Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q1 2021 Earnings Presentation
33 slides from Abercrombie & Fitch's earnings presentation, May 27, 2021
Slide 1: Investor Presentation: First Quarter 2021
INVESTOR PRESENTATION: FIRST QUARTER 2021
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
2 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 ri
Slide 3: Table of Contents
3 TABLE OF CONTENTS Safe Harbor and Other Information 2 Company Overview 4 Focus Areas 7 Digital Evolution 12 Global Store Network Optimization 14 Q1 2021 Results 18 Financial Position, Liquidity & Capital Allocation 24 Appendix 30
Slide 4: Company Overview
4 COMPANY OVERVIEW
Slide 5: Gilly Hicks, Social Tourist and Hollister brands
5 GILLY HICKS Hollister also carries an intimates brand, Gilly Hicks, which offers intimates, loungewear and sleepwear. Its products are designed to invite everyone to embrace who they are underneath it all. SOCIAL TOURIST Social Tourist is the creative vision of Hollister, the teen brand liberating
Slide 6: Company Overview: Global, Digitally-Led Omnichannel Retailer
6 COMPANY-OPERATED RETAIL STORES COMPANY OVERVIEW GLOBAL, DIGITALLY-LED OMNICHANNEL RETAILER THE COMPANY'S PRODUCTS ARE SOLD GLOBALLY, PRIMARILY THROUGH ITS COMPANY-OWNED DIGITAL AND STORE CHANNELS, AS WELL AS THROUGH VARIOUS THIRD-PARTY ARRANGEMENTS 24 CAPABILITY TO SHIP TO OVER 110 COUNTRIES INTER
Slide 7: Focus Areas
ae “ih i FOCUS AREAS” Abercrombie & Fitch Co.
Slide 8: Transformation initiatives and strategic priorities
8 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 growing profitably across channels INCREASING THE
Slide 9: Our Focus Areas for 2021
9 ACCELERATING DIGITAL, DATA AND TECHNOLOGY INVESTMENTS TO INCREASE AGILITY AND IMPROVE CUSTOMER EXPERIENCE INCREASING OUR MARKETING INVESTMENTS TO BUILD ON THE MOMENTUM WE SEE ACROSS BRANDS AND GEOGRAPHIES DEDICATING RESOURCES TOWARDS CONTINUING GILLY HICKS GROWTH AND LAUNCHING SOCIAL TOURIST OPTIM
Slide 10: Launch of New Brand Social Tourist
10 FOCUS AREAS LAUNCH OF NEW BRAND "SOCIAL TOURIST" THE COMPANY RECENTLY ANNOUNCED THAT SOCIAL MEDIA STARS, DIXIE AND CHARLI D'AMELIO, EXPANDED THEIR RELATIONSHIP WITH HOLLISTER TO CO-CREATE A TREND-FORWARD GLOBAL APPAREL BRAND AN EXCLUSIVE, MULTI-YEAR APPAREL AGREEMENT BETWEEN THE COMPANY AND THE D
Slide 11: How We Are Navigating COVID-19
11 FOCUS AREAS HOW WE ARE NAVIGATING COVID-19 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 temporary store closures, r
Slide 12: Digital Evolution
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Slide 13: Digitally-Led Global Retailer
13 DIGITAL EVOLUTION DIGITALLY-LED GLOBAL RETAILER * 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
Slide 14: Global Store Network Optimization
14 GLOBAL STORE NETWORK OPTIMIZATION
Slide 15: Global Store Network Optimization
15 Total stores FY17 FY18 FY19 FY20 Q1 21 * Prior period figures have been revised to reflect a change in classification of certain stores to be consistent with current presentation. GROSS SQUARE FOOTAGE (in thousands) FY 17 FY 18 FY 19 FY 20 Q1 21 6,710 6,566 6,314 5,232 5,189 GLOBAL STORE NETWORK
Slide 16: Q1 2021 Store Fleet Detail and Optimization Activity
16* Mall rating based on Green Street Advisors as of March 2021. YTD STORE OPTIMIZATION ACTIVITY Q1 2021 STORE FLEET DETAIL HOLLISTER ABERCROMBIE TOTAL COMPANY # OF STORES % OF FLEET # OF STORES % OF FLEET # OF STORES % OF FLEET LEGACY STORES 195 39% 117 50% 312 43% UPDATED FORMATS 291 58% 70 30% 36
Slide 17: New Store Openings & Closings
17 NEW STORE OPENINGS & CLOSINGS (1) Store count excludes one international third-party operated multi-brand outlet store as of each of May 1, 2021 and January 30, 2021. (2) Hollister includes the company’s Hollister and Gilly Hicks brands. Locations with Gilly Hicks carveouts within Hollister store
Slide 18: Q1 2021 Results
18 Q1 2021 RESULTS
Slide 19: Q1 2021 management commentary
