Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q2 2024 Earnings Presentation
28 slides from Abercrombie & Fitch's earnings presentation, Aug 28, 2024
Slide 1: Investor Presentation: Second Quarter 2024
INVESTOR PRESENTATION: SECOND QUARTER 2024
Slide 2: Table of Contents
TABLE OF CONTENTS Safe Harbor and Other Information 3 Company Overview 5 Q2 2024 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 contains forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements, including, without limitation, statements regarding our third qu
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: Global, digitally-led, omnichannel apparel and accessories 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: Company Overview
COMPANY OVERVIEW 6
Slide 7: Abercrombie & Fitch brand overview: NFL Collection
PRODUCT VOICE NFL COLLECTION CUSTOMER EXPERIENCE GLOBAL NET SALES NET SALES BY CHANNEL TARGETING +10% (FY 2023) MILLENNIALS GROWTH CAGR $2.20B $1.73B $1.56B $1.46B $1.29B ~ 40% POST GRAD STORES ~ 60% DIGITAL LOVES TO TRAVEL FASHION OBSESSED STORES DIGITALLY-LED 247 GLOBALLY (FY 2023) FY 2019 FY 2020
Slide 8: Hollister brand overview: Collegiate Graphics Shop
PRODUCT VOICE FEEL GOOD FEST COLLEGIATE GRAPHICS SHOP CUSTOMER 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 70% DIGITAL ~ COMFORT OBSESSED STORES VALUE VERSA
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) $485 EXPECT ~14% to 15% EXPECT $4.3 ~12% to 13% MARGIN COVID CLOSURE GROWTH $3.6 $3.6 IMPACT $3.7 $3.7 $343 $3.5 $3.1 $127 $72 $70 COVID CLOSURE $93 IMPACT $(20) Y/Y 5% 3% 1% (14%) 19% 0% 16% OP 2% 4% 2% (1%) 9%
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 • Graphics Licensing • Influencer Channel • Localized Physical/Digital • Activewear • Social Commerce Experiences • A&F Best Dressed Guest (Instagram, TikTok, WeChat) • Fuel Regi
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: Q2 Update
GLOBAL SALES GROWTH NET SALES $1.1B +21% Y/Y 2024 Q2 UPDATE +26%Y/Y "We delivered a strong first half of the year, and we are EMEA increasing our full-year outlook. Although we continue +16%Y/Y to operate in an increasingly APAC uncertain environment, we AMERICAS +3%Y/Y remain steadfast in executing
Slide 16: 2024 Q2 Net Sales Results by Segment
2024 Q2 NET SALES RESULTS BY SEGMENT Americas Net Sales EMEA Net Sales APAC Net Sales (in $ millions) (in $ millions) (in $ millions) +23% $1,191 Y/Y +16% Y/Y $901 $868 $820 +3% $731 $219 Y/Y $200 $172 $165 $158 $43 $36 $33 $32 $31 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2
Slide 17: 2024 Q2 Net Sales Results by Brand
2024 Q2 NET SALES RESULTS BY BRAND Total Company Net Sales Abercrombie Brands Net Sales Hollister Brands Net Sales (in $ millions) (in $ millions) (in $ millions) +17% Y/Y +21% +26% $698 Y/Y Y/Y $1,453 $755 $552 $509 $473 $449 $1,134 $548 $572 $582 $1,056 $1,021 $935 $463 Q2 2023 Q3 2023 Q4 2023 Q1
Slide 18: 2024 Q2 Gross Profit / Operating Income
