Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q4 2023 Earnings Presentation
33 slides from Abercrombie & Fitch's earnings presentation, Mar 6, 2024
Slide 1: Investor Presentation: Fourth Quarter 2023
INVESTOR PRESENTATION: FOURTH QUARTER 2023
Slide 2: Table of Contents
TABLE OF CONTENTS Safe Harbor and Other Information 3 Company Overview 5 Q4 2023 and Full Year Results 15 Appendix 21 2
Slide 3: 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 4: Reporting and Use of GAAP and Non-GAAP Measures
REPORTING AND USE OF GAAP AND NON-GAAP MEASURES The following presentation includes certain adjusted non-GAAP financial measures. Additional details about non-GAAP financial measures and a reconciliation of GAAP financial measures to non-GAAP financial measures is included in the Appendix to this pr
Slide 5: Abercrombie & Fitch Co. is a global, digitally-led, omnichannel apparel retailer
Abercrombie & Fitch Co. is a global, digitally-led, omnichannel apparel and accessories retailer catering to kids through millennials with assortments curated for their specific lifestyle needs Our corporate purpose of 'We are here for you on the journey to being and becoming who you are' fuels our
Slide 6: Our Global Brands
OUR GLOBAL BRANDS COMPANY OVERVIEW 6
Slide 7: Abercrombie Brands: Global Net Sales
PRODUCT VOICE CUSTOMER EXPERIENCE GLOBAL NET SALES NET SALES BY CHANNEL TARGETING (FY 2023) +10% MILLENNIALS GROWTH CAGR $2.20B $1.73B $1.46B $1.56B $1.29B ~ 40% ~ POST GRAD STORES 60% DIGITAL LOVES TO TRAVEL FASHION OBSESSED DIGITALLY-LED 247 STORES GLOBALLY FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Slide 8: Hollister Brands: Global Net Sales
PRODUCT VOICE TEENS ENGAGE DIGITALLY PURCHASE CUSTOMER IN-STORE EXPERIENCE TARGETING GLOBAL NET SALES NET SALES BY GEN Z 2023 BACK TO CHANNEL W/ MILLENNIAL GROWTH +6% (FY 2023) Y/Y PARENTS $2.16B $2.15B $2.08B $1.96B $1.83B 30% ~ COMING INTO THEIR OWN DIGITAL COMFORT OBSESSED ~ 70% STORES VALUE VERS
Slide 9: Focus on Sustainable, Profitable Growth
FOCUS ON SUSTAINABLE, PROFITABLE GROWTH BUILT ON YEARS OF TRANSFORMATION Longer-Term Ambition1: $5B Sales 10%+ Op Margin 2023 Results: 2025 Target1: $4.3B Sales $4.1-$4.3B Sales 11% Op Margin 8%+ Op Margin 2022: $3.7B Sales 3% Op Margin Fiscal 2017 - 2022 2023 - 2025 STABILIZE & ALWAYS FORWARD PLAN
Slide 10: Sales & Profitability
SALES & PROFITABILITY Net Sales Operating Income (Loss) (in $ billions) (in $ millions) EXPECT EXPECT +4-6% $485 ~12% COVID $4.3 GROWTH MARGIN CLOSURE $3.6 $3.6 IMPACT $3.7 $3.7 $343 $3.5 $3.1 $127 COVID $72 $70 CLOSURE $93 IMPACT $(20) Y/Y 5% 3% 1% (14%) 19% 0% 16% OP 2% 4% 2% (1%) 9% 3% 11% GROWTH
Slide 11: Always Forward Plan
ALWAYS FORWARD PLAN PILLARS ALWAYS FORWARD ALWAYS FORWARD PLAN INTRODUCED AT PLAN JUNE 2022 INVESTOR DAY 1 EXECUTE GLOBAL BRAND GROWTH PLANS 2025 TARGETS: •Data driven approach to store expansion •Grow brand lovers through digital marketing and social selling $4.1B - $4.3B REVENUES 8%+ OPERATING MAR
Slide 12: Global Brand Growth
1 GLOBAL BRAND GROWTH PRODUCT VOICE EXPERIENCE COLLECTIONS & DIGITAL CUSTOMER GEOGRAPHIC EXTENSIONS ACQUISITION EXPANSION • Active (YPB in A&F) • Influencer Channel • Localized Physical/Digital • A&F Best Dressed Guest • Social Commerce Experiences • Graphics Licensing (Instagram, TikTok, WeChat) •
