Abercrombie & Fitch Co. Provides Fourth Quarter and Fiscal Year Outlook Update
01/10/22
NEW ALBANY, Ohio, Jan. 10, 2022 (GLOBE NEWSWIRE) — Abercrombie & Fitch Co. (NYSE: ANF) today provided an update on its outlook for the 2021 fiscal year and the fourth quarter of fiscal 2021.
For Fiscal 2021 the company expects:
- Net sales up in the range of 19% to 20% compared to 2020 net sales of $3.125 billion and up 2% to 3% compared to 2019 net sales of $3.623 billion.
- Operating margin of 9% to 10%, in-line with previous outlook, compared with adjusted non-GAAP operating margins of 1.7% and 2.3% in fiscal 2020 and fiscal 2019, respectively.
- Capital expenditures of $90 million to $95 million versus previous outlook of $100M.
For the fourth quarter of Fiscal 2021, the company expects:
- Net sales up in the range of 4% to 6% compared to 2020 net sales of $1.122 billion and flat to down 2% compared to 2019 net sales of $1.185 billion, reflecting ongoing U.S. and digital momentum. Prior outlook of up 3% to 5% to 2019 was impacted by additional unexpected and uncontrollable inventory receipt delays and increased COVID-related impacts and restrictions.
- Gross profit rate to be approximately flat to 2019 levels of 58.2%, in line with previous outlook, reflecting double-digit AUR improvement relative to 2019 and 2020 on reduced depth and breadth of promotions and markdowns, offset by approximately $75 million of freight cost pressure, equating to roughly 650 basis points in gross profit rate, due to rising ocean and air rates and increased air deliveries related to Vietnam factory closures.
- Operating expense, excluding other operating income, to be up low-to-mid single digits from 2019 adjusted non-GAAP operating expense of $565 million, in line with previous outlook, reflecting store occupancy savings due to closures offset by higher fulfillment costs and marketing investments.
- An effective tax rate in the low to mid 20’s, compared to previous outlook of low 20s.
- Stock repurchases of at least $125 million pending market conditions and share price, inclusive of approximately $115 million repurchased quarter-to-date.
Fran Horowitz, Chief Executive Officer, said: “I am incredibly proud of how our global teams and partners have continued to execute in the face of ongoing COVID-related disruptions, putting us on track to achieve our highest annual operating income and margin in over a decade. Customers have embraced each brand’s unique product, voice and experience. Strong response to our winter and holiday collections, including standout performance in jeans, dresses and sweaters, enabled us to maintain our planned promotional cadence, including reducing the depth of our promotions over the peak Black Friday/Cyber Monday period and throughout December.”
“After a strong start to the quarter in inventory receipts and product sell-through, we experienced unexpected inventory receipt slides in key categories due to extended port and transportation delays. As a result, we did not have enough inventory to keep pace with customer demand, resulting in lost sales during the peak holiday selling period. While all brands were impacted, Hollister and Gilly Hicks were slightly harder hit. We believe that, if we had the inventory on-hand, we would have delivered sales within our previous outlook range. Post-holiday, as inventory has landed, we have experienced an acceleration in sales trend. Looking ahead, we expect to minimize the gross margin impact of late deliveries by balancing promotional depth and utilizing pack-and-hold where appropriate.”
“As I reflect on the past two years, we have implemented crucial, transformative changes to pivot our business model and strategically position our company and our brands for future growth. From reducing square footage by about 20% compared to 2019, to increasing our digital business to roughly 50% of our sales volume, to refining the purpose and positioning of each of our brands, we believe that our company has never been better positioned to increase shareholder value. I am excited for 2022 and beyond as we further strengthen our role as a leading global omnichannel retailer.”
About Abercrombie & Fitch Co.
Abercrombie & Fitch Co. (NYSE: ANF) is a leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids through five renowned brands. The iconic Abercrombie & Fitch brand was born in 1892 and aims to make every day feel as exceptional as the start of a long weekend. abercrombie kids sees the world through kids’ eyes, where play is life and every day is an opportunity to be anything and better anything. The Hollister brand believes in liberating the spirit of an endless summer inside everyone and making teens feel celebrated and comfortable in their own skin. Gilly Hicks, offering intimates, loungewear and sleepwear, is designed to give all Gen Z customers their daily dose of happy. Social Tourist, the creative vision of Hollister and social media personalities, Dixie and Charli D’Amelio, offers trend forward apparel that allows teens to experiment with their style, while exploring the duality of who they are both on social media and in real life.
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. Abercrombie & Fitch Co. operates approximately 745 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce sites www.abercrombie.com, www.abercrombiekids.com, www.hollisterco.com, www.gillyhicks.com and www.socialtourist.com.
