Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q2 2012 Earnings Presentation
24 slides from Abercrombie & Fitch's earnings presentation, Aug 17, 2012
Slide 1: Abercrombie & Fitch Investor Presentation Second Quarter 2012
Exhibit 99.3 Exhibit 99.3 EST. 1892 Abercrombie & Fitch NEW YORK INVESTOR PRESENTATION 2012 SECOND QUARTER
Slide 2: Safe Harbor Statement
SAFE HARBOR Private various Securities important STATEMENT Litigation factors, many Reform of UNDER which Act ofTHE may 1995) be PRIVATE beyond contained the SECURITIES inCompany’s this presentation LITIGATION control.orWo madeREFORM by management ACT OFor1995 spokespeople A&F cautions of A&F thatin
Slide 3: Q2 Unaudited P&L Summary
Q2 UNAUDITED GROSS INCOMEPROFIT 26,962 594,407 $15,5192.8% P&L 1.6%47,174 SUMMARY $32,031 62.5% 5.1% 583,042 3.5% INTEREST 2012 NET 63.6% %INCOME OF EXPENSE, OPERATING NET SALES PER SHARE NET 2011 EXPENSE 1,546 % BASIC OF0.2% NET 569,378 $0.19 985 SALES 0.1% $0.37 59.8% NET INCOME DILUTED 535,324 SA
Slide 4: Sales Analysis and Total Sales Mix
SALES TOTAL MIX SALES ANALYSIS +COMPANY—8% 31%MIX TOTAL VERSUS INTERNATIONAL ABERCROMBIE PRIOR YEAR SALES & Q2FITCH—11% YEAR + 36% TODTC DATE ABERCROMBIE SALES TOTAL + 25% SALES DTC & FITCH—8% + SALES 4% TOTAL + 33% abercrombie SALES COMPARABLE + 7%kids—10% TOTALSTORE U.S. abercrombie SALES—5% SALES
Slide 5: Net Sales Growth Contribution
SALESyear STORES current GROWTH (75,942) rates (2) -8.3% CONTRIBUTION NewDTC stores, 25,639 net of2.8% GROWTH closures; NON-COMPARABLE plus SECOND net effect QUARTER of third STORES, party CONTRIBUTION sell-off NET (2)revenue 99,946 % 10.9% 2011 NET 2012SALES NET SALES $916,763 $951,407 FOREIGN 3.8%
Slide 6: Operating Expense
OPERATING (2) (30) support, 272,774 TOTAL other 28.7% $569,378 store EXPENSE 251,769 expense, 59.8% SECOND 27.5% DTC, $535,324 120 and QUARTER STORES distribution 58.4% 140 2012 & (1) center DISTRIBUTION %Includes OF costs NET(3) rent, SALES Rounded other 458,085 2011 landlord based 48.1% % OFon cha
Slide 7: Q2 Operating Income Analysis
Q2 254,764 (1) EXPENSES—(111,293)—STORE Income Opening Income. ANALYSIS for Also Costs U.S. 75,141 includes include 2012 Stores 197,962 2011 third pre-opening and OPERATING International party 76,139sell-off PRE-OPENING 29.5% rent, Stores payroll, revenue. OPERATING 38.5%istravel DIRECT reported COS
Slide 8: Share Repurchases
SHARE3,546.2 $48.85 428.8 REPURCHASES $25,469 $196,606 $59.40 $55.44 FYSECOND 2012 SHARES FY 2011 QUARTER—— AUTHORIZED SHARES AVERAGE 950.1 FOR$64,399 FUTURE SHARES $67.78 REPURCHASE* AVERAGE THIRD QUARTER COST 22,919 COST150.0 *Includes REPURCHASED $8,835 increase $58.90ofFOURTH COST ten million RE
Slide 9: International Store Count
INTERNATIONAL 4 11 17 ITALY 1 3 5HOLLISTER 7 SPAIN 3 8 10 STORE IRELAND COUNT—CUMULATIVE 1 1 HONG KONG 1 1YEAR SWEDEN END2Q2 2 FRANCE END HOLLISTER 4 5 BELGIUM 2007 22008 2 AUSTRIA 2009 2010 3 42011 CHINA 20122CANADA 3 TOTAL 3 96 18 6 938 1277 1292 UK 3 10 19 26 28 GERMANY 1
Slide 10: Q2 International Openings
Q2 INTERNATIONAL GERMANY ITALY GILLY BLUEWATER 6/23/12 HICKS5/19/12 LONDON, HOLLISTER REGENT HOLLISTER STORE STREET UKBONAIRE 5/12/12 OPENINGS VIVATSGASSE LONDON, VALENCIA, BRAND UK 5/12/12 BONN, CENTER SPAINGILLY GERMANY 7/14/12 CITY HICKS HOLLISTER DATE 5/19/12 BENTALL HOLLISTER HOLLISTER PLUS KIN
Slide 11: 2012 Guidance
2012 GUIDANCE CONTRIBUTION RATE $2.50—$2.75 NEGATIVE EROSION, COMP CAPITAL DRIVEN UPDATES FROM STORE EXPENDITURES 2011 BY SALES FULL OPENINGS AUCINCREASED YEAR: IMPROVEMENT OF APPROXIMATELY COMP $360 MG&A STORE MILLION INVERSUS SECOND SALES THIRD $200 DOWN SECOND HALF MILLION QUARTER: 10% OFQUARTER,
