Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q3 2021 Earnings Presentation
31 slides from Abercrombie & Fitch's earnings presentation, Nov 24, 2021
Slide 1: Investor Presentation: Third Quarter 2021
INVESTOR PRESENTATION: THIRD QUARTER 2021
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
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 presentation or made by management or spokespeople of A&F involve risk
Slide 3: Table of Contents
Safe Harbor and Other Information 2 Company Overview 4 Focus Areas 7 Digital Evolution 11 Global Store Network Optimization 13 Q3 2021 Results 16 Financial Position, Liquidity & Capital Allocation 22 Appendix 28 TABLE OF CONTENTS
Slide 4: Company Overview
Abercrombie & Fitch Co. A | woitner | GL | COMPANY OVERVIEW
Slide 5: Brand descriptions: Hollister, Gilly Hicks, abercrombie kids
The quintessential apparel brand of the global teen consumer, Hollister Co. believes in liberating the spirit of an endless summer inside everyone. At Hollister, summer isn’t just a season, it’s a state of mind. Hollister creates carefree style designed to make all teens feel celebrated and comforta
Slide 6: Global, Digitally-Led Omnichannel Retailer
6 735 GLOBAL, DIGITALLY-LED OMNICHANNEL RETAILER COMPANY-OPERATED RETAIL STORES THE COMPANY'S PRODUCTS ARE SOLD GLOBALLY, PRIMARILY THROUGH ITS COMPANY-OWNED DIGITAL AND STORE CHANNELS, AS WELL AS THROUGH VARIOUS THIRD-PARTY ARRANGEMENTS CAPABILITY TO SHIP TO OVER 110 COUNTRIES GLOBAL BRANDS WHOLESA
Slide 7: Focus Areas
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Slide 8: Our Previously-Stated Transformation Initiatives
OUR PREVIOUSLY-STATED TRANSFORMATION INITIATIVES OPTIMIZING OUR GLOBAL STORE NETWORK • Rightsizing store fleet and adapting to the evolving role of the store as customers' shopping preferences shift ENHANCING DIGITAL AND OMNICHANNEL CAPABILITIES • Creating best-in-class customer experiences while gr
Slide 9: We Entered 2021 on Offense While Recapturing Lost Sales Due to COVID-19
WE ENTERED 2021 ON OFFENSE WHILE WORKING TOWARDS RECAPTURING LOST SALES DUE TO COVID-19 WHILE WE CONTINUE TO OPERATE IN AN UNCERTAIN ENVIRONMENT, WE WILL FOCUS ON WHAT WE CAN CONTROL OUR FOCUS AREAS FOR 2021 ACCELERATING DIGITAL, DATA AND TECHNOLOGY INVESTMENTS TO INCREASE AGILITY AND IMPROVE CUSTOM
Slide 10: Focusing on the Well-Being of Associates and Customers
FOCUSING ON THE WELL-BEING OF ASSOCIATES AND CUSTOMERS Implemented a range of health and safety measures with the well-being of the Company’s customers, associates and business partners in mind, including but not limited to ensuring all stores follow local mandates relating to face coverings, social
Slide 11: Digital Evolution
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Slide 12: Digital Evolution: Aggressively Investing to Support Transformation
* In fiscal 2020, the company was impacted by the COVID-19 pandemic and experienced widespread temporary store closures, while the company’s digital operations continued to serve the customers during this unprecedented period. INVESTMENTS IN DIGITAL AND OMNICHANNEL CAPABILITIES OF $150M+ FISCAL 2017
Slide 13: Global Store Network Optimization
GLOBAL STORE NETWORK OPTIMIZATION 13
Slide 14: Roughly Half of Global Store Base in Updated Formats
14 ROUGHLY HALF OF GLOBAL STORE BASE IN UPDATED FORMATS; REMOVED 1.6M GROSS SQUARE FEET GLOBALLY SINCE 2017 Total stores FY17 FY18 FY19 FY20 Q3 21 * Prior period figures have been revised to reflect a change in classification of certain stores to be consistent with current presentation. GROSS SQUARE
Slide 15: 91% of U.S. Stores Located in A/B Malls
15 91% OF U.S. STORES LOCATED IN A/B MALLS; CONTINUE TO REPOSITION GLOBAL FLEET * Mall rating based on Green Street Advisors as of March 2021. YTD STORE OPTIMIZATION ACTIVITY Q3 2021 STORE FLEET DETAIL HOLLISTER ABERCROMBIE TOTAL COMPANY # OF STORES % OF FLEET # OF STORES % OF FLEET # OF STORES % OF
Slide 16: Q3 2021 Results
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Slide 17: Q3 2021 Results
Q3 2021 RESULTS “We were very pleased with our third quarter results. Total net sales grew 10% year-over-year, or 5% from 2019 levels. Our largest market, the U.S., experienced ongoing strength, growing 17% on a one-year and 12% on a two- year basis. Digital net sales rose 8% from last year, represe
