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, 2006 (May 16, 2006)

    ABERCROMBIE & FITCH CO.   

(Exact name of registrant as specified in its charter)

Delaware	1-12107	31-1469076
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer 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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o 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 16, 2006, 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 29, 2006. 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.

     The Registrant also made available in conjunction with the release additional quarterly financial information as of and for the quarterly period ended April 29, 2006 and as of and for the quarterly periods during the fiscal years ended January 28, 2006, January 29, 2005 and January 31, 2004. The additional quarterly financial information is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

     The Registrant’s management conducted a conference call on May 16, 2006, at approximately 4:30 p.m., Eastern Time, to review the Registrant’s financial results for the thirteen weeks ended April 29, 2006. Additionally, the Registrant’s management addressed plans for the remaining first half of the fiscal year ending February 3, 2007 on the conference call. A copy of the transcript of the conference call is furnished as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 8.01. Other Events.

     In the Release, the Registrant also announced that its Board of Directors had declared a quarterly cash dividend of $0.175 per share in respect of the Registrant’s Class A Common Stock. The dividend was declared on May 16, 2006 and is payable on June 20, 2006 to stockholders of record on May 30, 2006.

Item 9.01. Financial Statements and Exhibits.

(a) through (c) Not applicable

(d) Exhibits:

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 16, 2006
99.2	Additional Quarterly Financial Information made available by Abercrombie & Fitch Co. in conjunction with News Release on May 16, 2006
99.3	Transcript of conference call held by management of Abercrombie & Fitch Co. on May 16, 2006

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 17, 2006	By:	/s/ Michael W. Kramer
		Michael W. Kramer Senior Vice President and Chief Financial Officer

INDEX TO EXHIBITS

Current Report on Form 8-K
Dated May 17, 2006

Abercrombie & Fitch Co.

Exhibit No.	Description
99.1	News Release issued by Abercrombie & Fitch Co. on May 16, 2006
99.2	Additional Quarterly Financial Information made available by Abercrombie & Fitch Co. in conjunction with News Release on May 16, 2006
99.3	Transcript of conference call held by management of Abercrombie & Fitch Co. on May 16, 2006

EX-99.1

Exhibit 99.1

ABERCROMBIE & FITCH REPORTS FIRST QUARTER RESULTS;

FIRST QUARTER NET INCOME UP 39%;

FIRST QUARTER NET INCOME PER FULLY-DILUTED SHARE UP 38% TO $0.62;

BOARD OF DIRECTORS DECLARES QUARTERLY DIVIDEND OF $0.175;

COMPANY INCREASES SEASONAL NET INCOME PER SHARE GUIDANCE

New Albany, Ohio, May 16, 2006: Abercrombie & Fitch Co. (NYSE: ANF) today reported unaudited results which reflected record first quarter net income of $56.2 million and net income per share on a fully-diluted basis of $0.62 for the first quarter ended April 29, 2006.

First Quarter Developments

• Total Company net sales increased 20% to $657.3 million; comparable store sales increased by 6%

• Abercrombie & Fitch net sales increased 4% to $312.7 million; Abercrombie & Fitch comparable store sales decreased by 4%

• abercrombie net sales increased 26% to $79.5 million; abercrombie comparable store sales increased by 30%

• Hollister net sales increased 45% to $259.5 million; Hollister comparable store sales increased by 13%

• Net income for the first quarter increased 39% to $56.2 million from $40.4 million in fiscal 2005

• Net income per share on a fully-diluted basis increased 38% to $0.62 in the first quarter of 2006 from $0.45 in fiscal 2005

Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:

“This was an excellent quarter for our Company; we are continuing to achieve strong financial results against the results we posted in 2005. We made progress for the first quarter including increased sales and margin. This improvement, resulting in net income growth of 39%, represents a good start to fiscal 2006. Although our results will continue to be measured against the growth we attained last year, I am confident that our brands are positioned to generate strong financial returns this year.”

First Quarter Financial Results

Net sales for the thirteen weeks ended April 29, 2006 increased 20% to $657.3 million from $546.8 million for the thirteen weeks ended April 30, 2005. Total Company comparable store sales increased 6% for the quarter.

The gross profit rate for the quarter was 65.4%, up 10 basis points compared to last year. The improvement in gross profit rate was primarily due to a slight improvement in initial markup combined with a slightly lower markdown rate versus last year.

Stores and Distribution expense, as a percentage of sales, decreased 130 basis points to 39.3% from 40.6%. The decrease in rate versus last year primarily resulted from the Company’s ability to leverage store related fixed costs combined with a reduction in store repair and maintenance expense partially offset by increased payroll expense.

Marketing, General and Administrative expense, as a percentage of sales, increased 130 basis points to 13.6% from 12.3%. The increase in rate is primarily attributed to increased home office payroll, which includes the effect of the adoption of FAS 123(R).

The effect of the adoption of FAS 123(R) for the first quarter of fiscal 2006 was $6.2 million on a pre-tax basis.

The effective tax rate for the first quarter was 35.5% as compared to 41.9% for the 2005 fiscal year comparable period. The tax rate in the first quarter of 2006 includes a tax provision benefit related to the settlement of a tax audit.

Net income for the quarter increased 39% to $56.2 million, or $0.62 per share on a fully-diluted basis, from $40.4 million, or $0.45 per share on a fully-diluted basis, for the first quarter of fiscal 2005. The effect of the adoption of FAS 123(R) for the first quarter of fiscal 2006 was $0.04 per share on a fully-diluted basis.

2006 Outlook

Based on its first quarter results, the Company now expects net income per share on a fully-diluted basis for the first-half of fiscal 2006 to be in the range of $1.28 to $1.33, including a charge of approximately $0.08 attributable to the adoption of FAS 123(R), an increase from its previously issued guidance for the first-half of fiscal 2006 of $1.23 to $1.28, including the same charge related to the adoption of FAS 123(R).

The Company now expects total capital expenditures for fiscal 2006 to be between $400 million and $420 million with approximately $260 million of this amount allocated to new store construction, store remodels, conversions, and improvements to existing stores, with the remainder related to home office and distribution center investments.

For fiscal 2006, the Company now expects to increase gross square-footage by approximately 11% primarily through the addition of approximately 70 Hollister Co. stores, 20 abercrombie stores, ten Abercrombie & Fitch stores and seven RUEHL stores.

Other Developments

The Company plans to open its first European location in London in early 2007.

The Company remains on plan to open a flagship Abercrombie & Fitch store located at The Grove in Los Angeles in July 2006.

The Board of Directors declared a quarterly cash dividend of $0.175 per share on the Class A Common Stock of Abercrombie & Fitch Co. payable on June 20, 2006 to shareholders of record at the close of business on May 30, 2006.

The Company operated 348 Abercrombie & Fitch stores, 161 abercrombie stores, 327 Hollister Co. stores, and ten RUEHL stores at the end of the first quarter of 2006. 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 4031334; or for 12 months by visiting the Company’s website at www.abercrombie.com.