19 “2021 is off to a strong start. We built on the significant progress we made in 2020, registering our best first quarter operating income since 2008. The first quarter is evidence that our shift to a digitally-led global business model is working. Total net sales grew 61% year-over-year, with dig
Slide 20: Significant Items Impacting Q1 2021 Results
20 SIGNIFICANT ITEMS IMPACTING Q1 2021 RESULTS • Net sales increased 61%, or $296M, 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. • Store occupancy expense decreased $32M, reflecting a decreas
Slide 21: Q1 2021 Results: Net Sales
21 TOTAL COMPANY NET SALES UP 61% AND 6% COMPARED TO Q1 2020 AND Q1 2019, RESPECTIVELY, TO $781M DIGITAL SALES UP 45% AND 81% TO LAST YEAR AND 2019, RESPECTIVELY, RESULTING IN Q1 2021 DIGITAL SALES OF $403M, OR 52% OF TOTAL NET SALES ABERCROMBIE $339M UP 60% TO LAST YEAR 43.4% OF TOTAL NET SALES HOL
Slide 22: Operating Expense Summary
22 GAAP NON-GAAP* * Q1 non-GAAP operating expense is presented on an adjusted non-GAAP basis, and excludes the effect of certain items set out of page 31. (1) Includes operating lease costs, other landlord charges, utilities, depreciation and other occupancy expense. (2) Includes selling payroll, st
Slide 23: Income Statement Summary
23 (1) Gross profit is derived from cost of sales, exclusive of depreciation and amortization. GAAP (in thousands) Q1 2021 % OF NET SALES Q1 2020 % OF NET SALES Q1 2019 % OF NET SALES NET SALES $781,405 100.0% $485,359 100.0% $733,972 100.0% GROSS PROFIT (1) 495,134 63.4% 264,145 54.4% 444,090 60.5%
Slide 24: Financial Position, Liquidity & Capital Allocation
24 FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATION
Slide 25: Financial Position and Liquidity Summary
25 CASH & EQUIVALENTS $909M AS COMPARED TO $704M LAST YEAR SHORT-TERM BORROWINGS NO BORROWINGS OUTSTANDING UNDER ABL FACILITY AS COMPARED TO $210M LAST YEAR $223M OF BORROWING AVAILABLE UNDER ABL FACILITY AS OF MAY 1, 2021 GROSS LONG-TERM BORROWINGS $350M OUTSTANDING AS COMPARED TO $233M LAST YEAR I
Slide 26: Cash Flow Summary
26 (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
Slide 27: Share Repurchases and Dividends
27 SHARE REPURCHASES (in thousands, except for average cost) NUMBER OF SHARES COST AVERAGE COST DIVIDENDS TOTAL FY 2016 — $— $— $54,066 $54,066 FY 2017 — $— $— $54,392 $54,392 FY 2018 2,932 $68,670 $23.42 $53,714 $122,384 FY 2019 3,957 $63,542 $16.06 $51,510 $115,052 FY 2020 1,397 $15,172 $10.86 $12
Slide 28: Condensed Consolidated Balance Sheet
28 (in thousands) MAY 1, 2021 JANUARY 30, 2021 MAY 2, 2020 CASH AND EQUIVALENTS $909,008 $1,104,862 $703,989 RECEIVABLES 107,821 83,857 88,639 INVENTORIES 388,633 404,053 426,594 OTHER CURRENT ASSETS 78,727 68,857 67,412 TOTAL CURRENT ASSETS $1,484,189 $1,661,629 $1,286,634 PROPERTY AND EQUIPMENT, N
Slide 29: Condensed Consolidated Cash Flow Statement
29 YEAR TO DATE PERIOD ENDED (in thousands) MAY 1, 2021 MAY 2, 2020 NET CASH USED FOR OPERATING ACTIVITIES $(131,350) $(140,776) PURCHASES OF PROPERTY AND EQUIPMENT (14,404) (46,990) WITHDRAWAL OF FUNDS FROM RABBI TRUST ASSETS — 50,000 NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES $(14,404) $
Slide 30: Appendix
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Slide 31: Non-GAAP Reconciliations: Net Sales, Gross Profit, Operating Income, EPS
31 NET SALES Q1 2021 Q1 2020 Δ % GAAP $781,405 $485,359 61% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 12,273 (4)% NON-GAAP CONSTANT CURRENCY BASIS $781,405 $497,632 57% GROSS PROFIT Q1 2021 Q1 2020 Δ BPS (2) GAAP $495,134 $264,145 900 IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHAN
Slide 32: Excluded Items Reconciliation Q1 2021 and Q1 2020
32 (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) Q1 2021 GAAP EXCLUDED ITEMS Q1 2021 NON-GAAP ASSET IMPAIRMENT, EXCLUSIVE OF FLAGSHIP STORE EXIT CHARGES $2,664 $2,664 $— OPERATING INCOME 57,
Slide 33: Abercrombie & Fitch Co.
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