Slide 18: Significant Items Impacting Q3 2021 Results
SIGNIFICANT ITEMS IMPACTING Q3 2021 RESULTS • Net sales increased 10%, or $86M, as compared to last year, reflecting an increase in both store and digital sales as the company anniversaries prior year COVID-19 related store closures • Gross margin rate declined 30 basis points as compared to last ye
Slide 19: Total Company Net Sales Up 10% Compared to Q3 2020
TOTAL COMPANY NET SALES UP 10% AND 5% COMPARED TO Q3 2020 AND Q3 2019, RESPECTIVELY, TO $905M DIGITAL SALES UP 8% AND UP 55% TO LAST YEAR AND 2019, RESPECTIVELY, RESULTING IN Q3 2021 DIGITAL SALES OF $413M, OR 46% OF TOTAL NET SALES ABERCROMBIE $383M UP 12% TO LAST YEAR 42.3% OF TOTAL NET SALES HOLL
Slide 20: Operating Expense Detail
(in thousands) Q3 2021 % OF NET SALES Q3 2020 % OF NET SALES Q3 2019 % OF NET SALES 1 YR Δ BPS (3) 2 YR Δ BPS (3) STORE OCCUPANCY (1) $108,234 12.0% $126,918 15.5% $150,794 17.5% (350) (550) ALL OTHER (2) 243,570 26.9% 219,345 26.8% 226,903 26.3% 10 60 STORES AND DISTRIBUTION 351,804 38.9% 346,263 4
Slide 21: Q3 2021 GAAP Income Statement
(1) Gross profit is derived from cost of sales, exclusive of depreciation and amortization. (2) Gross profit rate of 63.7% is down 30 basis points as compared to last year, driven by approximately 300 basis points of higher average unit cost from freight inflation and efforts to offset supply chain
Slide 22: Financial Position, Liquidity & Capital Allocation
FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATION 22
Slide 23: Cash Flow Summary
(in thousands) NET CASH PROVIDED BY OPERATING ACTIVITIES CAPITAL EXPENDITURES FREE CASH FLOW (1) FY 2016 $185,169 $140,844 $44,325 FY 2017 $287,658 $107,001 $180,657 FY 2018 $352,933 $152,393 $200,540 FY 2019 $300,685 $202,784 $97,901 FY 2020 $404,918 $101,910 $303,008 (1) Free cash flow is a non-GA
Slide 24: Strong Financial Position and Liquidity
24 FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATIONSTRONG FINANCIAL POSITION AND LIQUIDITY CASH & EQUIVALENTS $866M AS COMPARED TO $813M LAST YEAR SHORT-TERM BORROWINGS NO BORROWINGS OUTSTANDING UNDER ABL FACILITY $271M OF BORROWING AVAILABLE UNDER ABL FACILITY AS OF OCTOBER 30, 2021 GROSS LONG-TE
Slide 25: New Share Repurchase Program of Up to $500 Million
THE A&F BOARD OF DIRECTORS APPROVED A NEW SHARE REPURCHASE PROGRAM OF UP TO $500 MILLION OF COMMON STOCK, REPLACING THE FEBRUARY 2021 REPURCHASE PROGRAM OF 10 MILLION SHARES, WHICH HAD APPROXIMATELY 3.9 MILLION SHARES OF AVAILABILITY REMAINING The company repurchased approximately 2.7 million shares
Slide 26: Balance Sheet
(in thousands) OCTOBER 30, 2021 JANUARY 30, 2021 OCTOBER 31, 2020 CASH AND EQUIVALENTS $865,622 $1,104,862 $812,881 RECEIVABLES 83,447 83,857 89,074 INVENTORIES 543,713 404,053 545,548 OTHER CURRENT ASSETS 111,423 68,857 73,776 TOTAL CURRENT ASSETS $1,604,205 $1,661,629 $1,521,279 PROPERTY AND EQUIP
Slide 27: Year-to-Date Cash Flow Statement
YEAR TO DATE PERIOD ENDED (in thousands) OCTOBER 30, 2021 OCTOBER 31, 2020 NET CASH PROVIDED BY OPERATING ACTIVITIES $131,287 $108,894 PURCHASES OF PROPERTY AND EQUIPMENT (62,223) (91,748) WITHDRAWAL OF FUNDS FROM RABBI TRUST ASSETS — 50,000 NET CASH USED FOR INVESTING ACTIVITIES $(62,223) $(41,748)
Slide 28: Appendix
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Slide 29: Constant Currency and Non-GAAP Reconciliation
NET SALES Q3 2021 Q3 2020 Δ % GAAP $905,160 $819,653 10% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 3,540 0% NON-GAAP CONSTANT CURRENCY BASIS $905,160 $823,193 10% GROSS PROFIT Q3 2021 Q3 2020 Δ BPS (2) GAAP $576,244 $524,433 (30) IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RA
Slide 30: Excluded Items Reconciliation
(1) The tax effect of excluded items, calculated as the difference between the tax provision on a GAAP basis and an adjusted non-GAAP basis. (in thousands) Q3 2021 GAAP EXCLUDED ITEMS Q3 2021 NON-GAAP ASSET IMPAIRMENT, EXCLUSIVE OF FLAGSHIP STORE EXIT CHARGES $6,749 $6,749 $— OPERATING INCOME 72,731
Slide 31: Abercrombie & Fitch Co.
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