# # # #

For further information, call: Thomas D. Lennox
Vice President, 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 or made by management of A&F involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company’s control. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” and similar expressions may identify forward-looking statements. The following factors, in addition to those included in the disclosure under the heading “FORWARD-LOOKING STATEMENTS AND RISK FACTORS” in “ITEM 1A. RISK FACTORS” of A&F’s Annual Report on Form 10-K for the fiscal year ended January 28, 2006, in some cases have affected and in the future could affect the Company’s financial performance and could cause actual results for the 2006 fiscal year and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this Press Release or otherwise made by management: changes in consumer spending patterns and consumer preferences; the effects of political and economic events and conditions domestically and in foreign jurisdictions in which the Company operates, including, but not limited to, acts of terrorism or war; the impact of competition and pricing; changes in weather patterns; postal rate increases and changes; paper and printing costs; market price of key raw materials; ability to source product from its global supplier base; political stability; currency and exchange risks and changes in existing or potential duties, tariffs or quotas; availability of suitable store locations at appropriate terms; ability to develop new merchandise; ability to hire, train and retain associates; and the outcome of pending litigation. Future economic and industry trends that could potentially impact revenue and profitability are difficult to predict. Therefore, there can be no assurance that the forward-looking statements included in this Press Release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company, or any other person, that the objectives of the Company will be achieved. The forward-looking statements herein are based on information presently available to the management of the Company. Except as may be required by applicable law, the Company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

Abercrombie & Fitch Co.
Condensed Consolidated Statements of Income
(Unaudited)
Thirteen Weeks Ended April 29, 2006 and Thirteen Weeks Ended April 30, 2005
(in thousands except per share data)

	ACTUAL						ACTUAL
	2006			% of Sales			2005			% of Sales
Net Sales	$	657,271			100.0	%	$	546,810			100.0	%
Cost of Goods Sold		227,355			34.6	%		189,558			34.7	%
Gross Profit		429,915			65.4	%		357,252			65.3	%
Total Stores and Distribution Expense		258,352			39.3	%		222,223			40.6	%
Total Marketing, General and Administrative Expense		89,699			13.6	%		67,146			12.3	%
Other Operating Income, Net		(2,121	)		-0.3	%		(406	)		-0.1	%
Operating Income		83,985			12.8	%		68,289			12.5	%
Interest Income, Net		(3,166	)		-0.5	%		(1,220	)		-0.2	%
Income Before Income Taxes		87,151			13.3	%		69,509			12.7	%
Income Tax Expense		30,911			4.7	%		29,150			5.3	%
Effective Rate		35.5	%					41.9	%
Net Income	$	56,240			8.6	%	$	40,359			7.4	%
Net Income Per Share:
Basic	$	0.64					$	0.47
Fully-Diluted	$	0.62					$	0.45
Weighted-Average Shares Outstanding:
Basic		87,858						86,221
Fully-Diluted		91,327						89,800

Abercrombie & Fitch Co.
Condensed Consolidated Balance Sheets
(in thousands)

	(unaudited)
ASSETS	April 29, 2006		January 28, 2006
Current Assets
Cash and Equivalents	$	79,552	$	50,687
Marketable Securities		349,690		411,167
Receivables		33,813		41,855
Inventories		336,654		362,536
Deferred Income Taxes		27,333		29,654
Other Current Assets		49,888		51,185
Total Current Assets		876,930		947,084
Property and Equipment, Net		881,536		813,603
Other Assets		28,607		29,031
Total Assets	$	1,787,073	$	1,789,718
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts Payable and Outstanding Checks	$	125,501	$	145,313
Accrued Expenses		218,701		215,034
Deferred Lease Credits		32,876		31,727
Income Taxes Payable		53,629		99,480
Total Current Liabilities		430,707		491,554
Long-Term Liabilities
Deferred Income Taxes		32,714		38,496
Deferred Lease Credits		196,980		191,225
Other Liabilities		78,382		73,326
Total Long-Term Liabilities		308,076		303,047
Total Shareholders’ Equity		1,048,290		995,117
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,787,073	$	1,789,718

EX-99.2

Exhibit 99.2

ABERCROMBIE & FITCH
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)

PERIOD	2003								2004								2005								2006
	(% 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	%	$	346,722		11	%		0	%	$	411,930		19	%		19	%	$	546,810		33	%		6	%	$	657,271		20	%
2nd Qtr		-8	%	$	355,719		8	%		-5	%	$	401,346		13	%		30	%	$	571,591		42	%
3rd Qtr		-9	%	$	444,979		6	%		1	%	$	520,724		17	%		25	%	$	704,918		35	%
4th Qtr		-11	%	$	560,389		5	%		9	%	$	687,254		23	%		28	%	$	961,392		40	%
Year		-9	%	$	1,707,810		7	%		2	%	$	2,021,253		18	%		26	%	$	2,784,711		38	%
6 Mos		-7	%	$	702,441		9	%		-3	%	$	813,276		16	%		24	%	$	1,118,401		38	%
9 Mos		-8	%	$	1,147,421		8	%		-1	%	$	1,333,999		16	%		24	%	$	1,823,319		37	%
2. Cost of Goods Sold						(% of Sales)								(% of Sales)								(% of Sales)								(% of Sales)
1st Qtr					130,243		37.6	%					144,006		35.0	%					189,558		34.7	%					227,355		34.6	%
2nd Qtr					122,068		34.3	%					120,429		30.0	%					181,931		31.8	%
3rd Qtr					167,328		37.6	%					184,107		35.4	%					239,832		34.0	%
4th Qtr					205,001		36.6	%					231,487		33.7	%					321,974		33.5	%
Year					624,640		36.6	%					680,029		33.6	%					933,295		33.5	%
6 Mos					252,311		35.9	%					264,435		32.5	%					371,489		33.2	%
9 Mos					419,639		36.6	%					448,542		33.6	%					611,321		33.5	%
3. Gross Profit						(% of Sales)								(% of Sales)								(% of Sales)								(% of Sales)
1st Qtr					216,479		62.4	%					267,924		65.0	%					357,252		65.3	%					429,915		65.4	%
2nd Qtr					233,651		65.7	%					280,917		70.0	%					389,660		68.2	%
3rd Qtr					277,651		62.4	%					336,617		64.6	%					465,086		66.0	%
4th Qtr					355,388		63.4	%					455,767		66.3	%					639,418		66.5	%
Year					1,083,169		63.4	%					1,341,225		66.4	%					1,851,416		66.5	%
6 Mos					450,130		64.1	%					548,841		67.5	%					746,912		66.8	%
9 Mos					727,781		63.4	%					885,457		66.4	%					1,211,998		66.5	%

ABERCROMBIE & FITCH
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)

PERIOD	2003						2004						2005						2006
4. Total Stores and Distribution Expense				(% of Sales)						(% of Sales)						(% of Sales)						(% of Sales)
1st Qtr		137,747			39.7	%		165,515			40.2	%		222,223			40.6	%		258,352			39.3	%
2nd Qtr		139,732			39.3	%		160,515			40.0	%		232,097			40.6	%
3rd Qtr		155,937			35.0	%		188,381			36.2	%		252,947			35.9	%
4th Qtr		163,999			29.3	%		223,833			32.6	%		293,488			30.5	%
Year		597,416			35.0	%		738,244			36.5	%		1,000,755			35.9	%
6 Mos		277,479			39.5	%		326,030			40.1	%		454,320			40.6	%
9 Mos		433,417			37.8	%		514,411			38.6	%		707,267			38.8	%
5. Total Marketing, General and Administrative Expense				(% of Sales)						(% of Sales)						(% of Sales)						(% of Sales)
1st Qtr		38,238			11.0	%		55,784			13.5	%		67,146			12.3	%		89,699			13.6	%
2nd Qtr		38,932			10.9	%		51,703			12.9	%		67,884			11.9	%
3rd Qtr		41,323			9.3	%		86,273			16.6	%		97,644			13.9	%
4th Qtr		37,060			6.6	%		66,076			9.6	%		80,783			8.4	%
Year		155,553			9.1	%		259,836			12.9	%		313,457			11.3	%
6 Mos		77,170			11.0	%		107,488			13.2	%		135,030			12.1	%
9 Mos		118,493			10.3	%		193,760			14.5	%		232,674			12.8	%
6. Other Operating Income, Net				(% of Sales)						(% of Sales)						(% of Sales)						(% of Sales)
1st Qtr		(186	)		-0.1	%		(95	)		0.0	%		(406	)		-0.1	%		(2,121	)		-0.3	%
2nd Qtr		(147	)		0.0	%		(63	)		0.0	%		(1,408	)		-0.2	%
3rd Qtr		(187	)		0.0	%		(15	)		0.0	%		(1,379	)		-0.2	%
4th Qtr		(459	)		-0.1	%		(4,317	)		-0.6	%		(2,341	)		-0.2	%
Year		(979	)		-0.1	%		(4,490	)		-0.2	%		(5,534	)		-0.2	%
6 Mos		(333	)		0.0	%		(158	)		0.0	%		(1,814	)		-0.2	%
9 Mos		(520	)		0.0	%		(174	)		0.0	%		(3,193	)		-0.2	%

