107,488       13.2 %
 
                                
Other Operating Income, Net
     (1,814 )     -0.2 %     (160 )     0.0 %
 
                        
 
                                
Operating Income
     159,376       14.3 %     115,483       14.2 %
 
                                
Interest Income, Net
     (2,780 )     -0.2 %     (2,344 )     -0.3 %
 
                        
 
                                
Income Before Income Taxes
     162,156       14.5 %     117,827       14.5 %
 
                                
Income Tax Expense
     64,396       5.8 %     45,622       5.6 %
 
                                
Effective Rate
     39.7 %             38.7 %        
 
                        
 
                                
Net Income
   $ 97,760       8.7 %   $ 72,205       8.9 %
 
                        
 
                                
Net Income Per Share:
                                
Basic
   $ 1.13             $ 0.76          
Fully-Diluted
   $ 1.07             $ 0.74          
 
                                
Weighted Average Shares Outstanding
                               
Basic
     86,577               95,010          
Fully-Diluted
     90,946               97,118          

 

 

Abercrombie & Fitch Co.
Condensed Consolidated Balance Sheets
(in thousands)
                 
    (unaudited)        
ASSETS   July 30, 2005     January 29, 2005  
Current Assets
               
Cash and Cash Equivalents
   $ 91,736     $ 350,368  
Marketable Securities
     216,369       —  
Receivables
     31,623       26,127  
Inventories
     363,985       211,198  
Store Supplies
     40,079       36,536  
Deferred Income Taxes
     51,121       44,404  
Other Current Assets
     31,262       28,048  
 
            
 
                
Total Current Assets
     826,175       696,681  
 
                
Property and Equipment, Net
     758,740       687,011  
 
                
Other Assets
     8,428       8,413  
 
            
 
                
TOTAL ASSETS
   $ 1,593,343     $ 1,392,105  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current Liabilities
               
Accounts Payable and Outstanding Checks
   $ 180,625     $ 137,337  
Accrued Expenses
     197,633       194,729  
Deferred Lease Credits
     31,112       31,135  
Income Taxes Payable
     18,083       55,587  
 
            
 
                
Total Current Liabilities
     427,453       418,788  
 
            
 
                
Long-Term Liabilities
               
Debt
     —       —  
Deferred Income Taxes
     50,216       55,346  
Deferred Lease Credits
     192,971       177,923  
Other Liabilities
     80,590       70,722  
 
            
 
                
 
     323,777       303,991  
Total Shareholders’ Equity
     842,113       669,326  
 
            
 
                
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 1,593,343     $ 1,392,105