Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q4 2021 Earnings Presentation
37 slides from Abercrombie & Fitch's earnings presentation, Mar 3, 2022
Slide 1: Investor Presentation: Fourth Quarter 2021
INVESTOR PRESENTATION: FOURTH QUARTER 2021
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: Table of Contents
Safe Harbor and Other Information 2 Company Overview 4 Focus Areas 7 Digital Evolution 11 Global Store Network Optimization 13 Q4 2021 and Full Year Results 17 Financial Position, Liquidity & Capital Allocation 25 Appendix 31 TABLE OF CONTENTS
Slide 4: Company Overview
Abercrombie & Fitch Co. COMPANY OVERVIEW
Slide 5: Our Five Global Brands
5 COMPANY OVERVIEWOUR FIVE GLOBAL BRANDS A global specialty retailer of quality, comfortable, made-to- play favorites, abercrombie kids sees the world through kids’ eyes, where play is life and every day is an opportunity to be anything and better everything. The quintessential apparel brand of the
Slide 6: Global, Digitally-Led Omnichannel Retailer
6 ~90% 5 FISCAL 2021 DIGITAL SALES WERE ROUGHLY $1.7 BILLION, 47% OF TOTAL NET SALES 24 GLOBAL BRANDS INTERNATIONAL THIRD-PARTY OPERATED STORES COMPANY-OPERATED RETAIL STORES WHOLESALE PARTNERSHIPS, PRIMARILY INTERNATIONAL OF GLOBAL STORE FLEET WITH SHIP-FROM-STORE AND PURCHASE-ONLINE- PICK-UP-IN-ST
Slide 7: Focus Areas
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Slide 8: Focus Areas
FOCUS AREAS 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 OMNI-CHANNEL CAPABILITIES • Creating best-in-class customer experiences while growing profitably across channels INC
Slide 9: Successfully Executed to 2021 Focus Areas
SUCCESSFULLY EXECUTED TO 2021 FOCUS AREAS 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 ACCELERATING GROWTH OF G
Slide 10: Focusing on the Well-Being of Associates and Customers
10 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 ensuring all stores follow local mandates relating to face coverings, soc
Slide 11: Digital Evolution
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Slide 12: Digital Evolution: Investing to Support Transformation
* 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 unprecedented period. INVESTMENTS IN DIGITAL AND OMNICHANNEL CAPABILITIES OF $150M+ FISCAL 2018
Slide 13: Global Store Network Optimization
13 GLOBAL STORE NETWORK OPTIMIZATION
Slide 14: Stores as of FY21, New Store Openings & Closings
729 STORES AS OF FY21 NEW STORE OPENINGS & CLOSINGS (1) Store count excludes one international third-party operated multi-brand outlet store as of January 29, 2022. (2) Locations with Gilly Hicks carveouts within Hollister stores are represented as a single store count. Excludes 9 international fran
Slide 15: Removed 1.7M Gross Square Feet Since 2017
REMOVED 1.7M GROSS SQUARE FEET GLOBALLY SINCE 2017; EXPECT TO SEE NET STORE OPENINGS IN 2022 Total stores FY17 FY18 FY19 FY20 FY21 * 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 tho
Slide 16: 91% of U.S. Stores in A/B Malls; Repositioning Fleet
91% OF U.S. STORES LOCATED IN A/B MALLS; CONTINUE TO REPOSITION GLOBAL FLEET * Mall rating based on Green Street Advisors as of March 2022. YTD STORE OPTIMIZATION ACTIVITY Q4 2021 STORE FLEET DETAIL HOLLISTER ABERCROMBIE TOTAL COMPANY # OF STORES % OF FLEET # OF STORES % OF FLEET # OF STORES % OF FL
Slide 17: Q4 2021 and Full Year Results
17 Q4 2021 AND FULL YEAR RESULTS
Slide 18: 2021 Management Commentary
“2021 is a testament to the fundamental changes we have made to strengthen our foundation and improve our profitability. For the year, we delivered: Net sales of $3.7 billion with 47% digital penetration; a double-digit AUR growth rate; reported and adjusted operating income of $343 million and $355
Slide 19: Q4 2021 Results: Significant Items Impacting Results
Q4 2021 RESULTS SIGNIFICANT ITEMS IMPACTING RESULTS • Net sales for the fourth quarter and full year increased 4% and 19%, respectively, as compared to last year, with full year increases in stores and digital sales. • Gross profit rate for the fourth quarter declined 220 basis points as compared to
Slide 20: Q4 2021 Net Sales Results
ABERCROMBIE $493M UP 6% TO LAST YEAR 42.4% OF TOTAL NET SALES HOLLISTER $669M UP 2% TO LAST YEAR 57.6% OF TOTAL NET SALES EMEA $226M DOWN 4% TO LAST YEAR 19.5% OF TOTAL NET SALES UNITED STATES $842M UP 7% TO LAST YEAR 72.5% OF TOTAL NET SALES TOTAL COMPANY NET SALES UP 4% TO $1.2B Q4 2021 DIGITAL SA
Slide 21: Full Year 2021 Net Sales Results