ABERCROMBIE & FITCH
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)

PERIOD	2003						2004						2005						2006
7. Operating Income				(% of Sales)						(% of Sales)						(% of Sales)						(% of Sales)
1st Qtr		40,680			11.7	%		46,720			11.3	%		68,289			12.5	%		83,985			12.8	%
2nd Qtr		55,134			15.5	%		68,762			17.1	%		91,087			15.9	%
3rd Qtr		80,578			18.1	%		61,978			11.9	%		115,874			16.4	%
4th Qtr		154,788			27.6	%		170,175			24.8	%		267,488			27.8	%
Year		331,179			19.4	%		347,635			17.2	%		542,738			19.5	%
6 Mos		95,814			13.6	%		115,483			14.2	%		159,376			14.3	%
9 Mos		176,392			15.4	%		177,460			13.3	%		275,250			15.1	%
8. Interest Income, Net				(% of Sales)						(% of Sales)						(% of Sales)						(% of Sales)
1st Qtr		(991	)		-0.3	%		(985	)		-0.2	%		(1,220	)		-0.2	%		(3,166	)		-0.5	%
2nd Qtr		(861	)		-0.2	%		(1,358	)		-0.3	%		(1,560	)		-0.3	%
3rd Qtr		(757	)		-0.2	%		(1,574	)		-0.3	%		(1,516	)		-0.2	%
4th Qtr		(1,099	)		-0.2	%		(1,299	)		-0.2	%		(2,376	)		-0.2	%
Year		(3,708	)		-0.2	%		(5,216	)		-0.3	%		(6,672	)		-0.2	%
6 Mos		(1,852	)		-0.3	%		(2,343	)		-0.3	%		(2,780	)		-0.2	%
9 Mos		(2,609	)		-0.2	%		(3,919	)		-0.3	%		(4,296	)		-0.2	%
9. Pre-tax Income				(% of Sales)						(% of Sales)						(% of Sales)						(% of Sales)
1st Qtr		41,671			12.0	%		47,707			11.6	%		69,509			12.7	%		87,151			13.3	%
2nd Qtr		55,995			15.7	%		70,120			17.5	%		92,647			16.2	%
3rd Qtr		81,335			18.3	%		63,552			12.2	%		117,390			16.7	%
4th Qtr		155,887			27.8	%		171,474			25.0	%		269,864			28.1	%
Year		334,887			19.6	%		352,853			17.5	%		549,410			19.7	%
6 Mos		97,666			13.9	%		117,827			14.5	%		162,156			14.5	%
9 Mos		179,001			15.6	%		181,379			13.6	%		279,546			15.3	%

ABERCROMBIE & FITCH
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)

PERIOD	2003					2004					2005					2006
10. Taxes			(Tax Rate)					(Tax Rate)					(Tax Rate)					(Tax Rate)
1st Qtr		15,886		38.1	%		18,390		38.5	%		29,150		41.9	%		30,911		35.5	%
2nd Qtr		21,467		38.3	%		27,232		38.8	%		35,246		38.0	%
3rd Qtr		31,401		38.6	%		23,641		37.2	%		45,790		39.0	%
4th Qtr		61,304		39.3	%		67,214		39.2	%		105,240		39.0	%
Year		130,057		38.8	%		136,477		38.7	%		215,426		39.2	%
6 Mos		37,353		38.2	%		45,622		38.7	%		64,396		39.7	%
9 Mos		68,754		38.4	%		69,263		38.2	%		110,186		39.4	%
11. Net Income			(% of Sales)					(% of Sales)					(% of Sales)					(% of Sales)
1st Qtr		25,785		7.4	%		29,317		7.1	%		40,359		7.4	%		56,240		8.6	%
2nd Qtr		34,528		9.7	%		42,888		10.7	%		57,401		10.0	%
3rd Qtr		49,934		11.2	%		39,911		7.7	%		71,600		10.2	%
4th Qtr		94,583		16.9	%		104,260		15.2	%		164,624		17.1	%
Year		204,829		12.0	%		216,376		10.7	%		333,984		12.0	%
6 Mos		60,313		8.6	%		72,205		8.9	%		97,760		8.7	%
9 Mos		110,247		9.6	%		112,116		8.4	%		169,360		9.3	%
12. Net Income			(% Increase)					(% Increase)					(% Increase)					(% Increase)
1st Qtr	$	25,785		11.6	%	$	29,317		13.7	%	$	40,359		37.7	%		$56,240		39.3	%
2nd Qtr	$	34,528		12.0	%	$	42,888		24.2	%	$	57,401		33.8	%
3rd Qtr	$	49,934		5.6	%	$	39,911		-20.1	%	$	71,600		79.4	%
4th Qtr	$	94,583		1.1	%	$	104,260		10.2	%	$	164,624		57.9	%
Year	$	204,829		5.2	%	$	216,376		5.6	%	$	333,984		54.4	%
6 Mos	$	60,313		11.8	%	$	72,205		19.7	%	$	97,760		35.4	%
9 Mos	$	110,247		8.9	%	$	112,116		1.7	%	$	169,360		51.1	%
13. Net Income per Fully-Diluted Share			(% Increase)					(% Increase)					(% Increase)					(% Increase)
1st Qtr		$0.26		13.0	%		$0.30		15.4	%		$0.45		50.0	%		$0.62		37.8	%
2nd Qtr		$0.34		13.3	%		$0.44		29.4	%		$0.63		43.2	%
3rd Qtr		$0.50		6.4	%		$0.42		-16.0	%		$0.79		88.1	%
4th Qtr		$0.97		3.2	%		$1.15		18.6	%		$1.80		56.5	%
Year		$2.06		6.2	%		$2.28		10.7	%		$3.66		60.5	%
6 Mos		$0.60		13.2	%		$0.74		23.3	%		$1.07		44.6	%
9 Mos		$1.10		10.0	%		$1.16		5.5	%		$1.87		61.2	%

ABERCROMBIE & FITCH
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND STORE DATA)