Slide 13: Enterprise-Wide Digital Revolution
2 ENTERPRISE-WIDE DIGITAL REVOLUTION • Modernize Foundation (Retail ERP, Data Infrastructure) • Consistent Omnichannel experience (Digital and In-Store) • Powerful, Modern Loyalty Program • Lead with Personalization • Fast, Digital Product Testing • Real Estate Location Analytics COMPANY OVERVIEW 13
Slide 14: Financial Discipline
3 FINANCIAL DISCIPLINE 2023 SIGNIFICANT ACHIEVEMENT TO 2025 TARGETS 2022 2023 2025 TARGET GROSS PROFIT RATE expansion NET SALES $3.7B $4.3B $4.1B-$4.3B from 2022 on improved AUR and GROSS PROFIT (1) 56.9% 62.9% 60% - 63% lower freight costs OPERATING EXPENSE (1) 54.5% 51.7% 52% - 53% OPERATING EXPEN
Slide 15: Q4 Update: $1.45B Net Sales, +13% Y/Y
GLOBAL SALES GROWTH NET SALES $1.45B 21% 2023 Y/Y Q4 UPDATE "I am incredibly proud of how we performed throughout fiscal EMEA 2023, finishing with fourth quarter year-over-year net sales growth of 21%, which exceeded +13%Y/Y APAC our January business update expectations. AMERICAS +21%Y/Y We entered
Slide 16: 2023 Q4 Net Sales Results by Segment
2023 Q4 NET SALES RESULTS BY SEGMENT Americas Net Sales EMEA Net Sales APAC Net Sales (in $ millions) (in $ millions) (in $ millions) +23% Y/Y $1,191 +13% $971 Y/Y $868 $731 $219 +21% $665 $193 Y/Y $172 $158 $138 $43 $35 $32 $32 $31 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q4 2022 Q1 2023 Q2 2023 Q3
Slide 17: 2023 Q4 Net Sales Results by Brand
2023 Q4 NET SALES RESULTS BY BRAND Total Company Net Sales Abercrombie Brands Net Sales Hollister Brands Net Sales (in $ millions) (in $ millions) (in $ millions) +21% Y/Y +35% $1,453 Y/Y +9% $1,200 $755 Y/Y $1,056 $935 $698 $560 $548 $639 $836 $436 $463 $473 $509 $400 Q4 2022 Q1 2023 Q2 2023 Q3 202
Slide 18: 2023 Q4 Gross Profit / Operating Income
2023 Q4 GROSS PROFIT/ OPERATING INCOME Gross Profit Rate Operating Income (as a % of net sales) (in $ millions) +720 bps Y/Y $ 64.9% + 136M 61.0% 62.5% 62.9% Y/Y 55.7% $223 $138 $87 $90 $34 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 • Benefit from AUR growth (app
Slide 19: 2023 Q4 Financial Position
2023 Q4 FINANCIAL POSITION CASH & EQUIVALENTS • $901M as compared to $518M last year Inventory $700M INVENTORIES $595M • $469M, down 7% from last year $600M • Clean, current inventory position with regained chase capability in 2023 $506M $493M $500M $469M $448M SHORT-TERM BORROWINGS $400M • No borro
Slide 20: 2024 Fiscal Outlook
2024 FISCAL OUTLOOK PREVIOUS FULL YEAR OUTLOOK (1) Q1 2024 Q1 OUTLOOK NET SALES UP LOW DOUBLE-DIGITS OPERATING MARGIN IN THE RANGE OF 8% TO 10%(1) EFFECTIVE TAX RATE AROUND 10%(2) FY 2024 FULL YEAR OUTLOOK NET SALES GROWTH IN THE RANGE OF 4% TO 6% OPERATING MARGIN AROUND 12% EFFECTIVE TAX RATE MID-T
Slide 21: Appendix
APPENDIX 21
Slide 22: Income Statement
INCOME STATEMENT Q4 GAAP FULL YEAR GAAP % OF % OF % OF % OF (in thousands) Q4 2023 NET SALES Q4 2022 NET SALES 2023 NET SALES 2022 NET SALES NET SALES $1,452,907 100.0% $1,199,814 100.0% $4,280,677 100.0% $3,697,751 100.0% (1) GROSS PROFIT 913,569 62.9% 668,285 55.7% 2,693,412 62.9% 2,104,538 56.9%
Slide 23: Q4 Operating Expense
Q4 OPERATING EXPENSE % OF % OF 1 YR Δ (in thousands) Q4 2023 NET SALES Q4 2022 NET SALES BPS (3) STORES AND DISTRIBUTION 499,075 34.4% 441,959 36.8% (240) MARKETING, GENERAL & ADMINISTRATIVE 193,234 13.3% 138,084 11.5% 180 TOTAL OPERATING EXPENSE - GAAP $692,309 47.6% $580,043 48.3% (70) RECONCILIAT
