Press Release:
ABERCROMBIE & FITCH REPORTS FIRST QUARTER 2012 RESULTS BOARD OF DIRECTORS DECLARES QUARTERLY DIVIDEND OF $0.175 AND INCREASES SHARE REPURCHASE AUTHORIZATION BY TEN MILLION SHARES
New Albany, Ohio, May 16, 2012: Abercrombie & Fitch Co. (ANF) today reported unaudited results which reflected net income of $3.0 million and net income per diluted share of $0.03 for the thirteen weeks ended April 28, 2012, compared to net income of $25.1 million and net income per diluted share of $0.28 for the thirteen weeks ended April 30, 2011.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
“While we are disappointed that European sales trends remain challenging in a very difficult macroeconomic environment, we are largely satisfied with our overall performance for the quarter in that context. Our U.S. business, including direct-to-consumer, increased 4% on a comparable basis, on top of a strong performance last year. Our international business comped negatively, but the economics remain strong and we delivered overall international sales growth of 42% including a strong performance in direct-to-consumer. With cotton cost issues now largely behind us, we look forward to strong year over year earnings growth in the back half of the year.”
First Quarter Summary
Net sales for the thirteen weeks ended April 28, 2012 increased 10% to $921.2 million from $836.7 million for the thirteen weeks ended April 30, 2011. U.S. sales, including direct-to-consumer sales, increased 1% to $644.3 million. International sales, including direct-to-consumer sales, increased 42% to $277.0 million. Total Company direct-to-consumer sales, including shipping and handling, increased 40% to $148.2 million.
Total comparable store sales for the quarter decreased 5%.
By brand, comparable store sales decreased 4% for Abercrombie & Fitch, decreased 11% for abercrombie kids, and decreased 5% for Hollister Co. Total sales by brand were $360.4 million for Abercrombie & Fitch, $77.7 million for abercrombie kids and $463.6 million for Hollister Co.
The gross profit rate for the first quarter was 62.6%, 240 basis points lower than last year`s first quarter gross profit rate. The decrease in the gross profit rate was driven by a significant increase in average unit cost.
Stores and distribution expense, as a percentage of net sales, increased to 49.5% from 47.7% for the first quarter last year. The increase in the stores and distribution expense rate was primarily driven by higher direct-to-consumer costs, store payroll and store management costs, partially offset by a lower occupancy expense rate.
Marketing, general and administrative expense for the first quarter was $116.9 million, a 9% increase compared to $107.7 million during the same period last year. The increase in marketing, general and administrative expense was due to increases in marketing expense, equity compensation expense and other expense.
The effective tax rate for continuing operations for the thirteen weeks ended April 28, 2012 was 43.0% compared to 35.6% for the Fiscal 2011 comparable period.
Net income was $3.0 million and net income per diluted share was $0.03 for the thirteen weeks ended April 28, 2012, compared to net income of $25.1 million and net income per diluted share of $0.28 for the comparable period last year.
The Company ended the first quarter of Fiscal 2012 with $321.6 million in cash and cash equivalents, and $37.9 million in current marketable securities.
During the first quarter of Fiscal 2012, the Company repurchased 3.3 million shares of its common stock at an aggregate cost of approximately $161.2 million.
The Company opened an Abercrombie & Fitch flagship in Hamburg and seven international Hollister stores during the quarter. Subsequent to quarter-end, the Company has opened four international Gilly Hicks stores.
2012 Outlook
Based on first quarter trends, the Company is now projecting same store sales to be down by a mid-single digit percentage on a full-year basis. Notwithstanding lower sales expectations, the Company continues to expect full year diluted earnings per share in the range of $3.50 to $3.75, with lower sales offset by a higher projected gross margin rate, lower expenses, and a lower share count at the end of the first quarter.
The Company continues to anticipate opening international Abercrombie & Fitch flagship locations in Hong Kong, Munich, Dublin and Amsterdam in Fiscal 2012. The Company continues to anticipate opening close to 40 international Hollister stores throughout the year.
Based on current new store plans and other planned expenditures, the Company continues to expect total capital expenditures for 2012 to be approximately $400 million, predominately related to new stores, store refreshes and remodels.
Other Developments
On May 15, 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 June 12, 2012 to shareholders of record at the close of business on May 29, 2012.
Additionally, the Board of Directors increased the existing share repurchase authorization by ten million shares, bringing the shares available for purchase under its publicly announced share repurchase authorization to 12.9 million shares.
An investor presentation of first 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.
The Company will report second quarter sales and earnings results on Wednesday, August 15, 2012.
At the end of the first quarter, the Company operated a total of 1,049 stores. The Company operated 279 Abercrombie & Fitch stores, 154 abercrombie kids stores, 491 Hollister Co. stores and 18 Gilly Hicks stores in the United States. The Company operated 15 Abercrombie & Fitch stores, five abercrombie kids stores, 84 Hollister Co. stores and three Gilly Hicks store internationally. The Company operates e-commerce websites at www.abercrombie.com, www.abercrombiekids.com, www.hollisterco.com and www.gillyhicks.
