ABERCROMBIE & FITCH REPORTS THIRD QUARTER 2012 RESULTS SALES INCREASE 9% AND NET INCOME INCREASES 40% BOARD OF DIRECTORS DECLARES QUARTERLY DIVIDEND OF $0.175
2012-11-14 13:02:57 -
New Albany, Ohio, November 14, 2012: Abercrombie & Fitch Co. (NYSE: ANF) today
reported unaudited results which reflected net income of $71.5 million and net
income per diluted share of $0.87 for the thirteen weeks ended October
27, 2012, compared to net income of $50.9 million and net income per diluted
share of $0.57 for the thirteen weeks ended October 29, 2011.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie
& Fitch Co., said:
"These significantly improved financial results reflect progress on several
fronts over the past quarter. Our US chain store business posted healthy growth
on top of a strong quarter a year ago, and we saw sequential trend improvement
in our international business. Our principal focus remains to execute against
our key strategic initiatives to leverage our iconic brands and to continue to
be judicious in our use of our shareholders' capital to drive long-term
shareholder value."
Third Quarter Summary
Net sales for the thirteen weeks ended October 27, 2012 increased 9% to $1.170
billion from $1.076 billion for the thirteen weeks ended October 29, 2011. Total
U.S. sales, including direct-to-consumer sales, were approximately flat at
$818.6 million. Total international sales, including direct-to-consumer sales,
increased 37% to $351.1 million. Total Company direct-to-consumer sales,
including shipping and handling, increased 20% to $158.3 million.
Total comparable store sales for the quarter decreased 3% relative to last year.
By brand, comparable store sales decreased 4% for Abercrombie & Fitch, 3% for
abercrombie kids, and 1% for Hollister Co. Total sales by brand were $440.0
million for Abercrombie & Fitch, $99.8 million for abercrombie kids and $602.5
million for Hollister Co.
Within direct-to-consumer, including shipping and handling revenues, US sales
were up 15% and international sales were up 31%.
The gross profit rate for the third quarter was 62.5%, 240 basis points higher
than last year's third quarter gross profit rate. The increase in the gross
profit rate was driven by a decrease in average unit cost and an international
mix benefit, partially off-set by a slight decrease in average unit retail and
an adverse effect of exchange rates.
Stores and distribution expense, as a percentage of net sales, decreased to
42.5% from 42.9% for the third quarter of last year. The decrease in the stores
and distribution rate was primarily the result of lower store pre-opening
costs. In addition, prior year stores and distribution expense included
approximately $4 million of accelerated depreciation related to the
consolidation of the distribution centers.
Marketing, general and administrative expense for the third quarter was $123.4
million, compared to $107.8 million during the same period last year. The
increase in marketing, general and administrative expense was due to increases
in marketing, incentive compensation related expenses, IT and other expenses.
The effective tax rate for continuing operations for the thirteen weeks ended
October 27, 2012 was 35.5%, compared to 35.8% for the prior year comparable
period.
Net income was $71.5 million and net income per diluted share was $0.87 for the
thirteen weeks ended October 27, 2012, compared to net income of $50.9 million
and net income per diluted share of $0.57 for the comparable period last year.
The Company ended the third quarter of fiscal 2012 with approximately $349.7
million in cash and cash equivalents, $19.9 million in current marketable
securities and $60.0 million in borrowings under the revolving credit agreement.
During the third quarter of Fiscal 2012, the Company repurchased 3.0 million
shares of its common stock at an aggregate cost of approximately $104.3 million.
As of October 27, 2012, the Company had approximately 19.9 million remaining
shares available for purchase under its publicly announced stock repurchase
authorizations.
During the quarter the Company opened an Abercrombie & Fitch flagship store in
Hong Kong, a combined Abercrombie & Fitch and abercrombie kids store in Munich
and nine international Hollister Co. chain stores. Subsequent to quarter end,
the Company has opened an Abercrombie & Fitch store in Dublin.
2012 Outlook
Based on having exceeded its objectives for the third quarter, the Company is
now projecting full year diluted earnings per share of approximately $2.85 to
$3.00. This projection assumes a mid single digit percentage decrease in
comparable store sales for the fourth quarter and a slightly higher gross margin
rate for the quarter relative to the year-to-date rate. The projected diluted
earnings per share guidance does not include the impact of potential impairment
charges or other real estate charges. In addition, the projected earnings per
share guidance assumes a full year diluted weighted average share count of
approximately 83.1 million shares and does not include the impact of potential
share repurchases in the fourth quarter.
Other Developments
On November 13, 2012, 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 December 11, 2012 to shareholders of record at the close of business
on November 26, 2012.
An investor presentation of third quarter results will be available in the
"Investors" section of the Company's website at www.abercrombie.com at
approximately 8:00 AM, Eastern Time, today.
At the end of the third quarter, the Company operated a total of 1,067 stores.
