Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q4 2012 Earnings Presentation
29 slides from Abercrombie & Fitch's earnings presentation, Feb 27, 2013
Slide 1: Investor Presentation 2012 Fourth Quarter
INVESTOR PRESENTATION 2012 FOURTH QUARTER
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: Q4 Adjusted P&L Summary - Retail Method
3 Q4 ADJUSTED P&L SUMMARY* - RETAIL METHOD 20112012 % OF NET SALES UNAUDITED UNAUDITED % OF NET SALES NET SALES GROSS PROFIT OPERATING EXPENSE OTHER OPERATING INCOME, NET OPERATING INCOME INTEREST EXPENSE, NET INCOME BEFORE TAXES TAX EXPENSE NET INCOME NET INCOME PER DILUTED SHARE DILUTED WEIGHTED-A
Slide 4: Q4 Adjusted P&L Summary - Cost Method
4 Q4 ADJUSTED P&L SUMMARY* - COST METHOD 20112012 % OF NET SALES UNAUDITED UNAUDITED % OF NET SALES NET SALES GROSS PROFIT OPERATING EXPENSE OTHER OPERATING INCOME, NET OPERATING INCOME INTEREST EXPENSE, NET INCOME BEFORE TAXES TAX EXPENSE NET INCOME NET INCOME PER DILUTED SHARE DILUTED WEIGHTED-AVE
Slide 5: Full Year Adjusted P&L Summary - Retail Method
5 FULL YEAR ADJUSTED P&L SUMMARY* - RETAIL METHOD 20112012 % OF NET SALES UNAUDITED UNAUDITED % OF NET SALES NET SALES GROSS PROFIT OPERATING EXPENSE OTHER OPERATING INCOME, NET OPERATING INCOME INTEREST EXPENSE, NET INCOME FROM CONTINUING OPERATIONS BEFORE TAXES TAX EXPENSE FOR CONTINUING OPERATION
Slide 6: Full Year Adjusted P&L Summary - Cost Method
6 FULL YEAR ADJUSTED P&L SUMMARY* - COST METHOD 20112012 % OF NET SALES UNAUDITED UNAUDITED % OF NET SALES NET SALES GROSS PROFIT OPERATING EXPENSE OTHER OPERATING INCOME, NET OPERATING INCOME INTEREST EXPENSE, NET INCOME FROM CONTINUING OPERATIONS BEFORE TAXES TAX EXPENSE FOR CONTINUING OPERATIONS
Slide 7: Impairment & Other Charges
7 IMPAIRMENT & OTHER CHARGES 2012 FULL YEARQ1 Q2 Q3 Q4 2011 IMPAIRMENT CHARGES TOTAL IMPAIRMENT CHARGES ASSET WRITE-DOWNS STORE CLOSURE AND LEASE EXIT CHARGES ARS CHARGES LEGAL CHARGES TOTAL - - - - - - - - - - - - - - - - - - - - - - - - $7,407 $7,407 $68,022 $14,649 $18,971 $13,441 $10,000 $125,08
Slide 8: Sales Analysis Versus Prior Year
8 TOTAL SALES TOTAL U.S. SALES TOTAL INTERNATIONAL SALES DTC SALES COMPARABLE SALES*: TOTAL COMPANY ABERCROMBIE & FITCH abercrombie kids HOLLISTER +11% +1% +34% +26% -1% 0% +4% -2% TOTAL SALES TOTAL U.S. SALES TOTAL INTERNATIONAL SALES DTC SALES COMPARABLE SALES*: TOTAL COMPANY ABERCROMBIE & FITCH a
Slide 9: Comparable Sales
9 COMPARABLE SALES U.S. U.S.TOTAL TOTAL FOURTH QUARTER FULL YEAR COMPARABLE STORES COMPARABLE DTC TOTAL -14% -19%-4% -5% +52% +46%+17% +24% -3% -8%-1% -1% -1% -1% +5% +15% FLAT +1% INTERNATIONAL INTERNATIONAL
Slide 10: U.S. Chain Store + U.S. DTC Comparable Sales
10 U.S. CHAIN STORE* + U.S. DTC COMPARABLE SALES *U.S. Chain includes outlet stores and excludes flagship and tourist stores 17% 13% 12% 16% 4% 20% 16% 12% 8% 4% 0% 7% 7% 7% 1% 1% 8% 8% Q2 Q2 Q2Q4 2010 2011 2012 Q4 Q4Q1 Q1 Q1Q3 Q3 Q3
Slide 11: Sales Growth Contribution