PERIOD	2003					2004					2005					2006
14. Fully-Diluted Weighted-Average Shares Outstanding
1st Qtr		99,835					96,872					89,800					91,327
2nd Qtr		100,128					97,590					91,501
3rd Qtr		99,102					95,351					90,458
4th Qtr		97,839					90,750					91,276
Year		99,580					95,110					91,221
6 Mos		100,542					97,118					90,946
9 Mos		100,095					96,522					90,422
15. Actual Shares Outstanding — End of Period
1st Qtr		98,004					94,788					86,324					87,958
2nd Qtr		96,438					95,773					88,707
3rd Qtr		96,326					90,556					87,606
4th Qtr		94,607					86,040					87,726
16. Number of Stores — End of Period			(% Increase)					(% Increase)					(% Increase)					(% Increase)
1st Qtr		602		18.7	%		706		17.3	%		783		10.9	%		846		8.0	%
2nd Qtr		625		17.3	%		727		16.3	%		804		10.6	%
3rd Qtr		651		16.3	%		764		17.4	%		820		7.3	%
4th Qtr		700		17.3	%		788		12.6	%		851		8.0	%
17. Gross Square Feet — End of Period			(% Increase)					(% Increase)					(% Increase)					(% Increase)
1st Qtr		4,392		16.4	%		5,065		15.3	%		5,573		10.0	%		5,974		7.2	%
2nd Qtr		4,538		15.3	%		5,192		14.4	%		5,674		9.3	%
3rd Qtr		4,709		14.6	%		5,439		15.5	%		5,789		6.4	%
4th Qtr		5,021		15.2	%		5,591		11.4	%		6,025		7.8	%

EX-99.3

Exhibit 99.3

Final Transcript

Thomson StreetEvents

Conference Call Transcript

ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

Event Date/Time: May. 16. 2006 / 4:30PM ET

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

CORPORATE PARTICIPANTS

Tom Lennox
Abercrombie & Fitch Co. — VP Corporate Communications

Mike Kramer
Abercrombie & Fitch Co. — CFO, PAO and SVP

Mike Jeffries
Abercrombie & Fitch Co. — CEO and Chairman

CONFERENCE CALL PARTICIPANTS

Janet Kloppenburg
JJK Research — Analyst

Jeff Klinefelter
Piper Jaffray — Analyst

Paul Lejuez
Credit Suisse First Boston — Analyst

Kimberly Greenberger
Citigroup — Analyst

Jeff Black
Lehman Brothers — Analyst

Stacy Pak
Prudential — Analyst

Dorothy Lakner
CIBC World Markets — Analyst

Meredith Kent
UBS Financial Services — Analyst

Jennifer Black
Jennifer Black & Associates — Analyst

Christine Chen
Pacific Growth Equities — Analyst

Brian Tunick
J.P. Morgan — Analyst

Margaret Mager
Goldman Sachs — Analyst

Barbara Wyckoff
Buckingham Research Group — Analyst

Lauren Levitan
Cowen & Co. — Analyst

Robin Murchison
Suntrust Robinson Humphrey — Analyst

Dana Cohen
Bank of America Securities — Analyst

Gabrielle Kivitz
Deutsche Bank Securities — Analyst

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

PRESENTATION

Operator

     Thank you for standing by, everyone. Welcome to today’s Abercrombie & Fitch’s first quarter earnings results conference call. [OPERATOR INSTRUCTIONS] Now, at this time, I’d like to turn the conference over to Mr. Tom Lennox, please go ahead, sir.

     Tom Lennox — Abercrombie & Fitch Co. — VP Corporate Communications

     Good afternoon and welcome to our first quarter conference call. After the market closed, we publicly released the quarterly sales and earnings release, balance sheet, income statement, and an updated financial history. If you haven’t seen these materials, they are available on our Website. This call is being taped and can be replayed by dialing 888-203-1112. You will need to reference the conference ID number, 4031334. You may also access the replay through the Internet at abercrombie.com.

With me today are Mike Jeffries, Chairman and CEO; Mike Kramer, Chief Financial Officer; Mike [Nuzo] VP of Finance and Brian Logan, the Company’s Controller. Today’s earnings call will be limited to one hour. After our prepared comments, we will be available to take your questions for as long as time permits. Please limit to 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 Statements found in our earnings release and SEC filings. Now, to Mike Kramer.

     Mike Kramer — Abercrombie & Fitch Co. — CFO, PAO and SVP

     Good afternoon. Net sales for the first quarter were 657.3 million, increasing 20% over last year’s first quarter sales of 546.8 million. Comparable store sales increased 6% for the quarter. For the quarter, comps by brand were as follows. In the adult business, Abercrombie & Fitch, comparable store sales decreased 4%. Men’s comps decreased by a low single digit, women’s decreased by a mid-single digit.

In the kids business, Abercrombie, comps increased 30% with boys comps increasing by low 20’s and girls increasing by low 30’s. Hollister same-store sales increased 13%, with Dude’s comps increasing by a high single digit and Betty’s increasing by low teens. All regions posted positive comps. Comps were strongest in the southwest and weakest in the west. The first quarter gross profit rate was 65.4%, 10 basis points higher than last year’s rate of 65.3%. The increase in rate reflects a slight improvement in initial mark-up combined with a slightly lower markdown rate versus last year. We ended the first quarter with inventories up 38% per gross square foot at a cost versus last year.

This is lower than the guidance we provided on our fourth quarter conference call, when we estimated that first quarter ending inventory per square foot would reflect slightly less than the 59% increase reported at the end of the fourth quarter of fiscal 2005. Going forward, we are planning for increases in inventory levels to continue to moderate. Ending the second quarter of 2006 with a lower increase per foot at cost when compared to the first quarter of fiscal 2006. For the fall season of fiscal 2006, we expect inventory levels to continue to moderate.

Stores and distribution expense, as a percentage of sales, decreased 130 basis points to 39.3% versus 40.6% last year. The decrease in rate primarily resulted from the Company’s ability to leverage store-related fixed costs, combined with a reduction in store repairs and maintenance expense, partially offset by increased payroll expense. For the first quarter, marketing, general, and administrative expense, as a percentage of sales, increased 130 basis points to 13.6% from 12.3% last year.

The increase in rate versus, last year largely resulted from increased home office payroll, which includes approximately 90 basis points of expense attributable to the adoption of FAS 123R. For the first quarter, operating income increased 23% to 84 million, compared to with 68.3 million last year. The effective tax rate for the first quarter was 35.5%, as compared to 49.9% for the first quarter of fiscal 2005.

The tax rate in the first quarter of 2006 includes a tax provision benefit related to the settlement of a tax audit. Net income for the quarter increased 39% to 56.2 million versus 40.4 million last year. First quarter net income per share on a fully diluted basis was $0.62 versus $0.45, representing an increase of 38% versus last year. The affect of the adoption of FAS 123R for the first quarter of fiscal 2006 was $0.04 per share on a fully diluted basis.

The Board also declared a quarterly dividend of $0.175 per share payable on June 20, 2006, to shareholders of record as of May 30, 2006. During the quarter, we opened one Abercrombie & Fitch store, nine Hollister stores, and two RUEHL stores. We ended the first quarter with 340 Abercrombie & Fitch stores, 161 Abercrombie stores, 327 Hollister stores, and 10 RUEHL stores.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Tom Lennox — Abercrombie & Fitch Co. — VP Corporate Communications

     That was 348 Abercrombie & Fitch stores.

     Mike Kramer — Abercrombie & Fitch Co. — CFO, PAO and SVP

     For fiscal 2006, our current plans are to open 10 new Abercrombie & Fitch stores, 20 new Abercrombie stores, 70 new Hollister stores and seven new REUHL stores. For a total of 107 stores. Total square footage is expected to grow by approximately 11% in fiscal 2006.

