40 Hollister stores will open internationally this year
Press Release:
New Albany, Ohio, May 18, 2011: Abercrombie & Fitch Co. (NYSE: ANF) today reported unaudited results which reflected net income of $25.1 million and net income per diluted share of $0.28 for the thirteen weeks ended April 30, 2011, compared to a net loss of $11.8 million and a net loss per basic and diluted share of $0.13 for the thirteen weeks ended May 1, 2010. Net income for the thirteen weeks ended April 30, 2011, included net income per diluted share of $0.01 from discontinued operations.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
“We are pleased with our first quarter results, which exceeded our internal objectives and reflected broad strength by brand, by channel, and by region. These strong results give us a solid start to achieving our goals for the year.”
First Quarter Summary
Net sales for the thirteen weeks ended April 30, 2011 increased 22% to $836.7 million from $687.8 million for the thirteen weeks ended May 1, 2010. U.S. sales, including direct-to-consumer sales, increased 13% to $641.0 million. International sales, including direct-to-consumer sales, increased 64% to $195.7 million. Total Company direct-to-consumer sales, including shipping and handling, increased 32% to $105.8 million.
Total comparable store sales for the quarter increased 10%. By brand, comparable store sales increased 8% for Abercrombie & Fitch, increased 11% for abercrombie kids, and increased 11% for Hollister Co. Total sales by brand were $341.7 million for Abercrombie & Fitch, $86.6 million for abercrombie kids and $394.6 million for Hollister Co.
The gross profit rate for the first quarter was 65.0%, 230 basis points higher than last year`s first quarter gross profit rate. The increase in the gross profit rate was driven primarily by a lower average unit cost, favorable international mix, including foreign currency impact, and other gross margin items, such as a freight benefit.
Stores and distribution expense, as a percentage of net sales, decreased to 47.7% from 51.5% for the first quarter last year. The decrease in the stores and distribution expense rate was primarily driven by lower store occupancy costs and payroll costs as a percentage of net sales.
Marketing, general and administrative expense for the first quarter was $107.7 million, an 11% increase compared to $96.6 million during the same period last year. The increase in marketing, general and administrative expense was due to increases in compensation and benefits, including incentive and equity compensation, and marketing and other expense.
The effective tax rate for continuing operations for the thirteen weeks ended April 30, 2011 was a 35.6% expense as compared to a 39.5% benefit for the Fiscal 2010 comparable period.
Net income was $25.1 million and net income per diluted share was $0.28 for the thirteen weeks ended April 30, 2011, compared to a net loss of $11.8 million and a net loss per basic and diluted share of $0.13 for comparable period last year. Net income for the thirteen weeks ended April 30, 2011, included net income per diluted share of $0.01 from discontinued operations and related to the settlement of outstanding lease obligations.
The Company ended the first quarter of Fiscal 2011 with $741.8 million in cash and cash equivalents, borro
wings under the credit agreement of $44.3 million and outstanding letters of credit of $0.1 million, compared to $590.5 million in cash and cash equivalents, borrowings under the credit agreement of $49.0 million and outstanding letters of credit of $45.6 million at the comparable point last year.
During the first quarter of Fiscal 2011, the Company repurchased 428,800 shares of its common stock at an aggregate cost of approximately $25.5 million. As of April 30, 2011, the Company had approximately 9.3 million remaining shares available for purchase under its publicly announced stock repurchase authorizations.
See page 2 for the 2011 outlook
2011 Outlook
The Company continues to anticipate opening five international Abercrombie & Fitch flagship locations during Fiscal 2011. In addition the Company expects to open up to 40 international mall-based Hollister stores, primarily in the latter part of the year. The Company expects a minimal number of domestic store openings in 2011. In addition, the Company continues to expect to close approximately 50 domestic stores during Fiscal 2011, primarily at the end of the year through natural lease expirations.
Based on current new store plans and other planned expenditures, the Company expects total capital expenditures for 2011 to be approximately $350 million, predominately related to new stores, store refreshes and remodels.
The Company continues to expect margin pressure in the second quarter as a result of year over year erosion in the gross margin rate, and significantly less expense leverage than in the first quarter.
Other Developments
On May 17, 2011, 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 14, 2011 to shareholders of record at the close of business on May 27, 2011.
