New Albany, Ohio,
March 2, 2017: Abercrombie & Fitch Co. (NYSE:
ANF) today reported GAAP net income per diluted share of $0.71 for
the fourth quarter ended January 28, 2017, compared to GAAP
net income per diluted share of $0.85 for the fourth quarter last
year.
In addition, the company reported
GAAP net income per diluted share of $0.06 for the full year,
compared to GAAP net income per diluted share of $0.51 for the
full year last year. Excluding certain items, the company reported
adjusted non-GAAP net loss per diluted share
of $0.06 for the full year, compared to adjusted
non-GAAP net income per diluted share of $1.12 for
the full year last year.
The net effect of changes in
foreign currency exchange rates on a year-over-year basis adversely
impacted fourth quarter and full year results by approximately
$0.05 and $0.25 per diluted share, respectively.
A description of the use of
non-GAAP financial measures and a schedule reconciling GAAP
financial measures to adjusted non-GAAP financial measures
accompanies this release.
Fran Horowitz, Chief Executive
Officer, said:
"Results for the quarter reflect a
still challenging and competitive retail environment, however we
continue to make progress on our strategic priorities. Hollister,
our largest brand, achieved positive comp sales and the Abercrombie
brand renewal continues, although it is a work in progress.
International markets improved measurably from last quarter, for
both Abercrombie and Hollister brands, and the direct-to-consumer
business continued to deliver positive comparable sales in both the
U.S. and international markets. However, the competitive
environment resulted in more promotional activity and a lower gross
margin rate than planned.
While overall results did not meet
expectations, 2016 was a year of significant progress on each of
our strategic priorities. We continued to proactively respond to
the evolving retail landscape through our store closure and channel
optimization initiatives. We also stayed close to our customers to
understand what inspires them, which helped inform our planning and
execution. We began to communicate evolved identities for each of
our brands, and made improvements to the customer experience
through the roll out of store remodels, and ongoing investments in
direct-to-consumer and omnichannel capabilities across both
brands.
While the environment is likely to
remain challenging in 2017, we have a strong balance sheet and
continue to aggressively manage costs in order to continue our
investments in strategies to provide our customers with compelling
new experiences through a clearly defined brand voice, to position
our business for sustainable growth."
Fourth Quarter
Sales Results
Net sales for the fourth quarter
of $1.036 billion were down 7% from last year, with comparable
sales for the fourth quarter down 5%.
Fiscal 2016 Comparable Sales Summary (1) |
Brand |
|
Geography |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year |
|
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Full Year |
Abercrombie(2) |
(8)% |
(7)% |
(14)% |
(13)% |
(11)% |
|
United
States |
(2)% |
(4)% |
(5)% |
(6)% |
(5)% |
Hollister |
0% |
(2)% |
0% |
1% |
0% |
|
International |
(7)% |
(4)% |
(10)% |
(4)% |
(6)% |
Total
company |
(4)% |
(4)% |
(6)% |
(5)% |
(5)% |
|
Total
company |
(4)% |
(4)% |
(6)% |
(5)% |
(5)% |
(1) Comparable
sales are calculated on a constant currency basis.
(2) Abercrombie
includes the Abercrombie & Fitch and abercrombie kids
brands.
By brand, net sales for the fourth
quarter decreased 13% to $442.4 million for Abercrombie and
decreased 2% to $594.0 million for Hollister from last year.
By geography, net sales for the
fourth quarter decreased 8% to $688.2 million in the U.S. and
decreased 5% to $348.2 million in international markets from last
year.
Direct-to-consumer and omnichannel
sales grew to approximately 31% of total company net sales for the
fourth quarter, compared to approximately 28% of total company net
sales last year.
Additional Fourth
Quarter Results Commentary
The gross profit rate for the
fourth quarter was 59.3%. Excluding certain items last year, the
gross profit rate decreased 90 basis points on a constant currency
basis, primarily due to lower average unit retail, partially offset
by lower average unit cost.
Stores and distribution expense
for the fourth quarter was $439.8 million, up from $430.4 million
last year, primarily due to a lease termination charge of $15.6
million related to the A&F flagship store in Hong Kong and
higher direct-to-consumer expense. These were partially offset by
benefits from foreign currency exchange rates, the realization of
savings on lower sales and expense reduction efforts.
Marketing, general and
administrative expense for the fourth quarter was $121.7 million,
including $3.9 million in severance charges, and was down from
$125.2 million last year, primarily due to lower compensation
expense and expense reduction efforts, partially offset by higher
marketing expense.