11 SALES GROWTH CONTRIBUTION $1,328,766 62,793 62,7934.7% 1.5% 2,375 (26,287)0.2% -0.6% (47,695) (182,341)-3.6% -4.4% 39,711 133,8193.0% 3.2% 82,581 364,7636.2% 8.8% $1,468,531 $4,510,80510.5% 8.5% $4,158,058 FOURTH QUARTER GROWTH CONTRIBUTION % GROWTH CONTRIBUTION %FULL YEAR 2011 NET SALES ADDITION
Slide 12: Sales and Operating Income by Segment
* Operating Income is reported on a non-GAAP basis and excludes the charges on page 7. (1) Operating Income for U.S. Stores and International Stores is reported on an aggregate four-wall basis, and excludes store pre-opening costs. Also includes third party sell-off of excess merchandise. (2) Store
Slide 13: Restated Non-GAAP Diluted EPS History
13 $5.00 $6.00 $4.00 $3.00 $2.00 $1.00 2007 2008 2009 2010 20122011 RESTATED NON-GAAP DILUTED EPS HISTORY* $5.45 $1.60 $2.85$3.45 $0.89 $1.73 - 0.49 0.060.06 0.23 0.34 - 0.39 -- - 0.03 $5.45 $2.48 $2.90$3.51 $1.12 $2.10 GAAP EPS (1) IMPAIRMENT OTHER CHARGES NON-GAAP EPS * From Continuing Operations
Slide 14: Share Repurchases
14 SHARE REPURCHASES 3,300.0 3,025.2 1,222.7 $161,215 $104,283 $56,166 $48.85 $34.47 $45.94 428.8 $25,469 $59.40 - $42.62 18,671 - $64,399 $8,835 $67.78 $58.90 $97,903 $48.53 $321,664 $196,606 $55.44 - 2,017.3 7,547.9 3,546.2 950.1 150.0 SHARES REPURCHASED SHARES REPURCHASEDCOST COST AVERAGE COST AV
Slide 15: Free Cash Flow
* Operating Cash Flow less Capex 15 FREE CASH FLOW* 400,000 450,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2007 2008 2009 2010 2012 Est.2011
Slide 16: Capital Allocation History
16 CAPITAL ALLOCATION HISTORY 700,000 800,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2007 2008 2009 2010 20122011 CAPEXDIVIDENDS SHARE REPURCHASES
Slide 17: International Hollister Store Count - Cumulative
17 INTERNATIONAL HOLLISTER STORE COUNT - CUMULATIVE 2007 3 3 6 9 6 9 12 12 26 29 77 107 11 17 5 8 8 12 1 1 2 3 1 2 2 2 4 7 3 6 2 4 2 1 1 19 38 4 3 3 3 10 18 1 1 2008 2009 2010 20122011HOLLISTER CANADA UK GERMANY ITALY SPAIN IRELAND SWEDEN HONG KONG BELGIUM FRANCE AUSTRIA CHINA S. KOREA NETHERLANDS P
Slide 18: Q4 International Store Openings
18 Q4 INTERNATIONAL STORE OPENINGS CITY DATECENTERBRAND A&F A&F HOLLISTER HOLLISTER HOLLISTER HOLLISTER HOLLISTER HOLLISTER COLLEGE GREEN LEIDSESTRAAT ATLANTIS GRAN VIA 2 ATRIO GALERIA MOKOTOW GAROSUGIL GALAXY MALL DUBLIN, IRELAND AMSTERDAM, NETHERLANDS NANTES, FRANCE BARCELONA, SPAIN VILLACH, AUSTR
Slide 19: 2013 Guidance Updates
19 FULL YEAR: APPROXIMATELY FLAT COMPARABLE SALES, INCLUDING DTC SALES, WITH SLIGHTLY NEGATIVE COMPARABLE STORE SALES FULL YEAR DILUTED EPS IN THE RANGE OF $3.35 - $3.45 FULL YEAR CAPITAL EXPENDITURES OF APPROXIMATELY $200 MILLION TAX RATE: APPROXIMATELY IN LINE WITH PRIOR YEAR WEIGHTED AVERAGE SHAR
Slide 20: Q4 Store Count Activity
20 Q4 STORE COUNT ACTIVITY * End of Q4 2012 includes 27 Gilly Hicks stores, 20 in the U.S. and seven in Europe. TOTAL U.S. CANADA EUROPE ASIAALL BRANDS* HOLLISTER CO. A&F abercrombie kids START OF Q4 2012 OPENINGS CLOSINGS END OF Q4 2012 START OF Q4 2012 OPENINGS CLOSINGS END OF Q4 2012 START OF Q4
Slide 21: Strategic Initiatives