Slide 24: Full Year Operating Expense
FULL YEAR OPERATING EXPENSE % OF % OF 1 YR Δ (in thousands) 2023 NET SALES 2022 NET SALES BPS (3) STORES AND DISTRIBUTION 1,571,737 36.7% 1,496,962 40.5% (380) MARKETING, GENERAL & ADMINISTRATIVE 642,877 15.0% 517,602 14.0% 100 ASSET IMPAIRMENT — —% — —% — TOTAL OPERATING EXPENSE - GAAP $2,214,614 5
Slide 25: Balance Sheet
BALANCE SHEET (in thousands) FEBRUARY 3, 2024 JANUARY 28, 2023 CASH AND EQUIVALENTS $900,884 $517,602 RECEIVABLES 78,346 104,506 INVENTORIES 469,466 505,621 OTHER CURRENT ASSETS 88,569 100,289 TOTAL CURRENT ASSETS $1,537,265 $1,228,018 PROPERTY AND EQUIPMENT, NET 538,033 551,585 OPERATING LEASE RIGH
Slide 26: Statement of Cash Flows
STATEMENT OF CASH FLOWS YEAR TO DATE PERIOD ENDED (in thousands) FEBRUARY 3, 2024 JANUARY 28, 2023 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $653,422 $(2,343) PURCHASES OF PROPERTY AND EQUIPMENT (157,797) (164,566) PROCEEDS FROM THE SALE OF PROPERTY AND EQUIPMENT 615 11,891 WITHDRAWAL OF
Slide 27: Share Repurchases
SHARE REPURCHASES SINCE THE START OF 2021, THE COMPANY REPURCHASED APPROXIMATELY 15 MILLION SHARES FOR APPROXIMATELY $503 MILLION. THERE IS APPROXIMATELY 232 MILLION REMAINING UNDER OUR PREVIOUSLY AUTHORIZED SHARE REPURCHASE PROGRAM. SHARE REPURCHASES (in thousands, except NUMBER OF AVERAGE for aver
Slide 28: Full Year Reconciliation of GAAP to Non-GAAP Results
FULL YEAR RECONCILIATION OF GAAP TO NON-GAAP RESULTS STATEMENT OF OPERATIONS FY 2023 EXCLUDED FY 2023 GAAP ITEMS NON-GAAP ASSET IMPAIRMENT $4,436 $4,436 $— OPERATING INCOME 484,671 (4,436) 489,107 INCOME BEFORE INCOME TAXES 484,299 (4,436) 488,735 (1) INCOME TAX EXPENSE 148,886 (1,231) 150,117 NET I
Slide 29: Q4 Reconciliation of Constant Currency Results
Q4 RECONCILIATION OF CONSTANT CURRENCY RESULTS NET SALES Q4 2023 Q4 2022 Δ% GAAP $1,452,907 $1,199,814 21% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 5,287 0% NON-GAAP CONSTANT CURRENCY BASIS $1,452,907 $1,205,101 21% GROSS PROFIT Q4 2023 Q4 2022 Δ BPS (2) GAAP $913,569 $668,285 72
Slide 30: Full Year Reconciliation of Constant Currency Results
FULL YEAR RECONCILIATION OF CONSTANT CURRENCY RESULTS NET SALES FY 2023 FY 2022 Δ% GAAP $4,280,677 $3,697,751 16% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 6,500 0% NON-GAAP CONSTANT CURRENCY BASIS $4,280,677 $3,704,251 16% GROSS PROFIT FY 2023 FY 2022 Δ BPS (2) GAAP $2,693,412 $2
Slide 31: Q4 Reconciliation of GAAP to Non-GAAP Results
Q4 RECONCILIATION OF GAAP TO NON-GAAP RESULTS NET SALES BY BRAND AND GEOGRAPHY Q4 2022 NON-GAAP IMPACT FROM CONSTANT CHANGES IN NON-GAAP CURRENCY FOREIGN CURRENCY CONSTANT GAAP BASIS (in thousands) Q4 2023 GAAP EXCHANGE RATES (1) CURRENCY BASIS Δ% Δ% NET SALES BY REGION: (2) AMERICAS $ 1,191,259 $ 9
Slide 32: Full Year Reconciliation of GAAP to Non-GAAP Results
FULL YEAR RECONCILIATION OF GAAP TO NON-GAAP RESULTS NET SALES BY BRAND AND GEOGRAPHY FY 2022 NON-GAAP IMPACT FROM CONSTANT CHANGES IN NON-GAAP CURRENCY FOREIGN CURRENCY CONSTANT GAAP BASIS (in thousands) FY 2023 GAAP EXCHANGE RATES (1) CURRENCY BASIS Δ% Δ% NET SALES BY REGION: (2) AMERICAS $ 3,455,
Slide 33: Abercrombie & Fitch Co.
Abercrombie & Fitch Co.
Abercrombie & Fitch Company — Q4 2023 Earnings Presentation on 6ix