For fiscal 2006, we now expect planned capital expenditures to be between $400 and $420 million. Again, approximately 260 million of this amount is allocated to new store construction, remodels, conversions, and improvements to existing stores. With the remainder related to home office, IT, and distribution center investments. The new DC, which is currently under construction, is on schedule and expected to be completed by early December. From an IT standpoint, we are focused on enhancing several key areas of our existing platforms. By improving our existing infrastructure, we can achieve greater scalability, resulting in increased efficiency at both the store level and at home office.

I would like to finish by discussing our profit outlook for the spring season. While the fundamentals of our business are solid, comparable store sales increases should continue to be modest, as measured against last year. In fact, our most difficult comparisons, from a comparable store sales and gross profit rate standpoint, will occur during the second quarter. Although we are optimistic about our future performance, we remain cautious in our expectations.

At this point, we expect net income per fully diluted share for the first half of fiscal 2006 to be in the range of $1.28 to $1.33, including a charge of approximately $0.08 attributable to the adoption of FAS 123R. Now, Mike will comment on the business.

     Mike Jeffries — Abercrombie & Fitch Co. — CEO and Chairman

     Good afternoon. This was an excellent quarter for our Company. We are continuing to achieve strong financial results against the results we posted in 2005. We made progress for the first quarter, including increased sales and margin, while reducing operating costs as a percentage of sales. This improvement, resulting in a 39% increase in net income represents a good start to fiscal 2006.

Although our results will continue to be measured against the growth we attained last year, I am confident that our brands are positioned to generate strong financial returns this year. At the Abercrombie & Fitch business, net sales grew by 4%. The brand is generating approximately $440 per square foot on a trailing 12-month basis. While IMU reached its highest level during the quarter. More established, when compared to our other businesses, the Abercrombie & Fitch brand is generating strong returns.

Its positioning is why we are confident this can continue. We’re focused on increased quality and aspiration in every level of the business. Most recently, by eliminating seasonal sale events in our stores. While we will clear through slower moving items when necessary, markdown merchandise will now be limited to the backrooms of the store, ensuring that the front rooms offer full priced merchandise, even during the transition from one season to the next.

Another initiative entails the investment of at least $50 million to refresh the A&F store base. This initiative, which reinforces many of the brands’ high quality characteristics will enhance the in-store environment and includes the addition of louvered store fronts, more dramatic lighting and improved sound systems, to name a few. The flagship A&F store on Fifth Avenue continues to exceed our expectations. And is not only making a meaningful contribution to this Company’s strong sales and profit growth, but it is also making a statement about our brand.

We are thrilled with what is happening there and combined with another flagship store to be opened at the Grove in L.A. in July, we know that the excitement being generated will help us in many ways, including our long-term plans to bring our brands to other markets. In that regard, our Abercrombie & Fitch Canadian locations are outperforming many of their domestic peers, running at nearly three times the volume of the average U.S.-based store. And we are now underway in London where we plan to open our first European location in the spring of 2007.

Both Hollister and the kids business Abercrombie also had a strong first quarter. Hollister’s net sales were up 45%, comparable store sales increased 13% and its eCommerce business increased 40%. Hollister is now generating $537 sales per square foot on a trailing 12-month basis. Like the A&F stores, Hollister’s Canadian locations are also exceeding expectations, with productivity at three times above that of our average U.S. Hollister stores.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

The kids business had another outstanding quarter. Net sales increased 26%. Comparable store sales increased 30%. The eCommerce business grew by approximately 48%. And IMU increased by 90 basis points compared to last year. On a two-year basis, net sales have grown more than 70%, with gross margin and operating margin improving as well.

RUEHL performed well during the first quarter, achieving solid productivity improvements from a comparable store sales and net sales perspective. We also made progress from an initial mark-up standpoint, where IMU improved by approximately 14 percentage points. We recently opened stores at Ala Moana in Honolulu and at the Oakbrook Center near Chicago. The real estate strategy, which includes securing highly productive mall locations in affluent area, includes the addition of approximately five new stores, including locations at San Francisco Center and our Ventura Mall in Florida.

When we reported fiscal 2005 in February, we discussed the challenge of building on the strength of an extraordinary year. Frankly, we said it would be difficult because it would seem no matter what we did, our performance would pale by comparison. However, we view 2005 as a foundation for additional growth. We are off to a good start in fiscal 2006 and the first quarter only makes us more confident in the our ability to meet the challenge of generating solid results for the remainder of fiscal 2006.

Now, we are available to take your questions. Please limit yourself to one question so that we can speak with as many callers as possible. After everyone has had a chance, we will be happy to take follow-up questions. Thank you.

QUESTION AND ANSWER

     Operator

     [OPERATOR INSTRUCTIONS] We’ll first go to Janet Kloppenburg with JJK Research.

     Janet Kloppenburg — JJK Research — Analyst

     Hi, guys. Congratulations.

     Mike Jeffries — Abercrombie & Fitch Co. — CEO and Chairman

     Thank you.

     Janet Kloppenburg — JJK Research — Analyst

     Mike, I think for a lot of people there’s been an emphasis on what’s going to happen with denim as we go through the second quarter where your denim business was so strong and as we look to the back half. And I know it’s always going to be the base of your bottoms business. But maybe you could talk a little bit about the trends there and about what you see as far as denim growth goes for the rest of the year? Thanks so much.

     Mike Jeffries — Abercrombie & Fitch Co. — CEO and Chairman

     Yes. I don’t want to give away any fashion information, as always. The denim business is a solid percentage of our business. I believe that we will not see denim increases for the balance of the year in either the feminine or the masculine business. But I believe that on a comps basis, the denim masculine business will be better than the female business. There are more non-denim options in the female business than the masculine business. Our inventories are very much in line, coming into line. We’re being more efficient with our denim inventories as we go forward and I’m very comfortable with where we’re heading.

     Mike Kramer — Abercrombie & Fitch Co. — CFO, PAO and SVP

     Yes, this is Mike Kramer, I’d like to add to that. In terms of Q1 results, even with the decline in denim, year-over-year, as we expected, our bottoms business in both male and female were up. Which I think is very significant, and a I think a concern of many people.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     I think it’s very important to note that in the height of the denim big increases, our bottoms business in total was never as good as our tops business from a likes perspective.

     Tom Lennox - Abercrombie & Fitch Co. — VP Corporate Communications

     Next question.

Operator

     We’ll now take a question from Piper Jaffray’s Jeff Klinefelter.

     Jeff Klinefelter - Piper Jaffray — Analyst

     Yes, congratulations as well to everybody on a great first quarter.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Thank you, Jeff.

     Jeff Klinefelter - Piper Jaffray — Analyst

     Regarding the second quarter, I don’t mean to focus too much on denim, Mike. But just maybe to put it into perspective. Last year you had an outstanding back to school season. I recall that you did have great increases in denim, I think even referencing a May number of well over 100% comp. How much — maybe to put it into perspective, sort of your directional guidance here for the second quarter. How much denim, as a percent of total business did you do in the second quarter? And would that be an abnormally high number for a bottom’s category during that period of time? Help us put into perspective how to look at that from a productivity standpoint.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     I don’t know what the percentage was. We can look it up and get back to you on that, Jeff.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Nor do we may want to disclose, more importantly.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Right. I think that — I really have to repeat that with our great denim performance last year, our top likes were consistently better than our total bottoms likes. I think the key to this business is about balance going forward. Somebody’s writing me a note. 44%, denim, total business.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Total business.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     I’m sorry, Jeff, I’ll get back to you on this. But I think the most important point is that we need to run a balanced bottoms business. I think we are maximizing the denim business that is there and working on building the other classifications, especially in female.