21 STRATEGIC INITIATIVES MERCHANDISING INITIATIVES INVENTORY OPTIMIZATION INSIGHT & INTELLIGENCE CUSTOMER ENGAGEMENT AVERAGE UNIT COST EXPENSE REDUCTION U.S. STORE CLOSURES
Slide 22: Q4 2012 GAAP to Non-GAAP Reconciliation
22 (1) GAAP figures reflect the cost method of accounting for inventory. (2) The store-related asset impairment charges relate to stores whose asset carrying value exceeded the fair value. For the fourteen week period ended February 2, 2013, the charge was associated with one Abercrombie & Fitch, th
Slide 23: Q4 2011 GAAP to Non-GAAP Reconciliation
23 (1) GAAP figures reflect the cost method of accounting for inventory. (2) The store-related asset impairment charges relate to stores whose asset carrying value exceeded the fair value. For the thirteen week period ended January 28, 2012, the charge was associated with 14 Abercrombie & Fitch, 21
Slide 24: Full Year 2012 GAAP to Non-GAAP Reconciliation
24 (1) GAAP figures reflect the cost method of accounting for inventory. (2) The store-related asset impairment charges relate to stores whose asset carrying value exceeded the fair value. For the fifty-three week period ended February 2, 2013, the charge was associated with one Abercrombie & Fitch,
Slide 25: Full Year 2011 GAAP to Non-GAAP Reconciliation
25 (1) GAAP figures reflect the cost method of accounting for inventory. (2) The store-related asset impairment charges relate to stores whose asset carrying value exceeded the fair value. For the fifty-two week period ended January 28, 2012, the charge was associated with 14 Abercrombie & Fitch, 21
Slide 26: How Is Valuing Inventory Under the Cost Method Different From the Retail Method?
26 HOW IS VALUING INVENTORY UNDER THE COST METHOD DIFFERENT FROM THE RETAIL METHOD? Under the retail method, a cost-to-retail relationship was established at the item level based upon weighted-average cost and initial retail selling price. The Company reduced the value of its inventory at cost, and
Slide 27: When Will the Change Be Effective and Will It Be Retrospectively Applied?
27 WHEN WILL THE CHANGE BE EFFECTIVE AND WILL THE CHANGE BE RETROSPECTIVELY APPLIED? The Company’s adoption of the cost method will be effective as of February 2, 2013 and is being applied retroactively for Fiscal 2011 and Fiscal 2010, in accordance with Accounting Standards Codification, 250, Accou
Slide 28: Impact to Reportable Segments and Historical Data
28 WHAT IS THE IMPACT TO THE COMPANY’S REPORTABLE SEGMENTS AND WILL HISTORICAL DATA BE RESTATED? For the Company’s three reportable segments: U.S. Stores, International Stores and Direct-to-Consumer (“DTC”), all will be impacted primarily with an inventory and operating income adjustment. This is pr
Slide 29: Appendix: 2012 Quarterly Analysis - Cost Method
29 APPENDIX: 2012 QUARTERLY ANALYSIS* - COST METHOD FULL YEAR SALES 2012 OPERATING INCOME SALES 2012 OPERATING INCOME SALES 2012 OPERATING INCOME SALES 2012 OPERATING INCOME SALES 2012 OPERATING INCOME Q1 Q2 Q3 Q4 U.S. STORES(1) INTERNATIONAL STORES(1) DIRECT TO CONSUMER MARKETING, GENERAL AND ADMIN