Slide 12: Q2 Store Openings, Closings and End Count
Q2 STORE 1,055 OPENINGS———-CLOSINGS———-END 578 486 936 1219 76 COUNT 93 4*7 A&F End ACTIVITY ofSTART Q2 2012 OF ALL includes Q2BRANDS* 201225294 OF Gilly 279 TOTAL Q2Hicks 42012 8 3U.S. stores, OPENINGS———- 159 CANADA 154183in2 the -HOLLISTER EUROPE U.S. and CLOSINGS seven ASIA CO.in START START (1)
Slide 13: Strategic Store Initiatives Update
STRATEGIC STORE INITIATIVES UPDATE CAPITAL ALLOCATION PHILOSOPHY INTERNATIONAL STORE PERFORMANCE STORE OPENING PLANS SHARE REPURCHASE PHILOSOPHY DOMESTIC
Slide 14: Capital Allocation Philosophy
CAPITAL HIGH RETURN ALLOCATION • OPERATIONAL PHILOSOPHY • SHARE ALLOCATE REPURCHASES AVAILABLE • DIVIDENDS CAPITAL TO THOSE INVESTMENTS EXPECTED TO GENERATE THE GREATEST RISK-ADJUSTED RETURNS •
Slide 15: Hollister Europe Store ROI
HOLLISTER 0.9 62% Level 0.7 41% ROI 0.421% = FULLY Fully EUROPE (1) Includes Loaded LOADED EXAMPLE EBITDA estimated EBITDAAPPROVED divided DC, $2.3 regional by $1.5 Total $0.8 75% management, Investment INITIAL 50% SALES NET and$7.9 an CAPEX allocation $5.9 3.2 $3.93.2 of 4-WALL country 3.2 OTHER CO
Slide 16: Hollister Volume by Europe
HOLLISTER VOLUME BYEUROPE APPROXIMATELY APPROXIMATELY 20% 90% OF STORES ACHIEVING 4-WALL OPERATING MARGINS OF 30% OR GREATER ON AVERAGE, EXCEEDING APPROVED SALES
Slide 17: A&F Flagship Example: London
A&F INITIAL (1) store Includes Working FLAGSHIP NETestimated Capital CAPEX EXAMPLE: (3) DC, 24.8 Store-Level regional OTHER LONDON management, INVESTMENTS(2) ROISALES = Fullyan $64.2 Loaded allocation 4-WALL 3.3 EBITDA TOTAL of country CONTRIBUTION divided INVESTMENT specific by Total costs, 30.5 In
Slide 18: A&F Flagships Europe Combined Store-Level ROI
A&F FLAGSHIPS—EUROPE COMBINED TRAILING TWELVE MONTH STORE-LEVEL ROI GREATER THAN 35% 25% OR HIGHER 4-WALL OPERATING MARGIN IN ALL BUT TWO STORES
Slide 19: A&F International Openings
A&F INTERNATIONAL AMSTERDAM Q4 2012 TIER OPENINGS 1 / FLAGSHIP CITY TIMING SEOULTYPE 2013 TIER HONG1 KONG / FLAGSHIP AUGUST SHANGHAI 11, 2012 FALL FLAGSHIP 2013 FLAGSHIP MUNICH Q3LONDON 2012 A&F TBD andkids kidsFLAGSHIP FLAGSHIP DUBLIN Q4 2012 TIER 1 / FLAGSHIP
Slide 20: Share Repurchase Philosophy
SHARE REPURCHASE REPURCHASES ATTRACTIVE ON SUPPLEMENT A LONG-TERM PHILOSOPHY WITH BASIS MINIMUM EXISTING CREDIT CASH BALANCE FACILITIES OF OR $350M OTHER EXCESS DEBTCASH FINANCING RETURNED AS APPROPRIATE TO SHAREHOLDERS EXECUTE THROUGH REPURCHASES DIVIDENDS WHENAND STOCK SHARE VALUATION IS
Slide 21: Use of Cash
USE OF CASH—LAST maintenance capex, IT, DTC, 6 QUARTERS and DC investments NEW STORES $360.2 SHARE REPURCHASES $357.8 OTHER CAPEX(1) $155.3 DIVIDENDS $90.2 TOTAL $963.5 (1) Other Capex includes
Slide 22: Free Cash Flow
FREE CASH FLOW OPERATING CASH FLOW(1) $500.0 NORMALIZED CAPEX (200.0) NORMALIZED FREE CASH FLOW $300.0 (1) Estimated Operating Cash Flow for FY 2012
Slide 23: Domestic Store Profitability Initiatives
DOMESTIC STORE INVENTORY GROWTH PROFITABILITY • NEW MP&AINITIATIVES SYSTEMS INSIGHT MERCHANDISING & INTELLIGENCE INITIATIVES • MACRO, • CONSERVATIVE COMPETITOR,• SHORTER • PRIMARYPRODUCT AND SECONDARY • INCREASE CHASE INVENTORY OPTIMIZATION •
Slide 24: Domestic Store Profitability Initiatives
DOMESTIC STORE SIGNIFICANT FALLPROFITABILITY AUC • CENTRALINITIATIVES COSTS LEVERAGE CUSTOMER STORE ENGAGEMENT RATIONALIZATION • NEW CLUB • 135 STORES PROGRAMS CLOSED EXPENSE • 180 EXPECTED & AUC REDUCTION CLOSURES• INTERNATIONAL • MODEST ANNUAL OPERATING ACCRETION •