Asset impairment charges for the fourth quarter
were $1.6 million.
Net other operating income for the
fourth quarter was $9.4 million, compared to net other operating
loss of $0.6 million last year. Excluding certain items last year,
net other operating income increased $7.7 million, primarily due to
the initial recognition of international gift card breakage of $4.8
million and foreign currency related gains.
Operating income for the fourth
quarter was $61.3 million, compared to $120.1 million last year.
Excluding certain items, adjusted non-GAAP operating income for the
fourth quarter last year was $121.3 million.
The effective tax rate for the
fourth quarter was 11%, reflecting an adjustment related to a
change in the full year effective tax rate from last quarter's
estimated rate, as well as a benefit of $4.5 million related to the
realization of foreign currency losses and a discrete benefit of
$2.4 million related to a tax regulatory change.
Net income attributable to
Abercrombie & Fitch Co. for the fourth quarter was $48.8
million, compared to $57.7 million last year. Excluding certain
items, adjusted non-GAAP net income attributable to Abercrombie
& Fitch Co. for the fourth quarter last year was $73.7
million.
Full Year 2016
Sales Results
Net sales for the full year of
$3.327 billion were down 5% from last year, with comparable sales
for the full year down 5%.
Fiscal 2016 Comparable Sales Summary (1) |
Brand |
|
Geography |
|
Fiscal 2016 |
Fiscal 2015 |
|
|
Fiscal 2016 |
Fiscal 2015 |
Abercrombie(2) |
(11)% |
(6)% |
|
United
States |
(5)% |
(3)% |
Hollister |
0% |
0% |
|
International |
(6)% |
(1)% |
Total
company |
(5)% |
(3)% |
|
Total
company |
(5)% |
(3)% |
(1) Comparable
sales are calculated on a constant currency basis.
(2) Abercrombie
includes the Abercrombie & Fitch and abercrombie kids
brands.
By brand, net sales for the full
year decreased 9% to $1.487 billion for Abercrombie and decreased
2% to $1.840 billion for Hollister from last year.
By geography, net sales for the
full year decreased 7% to $2.124 billion in the U.S. and decreased
3% to $1.203 billion in international markets from last year.
Direct-to-consumer and omnichannel
sales grew to approximately 26% of total company net sales for the
full year, compared to approximately 24% of total company net sales
last year.
Additional Full
Year Results Commentary
The gross profit rate for the full
year was 61.0%. Excluding certain items last year, the gross profit
rate decreased 30 basis points on a constant currency basis,
primarily due to lower average unit retail.
Stores and distribution expense
for the full year was $1.578 billion, down from $1.604 billion last
year. Excluding certain items last year, stores and distribution
expense decreased $19.1 million, primarily due to benefits from
foreign currency exchange rates, the realization of savings on
lower sales and expense reduction efforts, partially offset by
higher direct-to-consumer expense and a lease termination charge of
$15.6 million related to the A&F flagship store in Hong
Kong.
Marketing, general and
administrative expense for the full year was $453.2 million, down
from $470.3 million last year. Excluding certain items, adjusted
non-GAAP marketing, general and administrative expense increased
$6.4 million, primarily due to higher marketing expense, partially
offset by lower compensation expense and expense reduction
efforts.
Asset impairment charges for the
full year were $7.9 million, compared to $18.2 million last year
and restructuring benefits for the full year last year were $1.6
million, all of which were excluded from adjusted results with the
exception of $1.6 million in asset impairment charges for the
fourth quarter this year.
Net other operating income for the
full year was $26.2 million, compared to $6.4 million last year.
Excluding certain items, adjusted non-GAAP net other operating
income for the full year increased $5.3 million, primarily due to
the initial recognition of international gift card breakage of $4.8
million.
Operating income for the full year
was $15.2 million, compared to operating income of $72.8 million
last year. Excluding certain items, adjusted non-GAAP operating
income for the full year was $3.3 million, compared to adjusted
non-GAAP operating income of $136.5 million last year.
Given the sensitivity of the tax
rate at lower levels of absolute earnings, the effective tax rate
for the full year was 322%. Excluding certain items, the adjusted
non-GAAP effective tax rate for the full year was 98%. The
effective tax rate and the adjusted non-GAAP effective tax rate for
the full year reflect a benefit of approximately $4.5 million
related to the realization of foreign currency losses and a
discrete benefit of $2.4 million related to a tax regulatory
change.
