Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q3 2022 Earnings Presentation
34 slides from Abercrombie & Fitch's earnings presentation, Nov 23, 2022
Slide 1: Investor Presentation: Third Quarter 2022
INVESTOR PRESENTATION: THIRD QUARTER 2022
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 This presentation and related statements by management or spokespeople of A&F contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements, inclu
Slide 3: Table of Contents
Safe Harbor and Other Information 2 Company Overview 4 Focus Areas 11 Q3 2022 Results 16 Updated Fiscal 2022 Outlook 24 Financial Position, Liquidity & Capital Allocation 26 Appendix 30 TABLE OF CONTENTS 3
Slide 4: Company Overview
COMPANY OVERVIEW 4
Slide 5: Global, digitally-led, omni-channel apparel and accessories retailer
Abercrombie & Fitch Co. is a global, digitally-led, omni-channel apparel and accessories retailer catering to kids through millennials with assortments curated for their specific lifestyle needs Our corporate purpose of 'Being here for you on the journey to being and becoming who you are' fuels our
Slide 6: Brand descriptions: Hollister, Gilly Hicks, abercrombie kids, Social Tourist
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 7: Global, digitally-led omnichannel retailer key facts
29% ~90% 751 GLOBAL, DIGITALLY-LED OMNICHANNEL RETAILER COMPANY-OPERATED RETAIL STORES CAPABILITY TO SHIP TO OVER 110 COUNTRIES GLOBAL BRANDS WHOLESALE PARTNERSHIPS, PRIMARILY INTERNATIONAL OF GLOBAL STORE FLEET WITH SHIP- FROM-STORE AND PURCHASE-ONLINE- PICK-UP-IN-STORE CAPABILITIES OF FISCAL 2021
Slide 8: Always Forward Plan
ALWAYS / FORWARD) PLAN Abercrombie 8 R
Slide 9: Always Forward Plan and 2025 targets
ALWAYS FORWARD PLAN EXECUTE FOCUSED BRAND GROWTH PLANS •data driven approach to store expansion •grow brand lovers through digital marketing and social selling ACCELERATE AN ENTERPRISE-WIDE DIGITAL REVOLUTION • "Know Them Better" - continued expansion and acceleration of investments in customer anal
Slide 10: fhieo & AGI
fhieo & AGI TMENT + Abercrombie & Fitch Co. 10
Slide 11: Focus Areas
Fitch Co. rR Abercrombie &
Slide 12: Focus areas for fiscal 2022
THE FOLLOWING FOCUS AREAS FOR FISCAL 2022 SERVE AS A FRAMEWORK TO THE COMPANY ACHIEVING SUSTAINABLE GROWTH AND PROGRESSING TOWARD THE 2025 ALWAYS FORWARD PLAN TARGETS OUR FOCUS AREAS FOR 2022 • Execute brand growth plans, primarily focused on continuing momentum at Abercrombie & Fitch and delivering
Slide 13: Investing to be a best-in-class digitally-led global omni-channel retailer
AGGRESSIVELY INVESTING TO BE A BEST-IN-CLASS DIGITALLY-LED GLOBAL OMNI-CHANNEL RETAILER * In fiscal 2021, 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 unprece
Slide 14: Net store openings expected in 2022 with flat square footage
EXPECT TO SEE NET STORE OPENINGS IN 2022 WHILE MAINTAINING ROUGHLY FLAT SQUARE FOOTAGE 861 857 735 729 751 0 100 200 300 400 500 600 700 800 900 524 443 320 282 273 263 343 356 390 420 19 15 7 5 4 55 56 52 52 54 861 857 735 729 751 Total old format chain stores Total stores with updated formats Tota
Slide 15: Global fleet well-positioned; 91% of U.S. stores in A/B malls
GLOBAL FLEET WELL-POSITIONED; 91% OF U.S. STORES LOCATED IN A/B MALLS (2) Mall rating based on Green Street Advisors as of October 2022. (3) Other includes street and outlet locations. YTD STORE ACTIVITY Q3 2022 STORE FLEET DETAIL HOLLISTER ABERCROMBIE TOTAL # OF STORES % OF FLEET # OF STORES % OF F
Slide 16: Q3 2022 Results
Q3 2022 RESULTS 16
Slide 17: CEO Commentary
CEO COMMENTARY “We were pleased to see year-over-year sales trends improve across brands in light of the global macroeconomic environment. While net sales were down 3% as compared to last year on a reported basis, net sales were flat on a constant currency basis. Results were driven by Abercrombie b
Slide 18: Significant items impacting Q3 2022 results
NET (LOSS) INCOME PER SHARE SIGNIFICANT ITEMS IMPACTING Q3 2022 RESULTS • Net sales decreased 3%, or $25M, as compared to last year. • Gross margin rate declined 450 basis points as compared to last year to 59.2%, driven by higher freight costs and commodity inflation. • Digital fulfillment expense
Slide 19: Total company net sales down 3% to $880M