     Jeff Klinefelter - Piper Jaffray — Analyst

     Thank you.

Operator

     We’ll next take a question from Paul Lejuez with Credit Suisse.

     Paul Lejuez - Credit Suisse First Boston — Analyst

     Thanks, guys. Can you just remind us a bit of the MG&A line? When did the big increases start? And does it happen step by step, as you anniversary those moving throughout this year, or one shot all in the third quarter? If you could just kind of remind us of where we’re going there.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Yes, this is Mike Kramer. I’ll speak to that. The MG&A, we actually started, I would say, yes, this is a step function. We actually started significant increases at home office back in Q4, 2004, Q4, 2005. You have also seen increases sequentially from that point in time, but at a much decelerated rate. And you will also, on a go forward basis, continue to see decreases as we invest in the business. Consistent with what we have talked about in terms of investments in IT, continued investment in our merchants and design and you’ll just see that to continue on a go-forward basis.

Operator

     We’ll move on to Kimberly Greenberger of Citigroup.

     Kimberly Greenberger - Citigroup — Analyst

     Mike, could you talk about the clearance activities at Ezra Fitch, particularly in denim? Thanks.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     We are discontinuing the Ezra Fitch line. We’ve found that we are selling products at those price lines, but that the sub-brand Ezra Fitch meant very little to our customers. They are committed to Abercrombie and Fitch, and that’s their first loyalty. So, we are clearing the Ezra Fitch merchandise that we currently have in the chain, which includes fashion denim. And are going forward with price points that were the Ezra Fitch price points but under the Abercrombie & Fitch brand. And that you’ll see, for back to school, that Ezra Fitch will have probably been totally cleared in the Company. Thank you.

Operator

     We’ll move on to Jeff Black of Lehman Brothers.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Jeff Black - Lehman Brothers — Analyst

     Thanks a lot. I would have thought that payroll was more of an opportunity in the near term on the expense line, although it does look really good, so congrats on that. But is there an opportunity to do better on that line going forward, and if so, what is it? And how should we think about the level of comps you really need to generate expense leverage this year versus last year? Thanks a lot.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     With regards to payroll, yes, we believe there is opportunity on a go-forward basis. You did not see leverage for the total quarter in our stores payroll line item. However, you did see leverage in the back half of the quarter. One thing that I’d like to point out is, is as you know, back in beginning of November, we actually opened our Fifth Avenue store. This was also prior to, obviously, the busiest time of the year. And this was basically a new venture for us to get into, in terms of how to operate this size of store and the complexity related with it.

So, it took us a while post-Christmas to really gain an understanding of where our payrolls should be on a non-holiday time frame. So this was actually a big focus of ours. And we think that we brought it in line towards the latter part of the quarter, thereby helping us to achieve that leverage in April. And we will continue to see that on a go-forward basis. In terms of comps needed to generate leverage, we have really never disclosed that. But anywhere from flat to 3%, we think we can manage to be able to leverage our stores and distribution only.

Operator

     We’ll next take a question from Stacy Pak of Prudential Equity Group.

     Stacy Pak - Prudential — Analyst

     Thanks. So, on the MG&A line, it looks like it grew at about an 11% rate from Q4 of ‘05. And I’m wondering if we should expect that same sort of growth rate in Q2? And I just want to confirm that in Q2 you would need a flat to 3% comp to lever the store and distribution line. And perhaps you could approach the comp levers with us. I think the reason there’s so much focus on denim is people are worried about the price points and the ability to anniversary it from the top line. So, you’re not going to want to give us a comp estimate, I assume. But maybe you can talk about some of the metrics behind comp and how you’re approaching those, like AUR?

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     In terms of the growth of the MG&A line item, remember that a large portion of that growth was related to FAS 123R. In terms of being able to estimate into the second quarter, I would give you guidance that the growth will be less than what you saw from Q1 to Q4. Now, keep in mind, we are investing in the business. In terms of the comp rate, I am going to confirm to you just like what I said in terms of being able to leverage from a flat to moderate comp rate of 3%. And we believe strongly that on a go-forward basis that the comps are going to be coming back to us in terms of transaction growth. We see — right now, we’re not looking at taking any pricing action on a go-forward basis.

Operator

     We’ll move on to Dorothy Lakner with CIBC World Markets.

     Dorothy Lakner - CIBC World Markets — Analyst

     Thanks, good afternoon, everyone, and congratulations. I wondered if you could give us a little bit more color on, and this would be for Mike, on RUEHL and what’s working there? And then secondly, on the IT initiatives you have going this year, what kind of things are you doing? And if you could give us, sort of a timetable as to the various things you’re working on? Thanks.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     The RUEHL business is really coming around nicely. As I’ve said in the past, we have worked very hard to make the offerings more casual and more of our kind of corporate mentality in terms of casual. The men’s business is performing at a better growth rate than womens, because I think it’s becoming better faster. But there’s very solid growth in women’s as well. And it’s across the classifications. It’s across the apparel

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

classifications. In handbags, as I’ve also said, we are working to make the offering more casual. You’ll see a more casual handbag assortment for the July set. But in all I think we’re really on track in RUEHL and I’m very excited. And I think you guys can see that in the stores. They’re really coming together. In terms of number two, would you like to comment on IT, Mike?

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     In terms — IT initiative. The timing, actually they are currently and ongoing. I would like to take this time to announce that we’ve hired a new Chief IT Officer. She will be joining us in June. Even though her joining the Company will be in a month or so, we are continuing to assess our systems and whether they are scalable for us in the future. and that they accommodate us in terms of the needs of the business. And I will tell you that, we’ve already made great initiatives with regards to automating reporting, and we are going to continue to do that. We’re also going to — we’re taking a look at initiatives within the organization to upgrade systems, to get us to where we want to go and accelerated growth that we think that we’ll see from now through 2010. In addition to that, there’s a lot of processes that we believe that we’ve been looking at or doing from a manual perspective that we would like to automate. And all three of these, I think, are really going to help us really move the business forward without a lot of head count addition.

Operator

     We’ll take the next question from Meredith Kent of UBS.

     Meredith Kent - UBS Financial Services — Analyst

     Thanks. I just wanted to follow-up on Dorothy’s question on RUEHL. As the business — as the product is getting more casual, are the price points coming down? And also, are you still on track for profitability by the end of ‘07? And how would you say this profitability is going to be relative to the other brands, Abercrombie and Hollister?

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     I will comment on the price points one. The price points in RUEHL were reduced but about six months ago. We were approximately 30% higher than A&F, we’re currently at about 12% higher, which is where I want them to be. So, that took place about six months ago. Let’s let Mike comment. I think we’re on the right path to the profitability we’ve described. I don’t think we’ve ever described what the profit rate was going to be. No, we’ve never discussed the profit rate with regards to RUEHL, but we are well on track in terms of reaching profitability by the end of 2007. We’re very excited about this brand.

Operator

     We’ll next take a question from Jennifer Black.

     Jennifer Black - Jennifer Black & Associates — Analyst

     Good afternoon and let me also add my congratulations.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Have you seen the new Washington Square store, Jennifer?

     Meredith Kent - UBS Financial Services — Analyst

     I certainly have.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     And how did it look?

     Meredith Kent - UBS Financial Services — Analyst

     It looked great. It looked well-staffed, it’s looked — it’s a big store. It appears to be big.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     I haven’t made it out there yet, but I will.