Net income attributable to
Abercrombie & Fitch Co. for the full year was $4.0 million,
compared to $35.6 million last year. Excluding certain items,
adjusted non-GAAP net loss attributable to Abercrombie & Fitch
Co. for the full year was $4.1 million, compared to adjusted
non-GAAP net income attributable to Abercrombie & Fitch Co. of
$78.0 million last year.
The company ended the fiscal year
with $547.2 million of cash and cash equivalents, and gross
borrowings under the company's term loan agreement of $268.3
million, compared to $588.6 million of cash and cash equivalents
and $293.3 million of gross borrowings last year.
The company ended the fiscal year
with $399.8 million in inventory, a decrease of 8% versus last
year.
Total capital expenditures for the
full year were $140.8 million, which consisted of $73.0 million
related to new stores and store updates and $67.7 million related
to information technology, direct-to-consumer and omnichannel, and
other projects.
During the year, the company
opened 20 new stores, including 10 international and four U.S.
full-price stores and six outlet stores, primarily in the
U.S. The company also closed 54 stores, primarily in the U.S.
Other
Developments
As previously announced, on
February 15, 2017, 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 March 13, 2017 to
stockholders of record at the close of business on March 3,
2017.
Outlook
For fiscal 2017, the company
expects:
-
Comparable sales to improve for the full year,
but to remain challenging for the first half, with Hollister, its
largest brand, expected to maintain or improve its comparable sales
trend and Abercrombie to improve throughout the year
-
Adverse effects from foreign currency on sales
and operating income of approximately $55 million and $25 million,
respectively, or approximately $0.25 per diluted share
-
A gross margin rate flat to the fiscal 2016
adjusted non-GAAP rate of 61.0%, but up on a constant currency
basis, driven by lower average unit cost, with continuing
promotional pressure in the first quarter
-
Actions already taken to reduce expense by
approximately $100 million, enabling investments in revenue driving
activities and resulting in net operating expense down
approximately 3% from fiscal 2016 adjusted non-GAAP operating
expense of $2.025 billion, with a commitment to pursue further
expense reductions throughout the year
-
Net income attributable to noncontrolling
interests of approximately $4 million
-
A weighted average diluted share count of
approximately 68 million shares, excluding the effect of potential
share buybacks
The company expects to incur a
discrete non-cash income tax charge of approximately $9 million in
the first quarter of fiscal 2017 as a result of a change in
share-based compensation accounting standards. Excluding discrete
items, the core tax rate for full year is expected to be in the mid
30s and remains highly sensitive to jurisdictional mix and at lower
levels of pre-tax earnings.
The company is targeting capital
expenditures to be approximately $100 million for fiscal 2017.
Capital expenditures are expected to include approximately $70
million for store updates and new stores and approximately $20
million for direct-to-consumer and omnichannel and information
technology investments to support growth.
The company plans to open six
full-price stores in fiscal 2017, including four in the U.S. and
two in international markets. The company also plans to open two
new outlet stores. In addition, the company anticipates closing
approximately 60 stores in the U.S. during the fiscal year through
natural lease expirations.
An investor presentation of fourth
quarter results will be available in the "Investors" section of the
company's website at www.abercrombie.com at approximately 8:00 AM,
Eastern Standard Time, today.
About Abercrombie & Fitch
Co.
Abercrombie &
Fitch Co. (NYSE: ANF) is a leading, global specialty retailer of
apparel and accessories for Men, Women and Kids through three
renowned brands. The iconic Abercrombie & Fitch brand
embodies American casual luxury. With an updated attitude
that reflects the character, charisma and confidence of today's 20+
consumer, Abercrombie & Fitch remains true to its 125-year
heritage of creating expertly crafted products with an effortless,
American style. The Hollister brand epitomizes the
liberating and carefree spirit of the endless California summer for
the teen market. abercrombie kids creates smart, playful
apparel for children ages 3-14, celebrating the wide-eyed wonder of
childhood. The brands share a commitment to offering products of
enduring quality and exceptional comfort that allow consumers
around the world to express their own individuality and
style.
The Company
operates approximately 900 stores under these brands across North
America, Europe, Asia and the Middle East, as well as the
e-commerce sites www.abercrombie.com and
www.hollisterco.com.
Today at 8:30 AM,
Eastern Standard Time, the company will conduct a conference call.