TOTAL COMPANY NET SALES DOWN 3% TO $880M AND FLAT ON A CONSTANT CURRENCY BASIS COMPARED TO Q3 2021 ABERCROMBIE $422M UP 10% TO LAST YEAR UP 13% ON A CONSTANT CURRENCY BASIS (1) 48.0% OF TOTAL NET SALES HOLLISTER $458M DOWN 12% TO LAST YEAR DOWN 9% ON A CONSTANT CURRENCY BASIS (1) 52.0% OF TOTAL NET
Slide 20: Operating expense
(in thousands) Q3 2022 % OF NET SALES Q3 2021 % OF NET SALES 1 YR Δ BPS (3) STORE OCCUPANCY (1) 112,377 12.8% 108,234 12.0% 80 ALL OTHER (2) 254,956 29.0% 243,581 26.9% 210 STORES AND DISTRIBUTION 367,333 41.7% 351,815 38.9% 280 MARKETING, GENERAL & ADMINISTRATIVE 133,201 15.1% 146,269 16.2% (110) A
Slide 21: Income Statement
INCOME STATEMENT (1) Gross profit is derived from cost of sales, exclusive of depreciation and amortization. (2) Gross profit rate of 59.2% is down 450 basis points as compared to last year, primarily driven higher product costs and the adverse impact of exchange rates, partially offset by higher AU
Slide 22: Balance Sheet
BALANCE SHEET (in thousands) OCTOBER 29, 2022 JANUARY 29, 2022 OCTOBER 30, 2021 CASH AND EQUIVALENTS $257,332 $823,139 $865,622 RECEIVABLES 108,468 69,102 83,447 INVENTORIES 741,963 525,864 543,713 OTHER CURRENT ASSETS 112,602 89,654 111,423 TOTAL CURRENT ASSETS $1,220,365 $1,507,759 $1,604,205 PROP
Slide 23: Cash flow statement
YEAR TO DATE PERIOD ENDED (in thousands) OCTOBER 29, 2022 OCTOBER 30, 2021 NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES $(301,194) $131,287 PURCHASES OF PROPERTY AND EQUIPMENT (120,282) (62,223) PROCEEDS FROM THE SALE OF PROPERTY AND EQUIPMENT 11,891 — WITHDRAWAL OF FUNDS FROM RABBI TRUST AS
Slide 24: Updated Fiscal 2022 Outlook
24 UPDATED FISCAL 2022 OUTLOOK 24
Slide 25: Updated Fiscal 2022 Outlook
PREVIOUS FULL YEAR OUTLOOK (1) CURRENT FULL YEAR OUTLOOK NET SALES DOWN MID-SINGLE DIGITS(2) DOWN IN THE RANGE OF 2 to 3%(2) OPERATING MARGIN IN THE RANGE OF 1% TO 3% IN THE RANGE OF 2% TO 3% CURRENT Q4 OUTLOOK NET SALES DOWN IN THE RANGE OF 2 TO 4%(3) OPERATING MARGIN IN THE RANGE OF 5% TO 7% UPDAT
Slide 26: Financial Position, Liquidity & Capital Allocation
FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATION 26
Slide 27: Strong financial position and liquidity
STRONG FINANCIAL POSITION AND LIQUIDITY CASH & EQUIVALENTS $257M AS COMPARED TO $866M LAST YEAR, AS COMPANY BROUGHT IN INVENTORY EARLIER THAN 2021 AND UTILIZED EXCESS CASH TO FUND SHARE REPURCHASES SHORT-TERM BORROWINGS NO BORROWINGS OUTSTANDING UNDER ABL FACILITY $359M OF BORROWING AVAILABLE UNDER
Slide 28: Cash flow summary
(in thousands) NET CASH PROVIDED BY OPERATING ACTIVITIES CAPITAL EXPENDITURES FREE CASH FLOW (1) 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 FY 2021 $277,782 $96,979 $180,803 (1) Free cash flow is a non-GA
Slide 29: Share repurchases and dividends
THE COMPANY REPURCHASED APPROXIMATELY 4.8 MILLION SHARES AND HAS RETURNED $126 MILLION TO SHAREHOLDERS DURING THE YEAR-TO-DATE PERIOD ENDED OCTOBER 29, 2022 SHARE REPURCHASES (in thousands, except for average cost) NUMBER OF SHARES COST AVERAGE COST DIVIDENDS TOTAL FY 2017 — $— $— $54,392 $54,392 FY
Slide 30: Appendix
APPENDIX Teer & Fitch Co.
Slide 31: Reconciliation of GAAP to non-GAAP results
(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 2022 GAAP EXCLUDED ITEMS Q3 2022 NON-GAAP ASSET IMPAIRMENT $3,744 $3,744 $— OPERATING INCOME 17,543 (3,744) 21,287 INCOME BEFORE TAXES 10,248
Slide 32: Net sales, gross profit and operating income constant currency reconciliation
NET SALES Q3 2022 Q3 2021 Δ % GAAP $880,084 $905,160 (3)% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — (26,860) 3% NON-GAAP CONSTANT CURRENCY BASIS $880,084 $878,300 0% GROSS PROFIT Q3 2022 Q3 2021 Δ BPS (2) GAAP $520,816 $576,244 (450) IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANG
Slide 33: Foreign currency impact by brand and region
(1) The estimated impact from foreign currency is determined by applying current period exchange rates to prior year results and is net of the year-over-year impact from hedging. The per diluted share estimated impact from foreign currency is calculated using a 26% tax rate. (2) Hollister includes t
Slide 34: Abercrombie & Fitch Co.
Abercrombie & Fitch Co. ” Aberrombie | abercrombie | yoiTisrer | GIS | Reh