ABERCROMBIE & FITCH REPORTS FIRST QUARTER RESULTS BOARD OF DIRECTORS DECLARES QUARTERLY DIVIDEND OF $0.20
New Albany, Ohio, May 24, 2013: Abercrombie & Fitch Co. (ANF)
today reported unaudited first quarter results which reflected a net
loss of $7.2 million and net loss per basic and diluted share of $0.09
for the thirteen weeks ended May 4, 2013, compared to a net loss of
$21.3 million and net loss per basic and diluted share of $0.25 for the
thirteen weeks ended April 28, 2012.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
"Our results for the first quarter reflect a sixteen cent improvement
in earnings per share versus last year, including better than expected
gross margin rate improvement and tight expense management.
The first quarter proved to be more difficult than expected on the
top-line due to more significant inventory shortage issues than
anticipated, added to by external pressures.
However, comparable sales trends progressively improved during the
quarter and with the inventory headwinds largely behind us, we expect to
see continued sequential improvement in the second quarter. We are
also making good progress on our cross-functional initiatives, which we
expect will generate substantial operating margin improvement on a
sustainable, long-term basis."
First Quarter Summary
Net sales for the thirteen weeks ended May 4, 2013 decreased 9% to
$838.8 million from $921.2 million for the thirteen weeks ended April
28, 2012. Total U.S. sales, including direct-to-consumer sales,
decreased 17% to $534.9 million. Total international sales, including
direct-to-consumer sales, increased 10% to $303.9 million. Total Company
direct-to-consumer sales, including shipping and handling, decreased
10% to $132.7 million.
Due to the 53rd week in Fiscal 2012, first quarter comparable sales are
compared to the thirteen week period ended May 5, 2012. The effect of
the calendar shift was not material to total sales.
Total comparable sales for the quarter, including direct-to-consumer
sales, decreased 15% with comparable store sales decreasing 17% and
comparable direct-to-consumer sales decreasing 6%. Comparable sales for
the quarter, including direct-to-consumer sales, decreased 14% for the
U.S. and decreased 16% for international. Within the quarter,
comparable sales were weakest in February and March.
By brand, comparable sales, including direct-to-consumer sales,
decreased 13% for Abercrombie & Fitch, decreased 5% for abercrombie
kids, and decreased 18% for Hollister Co. Total sales by brand were
$325.0 million for Abercrombie & Fitch, $73.0 million for
abercrombie kids and $421.2 million for Hollister Co.
The gross profit rate for the first quarter was 65.9%, 720 basis points
higher than last year`s first quarter gross profit rate. The increase
in the gross profit rate was primarily driven by a benefit from a higher
mix of spring merchandise selling and a decrease in product costs.
Stores and distribution expense for the first quarter was $449.1
million, down from $455.7 million last year. As a percentage of sales,
expense savings in store payroll, repairs and maintenance, and other
stores and distribution expense were more than offset by the
deleveraging effect of negative comparable sales.
Marketing, general and administrative expense for the first quarter was
$118.8 million, a 2% increase compared to $116.9 million last year. The
increase in marketing, general and administrative expense was due to
increases in IT and outside services, partially off-set by decreases in
incentive compensation and other compensation related expenses.
The effective tax rate for the first quarter was a benefit of 53.7%
compared to a benefit of 29.1% last year. The current year rate reflects
a net reduction in reserves resulting from the settlement of tax
audits. The Company now expects its full year tax rate in the range of
33% to 34%.
During the first quarter of Fiscal 2013, the Company repurchased
approximately 350,000 shares of its common stock at an aggregate cost of
approximately $16.3 million.
The Company ended the first quarter with approximately $555.9 million
in cash and cash equivalents and borrowings under the Term Loan
Agreement of $146.3 million compared to $321.6 million in cash and cash
equivalents, $37.9 million in marketable securities and no borrowings
last year.
The Company opened four international Hollister chain stores, including
its first store in Australia, and a combined Hollister and Gilly Hicks
outlet store in the UK, during the quarter.
Other Developments
On May 21, 2013, the Board of Directors declared a quarterly cash
dividend of $0.20 per share on the Class A Common Stock of Abercrombie
& Fitch Co. payable on June 18, 2013 to shareholders of record at
the close of business on June 3, 2013.
2013 Outlook
Based on a modestly more cautious view for the remainder of the year,
the Company now expects full year diluted earnings per share in the
range of $3.15 to $3.25. This projection assumes comparable sales,
including direct-to-consumer to be slightly down for the balance of the
year. With regard to the second quarter of Fiscal 2013, the Company
expects diluted earnings per share in the range of $0.28 to $0.33.
Guidance for all periods does not include the impact of potential
impairment and store closure charges.
The Company continues to anticipate opening international Abercrombie
& Fitch flagship locations in Seoul and Shanghai, as well as
approximately 20 international Hollister chain stores throughout the
year. In addition, the Company now anticipates opening a small number
of international multi-brand outlet stores during the year. The Company
continues to expect to close approximately 40-50 stores in the U.S.
during 2013, through natural lease expirations.
Based on current new store plans and other planned expenditures, the
Company continues to expect total capital expenditures for Fiscal 2013
to be approximately $200 million, predominately related to new stores
and investments in IT initiatives.
At the end of the first quarter, the Company operated a total of 1,053
stores. The Company operated 264 Abercrombie & Fitch stores, 144
abercrombie kids stores, 481 Hollister Co. stores and 20 Gilly Hicks
stores in the United States. The Company operated 19 Abercrombie &
Fitch stores, five abercrombie kids stores, 112 Hollister Co. stores and
eight Gilly Hicks stores internationally. The Company operates
e-commerce websites at
www.abercrombie.com,
www.abercrombiekids.com,
www.hollisterco.com and
www.gillyhicks.com.
Source Press release Abercombie and Fitch