The Company operated 278 Abercrombie & Fitch stores, 154 abercrombie kids
stores, 486 Hollister Co. stores and 18 Gilly Hicks stores in the United
States. The Company operated 17 Abercrombie & Fitch stores, six abercrombie
kids stores, 101 Hollister Co. stores and seven Gilly Hicks stores
internationally. The Company operates e-commerce websites at
www.abercrombie.com, www.abercrombiekids.com, www.hollisterco.com and
www.gillyhicks.com.
Today at 8:30 AM, Eastern 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) 681-3372 and ask for the Abercrombie & Fitch Quarterly Call or go to
www.abercrombie.com. The international call-in number is (719) 325-4825. This
call will be recorded and made available by dialing the replay number (888)
203-1112 or the international number (719) 457-0820 followed by the conference
ID number 4310923 or through www.abercrombie.com.
For further information, call:
ICR, Inc.
Joe Teklits joseph.teklits@icrinc.com
203-682-8258
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 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 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, 2012, in some cases have affected and in the future could affect the
Company's financial performance and could cause actual results for the 2012
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 economic and financial conditions, and
the resulting impact on consumer confidence and consumer spending, could have a
material adverse effect on our business, results of operations and liquidity; if
we are unable to anticipate, identify and respond to changing fashion trends and
consumer preferences in a timely manner, and manage our inventory commensurate
with customer demand, our sales levels and profitability may decline;
fluctuations in the cost, availability and quality of raw materials, labor and
transportation, could cause manufacturing delays and increase our costs; equity-
based compensation awarded under the employment agreement with our Chief
Executive Officer could adversely impact our cash flows, financial position or
results of operations and could have a dilutive effect on our outstanding Common
Stock; our growth strategy relies significantly on international expansion,
which adds complexity to our operations and may strain our resources and
adversely impact current store performance; our international expansion plan is
dependent on a number of factors, any of which could delay or prevent successful
penetration into new markets or could adversely affect the profitability of our
international operations; our direct-to-consumer sales are subject to numerous
risks that could adversely impact sales; we have incurred, and may continue to
incur, significant costs related to store closures; our development of a new
brand concept such as Gilly Hicks could have a material adverse effect on our
financial condition or results of operations; fluctuations in foreign currency
exchange rates could adversely impact our financial condition and results of
operations; our business could suffer if our information technology systems are
disrupted or cease to operate effectively; comparable store sales may continue
to fluctuate on a regular basis and impact the volatility of the price of our
Common Stock; our market share may be negatively impacted by increasing
competition and pricing pressures from companies with brands or merchandise
competitive with ours; our stock price may be volatile and investors may not be
able to resell shares of our Common Stock at or above the price paid to acquire
the shares; our ability to attract customers to our stores depends, in part, on
the success of the shopping malls in which most of our stores are located; our
net sales fluctuate on a seasonal basis, causing our results of operations to be
susceptible to changes in Back-to-School and Holiday shopping patterns; our
inability to accurately plan for product demand and allocate merchandise
effectively could have a material adverse effect on our results; our failure to
protect our reputation could have a material adverse effect on our brands; 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; interruption in the
flow of merchandise from our key vendors and international manufacturers could
disrupt our supply chain, which could result in lost sales and could increase
our costs; we do not own or operate any manufacturing facilities and, therefore,
depend upon independent third parties for the manufacture of all our
merchandise; our reliance on two distribution centers domestically and two
third-party distribution centers internationally makes us susceptible to
disruptions or adverse conditions affecting our distribution centers; our
reliance on third parties to deliver merchandise from our distribution centers
to our stores and direct-to-consumer customers could result in disruptions to
our business; we may be exposed to risks and costs associated with credit card
fraud and identity theft that would cause us to incur unexpected expenses and
loss of revenues; modifications and/or upgrades to our information technology
systems may disrupt our 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; 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; the effects of war or acts of terrorism could have a material adverse
effect on our operating results and financial condition; our inability to obtain
commercial insurance at acceptable prices or our failure to adequately reserve
for self-insured exposures might increase our expenses and adversely impact our
financial results; operating results and cash flows at the store level may cause
us to incur impairment charges; we are subject to customs, advertising, consumer
protection, privacy, zoning and occupancy and labor and employment laws that
could require us to modify our current business practices, incur increased costs
or harm our reputation if we do not comply; changes in the regulatory or
compliance landscape could adversely affect our business and results of
operations; our unsecured Amended and Restated Credit Agreement (the "Amended
and Restated Credit Agreement") and our Term Loan Agreement include financial
and other covenants that impose restrictions on our financial and business
operations; our operations may be affected by regulatory changes related to
climate change and greenhouse gas emissions; 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.
ER Financials Q3 2012 FINAL:
hugin.info/143831/R/1657648/536223.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Abercrombie & Fitch Co via Thomson Reuters ONE
[HUG#1657648]