     Jennifer Black - Jennifer Black & Associates — Analyst

     I’m sure you’ll let me know when.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     I will.

     Jennifer Black - Jennifer Black & Associates — Analyst

     I wondered if you could talk about — you talked about clearance. And are you going to handle that different than now you’re handling it now on the Internet? And I think that’s my only question.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     The answer is that we continue to limit the amount of clearance on the Internet. The amount that we put up and the minimum price points. We have anniversaried that restriction and we took a hit in the Abercrombie and Fitch e-Com business because of it, but that business is now growing nicely against that base. We’ll watch it very carefully. I would expect us to continue to wean ourselves out of that business as much as possible.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Yes, having said that. We really were pleased with the results of our e-Com business in Q1, the growth that we saw there, in all three of our brands, particularly on the domestic side.

Operator

     We’ll next take a question from Christine Chen of Pacific Growth Equities.

     Christine Chen - Pacific Growth Equities — Analyst

     Congratulations on a great quarter, everyone.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Thank you, Christine.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Christine Chen - Pacific Growth Equities — Analyst

     I also wanted to follow-up a little bit on RUEHL. Can you share with us the impact that RUEHL had on Q1 this year and how that compares to last year? And then my — I have a question about the tax rate.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Christine, we’re not going to disclose at this point the Q1 affect on RUEHL. If you want to move to the tax rate, we’ll hep you with that.

     Christine Chen - Pacific Growth Equities — Analyst

     Okay. For the first half, you had previously said it would be about 39%. Is that still the case, even though you had a lower tax rate in Q1?

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Our normalized effective tax rate right now is 39%. So, I would expect that on a go-forward basis. Now having said that, we’re aggressively going after a lot of very, very old audits and settling these. So and obviously in these kinds of situations, we’re not in the driver’s seat. So — but we’re being very aggressive about this. But I would plan on a go-forward basis, 39% effective tax rate.

Operator

     We’ll next hear from Brian Tunick of J.P. Morgan.

     Brian Tunick - J.P. Morgan — Analyst

     For Mike and Mike. Maybe we were wondering about the change in promotional plans at the Abercrombie adult business. How does it affect your inventory flows or open to buy? And then what is the expected tradeoff between merchandise margins and volume? And then our second question is on the share buyback program. It looks like the share count went up sequentially, was it because of blackout periods, what’s happening on that front?

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Let me address the inventory flows. We’re flowing more consistently in every brand and that’s an important part of our strategy, Brian. And it addresses this issue that’s been raised about the denim. I don’t — I’m not losing a ton of sleep over denim, because what is really driving our business in all categories is weekly flow. And that’s especially true in the tops portion of the business, where we have to win in every one of the brands. There’s — I think we will take a volume hit the last week of May and the first week of June because we broke a major clearance event last year.

     We’re taking markdowns this year but doing it much more quietly. And the number of units per store in each of the brands is going to be reduced versus last year. It should result in higher margin, although we never predict that. But we’re clearly a regular price business. And as you know, we don’t allow the term ‘sale’ to be used in any of our businesses today. That was the first part of your question. And the second?

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Brian, related to your question with regards to stock buyback, we continue to review cash levels for product launches, store openings and other relevant factors. Why no repurchases were made during the quarter, we continue to consider repurchases from time to time based on market factors, cash availability, and the factors just mentioned.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

Operator

     We’ll move on to Margaret Mager with Goldman Sachs.

     Margaret Mager - Goldman Sachs — Analyst

     Hi. I have a couple questions and a great quarter, congrats on that.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Thanks, Margaret.

     Margaret Mager - Goldman Sachs — Analyst

     A couple of questions. First of all, one of the things that comes up is just the how to interpret the Abercrombie adult business comp store sales. When we first saw that first down comp in February, it kind of — people really reacted to that. And so I want to get your view of how that should be interpreted. How do you feel about it? Is there a message there about market share shifting? Is Hollister part of the equation? Any kind of color you can give on that. And then I’m curious on your total store count by concept, what are you thinking now? Do you think Abercrombie adult could go beyond 400? And then lastly on marketing, any kind of interesting or major marketing initiatives by brand, especially Hollister in the upcoming year? Thanks.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Okay. Let me address. The first question is comp store sales at A&F. I don’t view that as a market share shift. I think we are making enormous investments in the Abercrombie and Fitch brand to really cement that relationship with the 18 to 22 year-old. I think it is, as we mentioned, we’re investing $50 million in that brand to upgrade the stores, to upgrade the experience in the stores. And I’m very excited about where we’re taking it. I think that the negative comps, if you look at them carefully, were driven by our women’s business, which was out of character with the women’s businesses in the other brands. I think we simply could have done better in that business. I don’t think that we flowed newness and fashion aggressively as we might have. We’re concentrating very hard on this business go-forward. It’s always my first priority because it is the flagship business and I anticipate better results in the A&F business. We’re certainly pushing for them. In terms of store count, the A&F domestic — go ahead, Mike.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Yes, I’ll add that. And then Mike can talk about the new initiatives. With regards to the store count for our adult brands, we’re at 348 right now and I would think 400 would be pushing it in terms of domestic. But domestic in terms of the brand as a whole and our expansion internationally, I think is probably right in line.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Marketing initiatives, everything we do is in-store and will continue to be. There was a program, a member of — customer reward program in Hollister that has been completely eliminated. It was shown that it did nothing for us in terms of the business. Again, we run regular priced businesses that are not price promoted, so that has gone away with no affect on the volume. Again, marketing initiatives are totally in-store. We continue to invest more on the in-store marketing and I think they’re getting better and better.

Operator

     We’ll next hear from Barbara Wyckoff of Buckingham Research Group.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Barbara Wyckoff - Buckingham Research Group — Analyst

     A couple of questions. Margins in prior quarters in the year have been slightly higher in Hollister than the core A&F, with kids a few points blow. Does this trend continue and does it continue in first quarter? And then I have another follow-up?

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     With regards to Hollister. On a go-forward basis, you’re going to actually see the margins in terms of Hollister diluted a little bit, with regards to we are pricing our product to be a direct competitor with American Eagle. And I think that you might see a little bit of pricing with regards to Hollister in terms of bringing that back down in line on a small, small amount. So it would be right at —.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     I think we’ve said that on occasion the Hollister operating margin, there was comparability, a little bit, but I wouldn’t say —

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     It’s not significant.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     It will fall right in line with the others. There’s not going to be any dramatic changes any way or the other.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     These margins are all very close to one another.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Right.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     And consistently have been. Kids, we have said kids was lower in the past, but it’s clearly caught up.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Yes.

Operator

     We’ll next take a question from Lauren Levitan of Cowen & Company.

     Lauren Levitan - Cowen & Co. — Analyst

     Thanks. Good afternoon. I had a couple of clarifying questions and then one thing I was hoping you could delve in a little more. On clarifying, could you give us a sense — Mike, you talked about the priorities for share repurchase. Have you at all altered that target balance of 300 to 350 million in cash on the balance sheet? And then my other clarifying question relates to changes in the promotional stance. Will Hollister and the kids business also be reducing that signage and promotional cadence at end of season clearance? And does this also mean that at adult Abercrombie, we shouldn’t look for a post-Christmas event? And then the issue I was hoping you could talk on is, Mike, you talked about the $50

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

million you’ll be investing in the adult brand to refresh those stores. How many stores will that investment allow you to touch? And what percent of the fleet will you have consistent with what you would like the brand to be saying by the end of the year? Thanks very much.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Boy. You got a lot of questions here.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     I’ll take the first one. With regards to the cash balance, there’s been no alteration with regards to the 300 million target on the balance sheet. Our strategy with regards to buyback is the same as it always has been.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Let me work down the list. All divisions are affected by lack of major end of season and promotion events and signage. And it will be — you will see a post-Christmas clearance that will be much less aggressive than it has been in the past in all divisions. A smaller percentage of the inventory and we believe a smaller percentage of the business. The $50 million investment in the A&F fleet will touch all 350 stores. There will be visible changes in all 350 stores by the third week of June. By the end of this full year, there will be even more physical, obvious changes in 100 of the 350 stores. And those major changes will be rolled out over next year. So, expect to see some difference there.