2024 Q2 GROSS PROFIT/ OPERATING INCOME Gross Profit Rate Operating Income (as a % of net sales) (in $ millions) +240 bps Y/Y 64.9% 66.4% 64.9% $ 62.5% 62.9% + 86M Y/Y $223 $176 $138 $130 $90 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 • Benefit from lower raw mate
Slide 19: 2024 Q2 Financial Position
2024 Q2 FINANCIAL POSITION CASH & EQUIVALENTS Inventory • $738M as compared to $617M last year $700M INVENTORIES $595M • $540M, up 9.4% from last year $600M $538M • Clean, current inventory positioned to start the fall season $493M $500M $469M SHORT-TERM BORROWINGS $449M • No borrowings outstanding
Slide 20: Fiscal Outlook
PREVIOUS FULL YEAR OUTLOOK (1) 2024 FISCAL OUTLOOK Q3 2024 Q3 OUTLOOK NET SALES UP LOW DOUBLE-DIGITS OPERATING MARGIN IN THE RANGE OF 13% TO 14% EFFECTIVE TAX RATE MID-20S (1) The following outlook replaces all previous full year guidance. For fiscal 2024, the company now expects: FY 2024 CURRENT FU
Slide 21: Appendix
APPENDIX 21
Slide 22: Income Statement
INCOME STATEMENT GAAP % OF % OF (in thousands) Q2 2024 NET SALES Q2 2023 NET SALES NET SALES $1,133,974 100.0% $935,345 100.0% GROSS PROFIT (1) 736,262 64.9% 584,380 62.5% OPERATING EXPENSE 560,704 49.4% 497,232 53.2% OTHER OPERATING INCOME, NET (67) 0.0% (2,694) (0.3)% OPERATING INCOME 175,625 15.5
Slide 23: Balance Sheet
BALANCE SHEET (in thousands) AUGUST 3, 2024 FEBRUARY 3, 2024 JULY 29, 2023 CASH AND EQUIVALENTS $738,402 $900,884 $617,339 RECEIVABLES 115,077 78,346 112,597 INVENTORIES 539,759 469,466 493,479 OTHER CURRENT ASSETS 123,415 88,569 87,850 TOTAL CURRENT ASSETS $1,516,653 $1,537,265 $1,311,265 PROPERTY
Slide 24: Statement of Cash Flows
STATEMENT OF CASH FLOWS YEAR TO DATE PERIOD ENDED AUGUST 3, 2024 JULY 29, 2023 (in thousands) NET CASH PROVIDED BY OPERATING ACTIVITIES $260,119 $216,328 PURCHASES OF MARKETABLE SECURITIES (15,000) — PURCHASES OF PROPERTY AND EQUIPMENT (81,649) (89,780) NET CASH USED FOR INVESTING ACTIVITIES $(96,64
Slide 25: Share Repurchases
SHARE REPURCHASES SINCE THE START OF 2021, THE COMPANY REPURCHASED APPROXIMATELY 15 MILLION SHARES FOR APPROXIMATELY $533 MILLION. THERE IS APPROXIMATELY $202 MILLION REMAINING UNDER OUR PREVIOUSLY AUTHORIZED SHARE REPURCHASE PROGRAM. SHARE REPURCHASES (1) NUMBER OF AVERAGE (in thousands, except for
Slide 26: Reconciliation of GAAP to Non-GAAP Results
RECONCILIATION OF GAAP TO NON-GAAP RESULTS NET SALES BY GEOGRAPHY AND BRAND Q2 2023 NON-GAAP IMPACT FROM CONSTANT CHANGES IN FOREIGN NON-GAAP CURRENCY CURRENCY EXCHANGE CONSTANT GAAP BASIS (in thousands) Q2 2024 GAAP RATES (1) CURRENCY BASIS Δ% Δ% NET SALES BY SEGMENT: (2) AMERICAS $ 901,224 $ 731,4
Slide 27: Reconciliation of GAAP to Non-GAAP Results
RECONCILIATION OF GAAP TO NON-GAAP RESULTS STATEMENT OF OPERATIONS NET SALES Q2 2024 Q2 2023 Δ% GAAP $1,133,974 $935,345 21% (1) IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES — — 0% NON-GAAP CONSTANT CURRENCY BASIS $1,133,974 $932,975 22% GROSS PROFIT Q2 2024 Q2 2023 Δ BPS (2) GAAP $736,262
Slide 28: Abercrombie & Fitch Co.
Abercrombie & Fitch Co.
Abercrombie & Fitch Company — Q2 2024 Earnings Presentation on 6ix