ABERCROMBIE $1.6B UP 21% TO LAST YEAR 42.1% OF TOTAL NET SALES HOLLISTER $2.1B UP 17% TO LAST YEAR 57.9% OF TOTAL NET SALES EMEA $755M UP 6% TO LAST YEAR 20.3% OF TOTAL NET SALES UNITED STATES $2.7B UP 25% TO LAST YEAR 71.4% OF TOTAL NET SALES TOTAL COMPANY NET SALES UP 19% TO $3.7B FULL YEAR DIGITA
Slide 22: Q4 Operating Expense GAAP and Non-GAAP
GAAP NON-GAAP* * Q4 non-GAAP operating expense is presented on an adjusted non-GAAP basis, and excludes the effect of certain items set out of page 32. (1) Includes operating lease costs, other landlord charges, utilities, depreciation and other occupancy expense. (2) Includes selling payroll, store
Slide 23: Full Year Operating Expense GAAP and Non-GAAP
GAAP NON-GAAP* * Non-GAAP operating expense is presented on an adjusted non-GAAP basis, and excludes the effect of certain items set out of page 32. (1) Includes operating lease costs, other landlord charges, utilities, depreciation and other occupancy expense. (2) Includes selling payroll, store ma
Slide 24: Q4 and Full Year GAAP Income Statement
(1) Gross profit is derived from cost of sales, exclusive of depreciation and amortization. Q4 GAAP FULL YEAR GAAP (in thousands) Q4 2021 % OF NET SALES Q4 2020 % OF NET SALES 2021 % OF NET SALES 2020 % OF NET SALES NET SALES $1,161,353 100.0% $1,122,044 100.0% $3,712,768 100.0% $3,125,384 100.0% GR
Slide 25: Financial Position, Liquidity & Capital Allocation
25 FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATION
Slide 26: Financial Position and Liquidity Summary
CASH & EQUIVALENTS $823M AS COMPARED TO $1,105M LAST YEAR SHORT-TERM BORROWINGS NO BORROWINGS OUTSTANDING UNDER ABL FACILITY $248M OF BORROWING AVAILABLE UNDER ABL FACILITY GROSS LONG-TERM BORROWINGS $308M OUTSTANDING AS COMPARED TO $350M LAST YEAR INVENTORIES $526M UP 30% FROM LAST YEAR DUE TO HIGH
Slide 27: Cash Flow Summary
(in thousands) NET CASH PROVIDED BY OPERATING ACTIVITIES CAPITAL EXPENDITURES FREE CASH FLOW (2) 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 FY 2021 $273,997 $96,979 $177,
Slide 28: Balance Sheet
(in thousands) JANUARY 29, 2022 JANUARY 30, 2021 CASH AND EQUIVALENTS $823,139 $1,104,862 RECEIVABLES 69,102 83,857 INVENTORIES 525,864 404,053 OTHER CURRENT ASSETS 89,654 68,857 TOTAL CURRENT ASSETS $1,507,759 $1,661,629 PROPERTY AND EQUIPMENT, NET 508,336 550,587 OPERATING LEASE RIGHT-OF-USE ASSET
Slide 29: Share Repurchases and Dividends
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 $12,55
Slide 30: Cash Flow Statement
YEAR TO DATE PERIOD ENDED (in thousands) January 29, 2022 January 30, 2021 NET CASH PROVIDED BY OPERATING ACTIVITIES (1) $273,997 5 9 $404,918 PURCHASES OF PROPERTY AND EQUIPMENT (96,979) (101,910) WITHDRAWAL OF RABBI TRUST ASSETS (1) — 50,000 NET CASH USED FOR INVESTING ACTIVITIES (1) $(96,979) $(5
Slide 31: Appendix
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Slide 32: Excluded Items
(in thousands) Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 ASSET IMPAIRMENT $42,928 $8,083 $6,329 $— $57,340 TAX EFFECT (1) (4,432) 1,166 (369) — — TOTAL EXCLUDED ITEMS $38,496 $9,249 $5,960 $— $57,340 (in thousands) Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 ASSET IMPAIRMENT $2,664 $786 $6,749 $1,901 $12,
Slide 33: Q4 Reconciliation of Adjusted Non-GAAP Results
Q4 RECONCILIATION OF ADJUSTED NON-GAAP RESULTS Q4 2021 GAAP EXCLUDED ITEMS Q4 2021 NON-GAAP ASSET IMPAIRMENT, EXCLUSIVE OF FLAGSHIP STORE EXIT CHARGES $1,901 $1,901 $— OPERATING INCOME 98,133 (1,901) 100,034 INCOME BEFORE INCOME TAXES 91,174 (1,901) 93,075 INCOME TAX EXPENSE (1) 23,348 (373) 23,721
Slide 34: FY Reconciliation of Adjusted Non-GAAP Results
FY 2021 GAAP EXCLUDED ITEMS FY 2021 NON-GAAP ASSET IMPAIRMENT, EXCLUSIVE OF FLAGSHIP STORE EXIT CHARGES $12,100 $12,100 $— OPERATING INCOME 343,084 (12,100) 355,184 INCOME BEFORE INCOME TAXES 308,974 (12,100) 321,074 INCOME TAX EXPENSE (1) 38,908 (2,421) 41,329 NET INCOME $263,010 $(9,679) $272,689
Slide 35: Q4 Constant Currency Reconciliation
NET SALES Q4 2021 Q4 2020 Δ % GAAP $1,161,353 $1,122,044 4% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — (6,591) (1)% NON-GAAP CONSTANT CURRENCY BASIS $1,161,353 $1,115,453 4% GROSS PROFIT Q4 2021 Q4 2020 Δ BPS (2) GAAP $677,132 $679,019 (220) IMPACT FROM CHANGES IN FOREIGN CURRENCY
Slide 36: Full Year Constant Currency Reconciliation
NET SALES FY 2021 FY 2020 Δ % GAAP $3,712,768 $3,125,384 19% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 25,927 1% NON-GAAP CONSTANT CURRENCY BASIS $3,712,768 $3,151,311 18% GROSS PROFIT FY 2021 FY 2020 Δ BPS (2) GAAP $2,311,995 $1,891,205 180 IMPACT FROM CHANGES IN FOREIGN CURRENCY
Slide 37: Abercrombie & Fitch Co.
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