Operator

     We’ll take the next question from Robin Murchison.

     Robin Murchison - Suntrust Robinson Humphrey — Analyst

     Thank you. My questions have been answered.

Operator

     We’ll move on to Dana Cohen with Bank of America.

     Dana Cohen - Bank of America Securities — Analyst

     Hi, guys. One clarification and then a question. On the SG&A, I just want to clarify, you’re saying that on the entire line of stores and distribution, you think you can lever for the balance of the year to a flat to 3% comp. And on RUEHL, given where you’re putting the new stores, is sort of the store profile maybe evolving here or different from what you might have thought a year ago, in terms of what the business is about and where it works from a real estate location?

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     I’ll take the first question. Yes, we do think that we’ll be able to leverage on the entire stores and distribution line for the balance of the year. On a moderate comp of 0% to 3%.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Second question about RUEHL. No, it’s the same customer profile that we’ve always targeted. We’re obviously chewing off some of the better centers in the country at the top of the list, but we are looking for a more balanced portfolio go forward.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

Operator

     We’ll next take a follow-up from Paul Lejuez with Credit Suisse.

     Paul Lejuez - Credit Suisse First Boston — Analyst

     Thanks, guys. When you think about store payroll as a percent of sales, and maybe you don’t think of it this way. I’m just wondering if there’s an optimal level? What percent of sales should store payroll be and how does it differ by brand?

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     I’ll take that question. There’s relatively no difference by brand other than maybe a couple differences with regards to footprint. But let’s go forward in terms of talking about payroll percentage. No, that’s not how I look at it. Basically how we look at it, is we look at basically minimum staffing coverage on a store level basis based on a sales volume. And ensuring that we have the appropriate customer service, let’s say at the lowest volume that a store might hit through its seasonality, then we actually flex up and add more selling payroll as well as impact program payroll to the back office, as those sales increase. So our percentage of sales, obviously, changes on a sales volume i.e. leverage. And you’re going to see much more leverage in Q4 than you do in the other three seasons. As well, as you’ll see more leverage in your higher volume stores mostly than you will see on your average volume stores or lower volume stores.

Operator

     We’ll take the next question from Gabrielle Kivitz of Deutsche Bank.

     Gabrielle Kivitz - Deutsche Bank Securities — Analyst

     Your markdown rate in Q1 was slightly lower than last year. Is that sustainable in subsequent quarters? I know you’re up against tough comparisons, but can you continue to moderate the rate of increase of inventory per square foot while still having a markdown rate that’s lower than last year, like you did in the first quarter? And then the second part of the question is, your comp comparisons obviously get much more difficult in upcoming quarters. And if we assume a similar run rate from Q1 in the business and consider comparisons on a two-year basis, that would actually suggest a flat comp in Q2 and Q3 and negative comps in Q4. I think, Mike, you maybe mentioned — Mike Kramer, you mentioned to expect modest comp increases. If you could just help us understand what is going to help the business accelerate from Q1 trends? What’s going to be more favorable in Q2 through Q4? That’d be helpful. Thanks very much.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Well, first and foremost, I think you need to bifurcate the sales patterns through the quarter of Q1, in terms of February, March and April. And we did see some momentum. Yes, there was a calendar shift that took place but we also saw momentum through the quarter. But we really don’t give guidance on a go-forward basis. We — as I said, we continue to expect to be moderate comps. And that’s really all that I can guide you to.

Operator

     We’ll take a follow-up from Barbara Wyckoff.

     Barbara Wyckoff - Buckingham Research Group — Analyst

     Could you talk about the composition of the customer in the New York flagship, foreign versus local? And has there been any affect on the seaport business?

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     The answer is; there’s been a major affect on the seaport business, as we expected there to be. And the customer profile was pretty much what we expected as well, which is a very large percentage international customer. Very large percentage European and I think the — I have to repeat this most exciting news that Mike Kramer just gave me about the four-wall profitability of that store in April, which was in fact higher than the chains. So, we’re thrilled with that business. We’re thrilled with what we’re learning about running a high volume store. And it does give us huge confidence for the international potential of this brand.

Operator

     We’ll next take a follow-up from Stacy Pak.

     Stacy Pak - Prudential — Analyst

     Thanks. I was just wondering if you could tell us when you think inventories might be directly in line with sales? And also, if you’d care to tell us a good leverage point for MG&A for the rest of the year? Since you’ve given us so much on stores and distribution.

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     Well, I really don’t want to clarify anymore than we have with regards to MG&A. Again, I’ve said, that we will be adding to our home office payroll but at a much, much lower pace than what we were last year. Now, keeping in mind, also the impact of FAS 123R there, as well. In terms of inventory, we’re obviously targeting continued movement with regards to lower year-over-year growth. But that will also depend — fluctuate based on the sales that we actually start seeing on a go-forward basis. Again, this is an evolving thing but we’re very comfortable with our inventory positioning today. Both on an overall basis and then quite frankly, by a key item basis.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Stacy, I think if you were to apply — I’m not suggesting you do this, but just for argument’s sake, if you would apply the differential from the increase at the end of the fourth quarter to the increase at the end of the first quarter, which was essentially up 59 to up 36, with a 21 differential on there, you’re probably pretty close to where the sales growth was for the first quarter right now. So, who knows what will happen. but I think the point is, we’re getting closer and closer to having this thing moderate more closely in line with sales growth, which I know you’ve mentioned before.

Operator

     We’ll next take a follow-up from Margaret Mager.

     Margaret Mager - Goldman Sachs — Analyst

     On your inventory, what is it on a unit basis, if that’s still a relevant number to know? And can you talk about the mix of the inventory, the fashion basics versus fashion product and how that relates to, say, the mix of sales in the store?

     Mike Kramer - Abercrombie & Fitch Co. — CFO, PAO and SVP

     I’ll take the first one and then I’ll let Mike answer the last one. On a unit basis, the year-over-year growth was 28%, again a decrease. And if you wanted to talk about the terminology that I brought to the forefront in terms of weeks of supply, we’re well within that same target range that I’ve previously talked about.

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Final Transcript

May. 16. 2006 / 4:30PM ET, ANF — Q1 2006 Abercrombie & Fitch Co. Earnings Conference Call

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     In terms of the categories, Margaret, the increases are in fashion basics, personal care, and those are the biggest increases for May VLM. As we’re going forward, the increases — I’m not going to tell you where it’s going to net out but the increase will be in fashion. And you’ll see decreases in the denim classification. If that’s helpful to you. Next question?

Operator

     And there actually appear to be no further questions at this point.

     Mike Jeffries - Abercrombie & Fitch Co. — CEO and Chairman

     Excellent. Okay. Thank you for calling. Thank you.

Operator

     That does conclude this conference call. Thank you all for joining us and have a wonderful day.

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