Management will discuss the company's performance and its plans for
the future and will accept questions from participants. To listen
to the conference call, dial (877) 874-1567 and ask for the
Abercrombie & Fitch Quarterly Call or go to
www.abercrombie.com. The international call-in number is (719)
325-4785. This call will be recorded and made available by dialing
the replay number (888) 203-1112 followed by the conference ID
number 2068797 or the international number (719) 457-0820 followed
by the conference ID number 2068797 or through
www.abercrombie.com.
Investor contact: |
|
Media
contact: |
|
|
|
Brian
Logan |
|
Michael Scheiner |
Abercrombie & Fitch |
|
Abercrombie & Fitch |
(614)
283-6751 |
|
(614)
283-6192 |
Investor_Relations@abercrombie.com |
|
Public_Relations@abercrombie.com |
SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
A&F cautions that any
forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) contained in this Press
Release or made by management or spokespeople of A&F involve
risks and uncertainties and are subject to change based on various
important factors, many of which may be beyond the company's
control. Words such as "estimate," "project," "plan," "believe,"
"expect," "anticipate," "intend," and similar expressions may
identify forward-looking statements. Except as may be required by
applicable law, we assume no obligation to publicly update or
revise our forward-looking statements. The following factors, in
addition to those disclosed in "ITEM 1A. RISK FACTORS" of A&F's
Annual Report on Form 10-K for the fiscal year ended
January 30, 2016 and in A&F's subsequently filed quarterly
reports on Form 10-Q, in some cases have affected, and in the
future could affect, the company's financial performance and could
cause actual results for Fiscal 2016 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 global economic and
financial conditions, and the resulting impact on consumer
confidence and consumer spending, as well as other changes in
consumer discretionary spending habits, could have a material
adverse effect on our business, results of operations and
liquidity; our inability to anticipate customer demand and changing
fashion trends and to manage our inventory commensurately could
adversely impact our sales levels and profitability; a significant
component of our growth strategy is international expansion, which
requires significant capital investment, the success of which
is dependent on a number of factors that could delay or prevent the
profitability of our international operations; direct-to-consumer
sales channels are a significant component of our growth strategy,
and the failure to successfully develop our position in these
channels could have an adverse impact on our results of operations;
our market share may be negatively impacted by increasing
competition and pricing pressures from companies with brands or
merchandise competitive with ours; our ability to attract customers
to our stores depends, in part, on the success of the shopping
malls or area attractions that our stores are located in or around;
our inability to successfully implement our strategic plans could
have a negative impact on our growth and profitability; our failure
to protect our reputation could have a material adverse effect on
our brands; fluctuations in foreign currency exchange rates could
adversely impact our financial condition and results of operations;
fluctuations in the cost, availability and quality of raw
materials, labor and transportation, could cause manufacturing
delays and increase our costs; we depend upon independent third
parties for the manufacture and delivery of all our merchandise,
and a disruption of the manufacture or delivery of our merchandise
could result in lost sales and could increase our costs; our
business could suffer if our information technology systems are
disrupted or cease to operate effectively; we may be exposed to
risks and costs associated with cyber-attacks, credit card fraud
and identity theft that would cause us to incur unexpected expenses
and reputation loss; we rely on the experience and skills of our
senior executive officers, the loss of whom could have a material
adverse effect on our business; our reliance on two distribution
centers domestically and third-party distribution centers
internationally makes us susceptible to disruptions or adverse
conditions affecting our distribution centers; our litigation
exposure could have a material adverse effect on our financial
condition and results of operations; our inability or failure to
adequately protect our trademarks could have a negative impact on
our brand image and limit our ability to penetrate new markets;
fluctuations in our tax obligations and effective tax rate may
result in volatility in our operating results; extreme weather
conditions and the seasonal nature of our business may cause net
sales to fluctuate and negatively impact our results of operations;
our facilities, systems and stores, as well as the facilities and
systems of our vendors and manufacturers, are vulnerable to natural
disasters, pandemic disease and other unexpected events, any of
which could result in an interruption to our business and adversely
affect our operating results; the impact of war or acts of
terrorism could have a material adverse effect on our operating
results and financial condition; changes in the regulatory or
compliance landscape could adversely affect our business and
results of operations; our Asset-Based Revolving Credit Agreement
and our Term Loan Agreement include restrictive covenants that
limit our flexibility in operating our business; and, compliance
with changing regulations and standards for accounting, corporate
governance and public disclosure could adversely affect our
business, results of operations and reported financial results.
Q4 2016 ER Financials
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Abercrombie & Fitch Co via Globenewswire
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From Apr 2024 to May 2024
Abercrombie and Fitch (NYSE:ANF)
Historical Stock Chart
From May 2023 to May 2024