Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q2 2023 Earnings Presentation
27 slides from Abercrombie & Fitch's earnings presentation, Aug 23, 2023
Slide 1: Investor Presentation: Second Quarter 2023
INVESTOR PRESENTATION: SECOND QUARTER 2023
Slide 2: Table of Contents
TABLE OF CONTENTS Safe Harbor and Other Information 3 Company Overview 4 Q2 2023 Results 14 Appendix 19 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: 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 'Being here for you on the journey to being and becoming who you are' fuels our p
Slide 5: Our Brands
OUR BRANDS COMPANY OVERVIEW 5
Slide 6: For kids through millennials
for kids through millennials
Slide 7: Our Journey
OUR JOURNEY GROWTH FOCUS, LEVERAGING TRANSFORMED LONG-TERM OPERATING MODEL 2017 2022 2023 2025 ASPIRATION STABILIZE TRANSFORM GROW TARGET GOAL REVENUE $3.7B $4.1-$4.3B $5.0B OPERATING ALWAYS MARGIN 3% FORWARD 8%+ 10%+ PLAN COMPANY OVERVIEW 7
Slide 8: Sales & Profitability History
SALES & PROFITABILITY HISTORY Fiscal Net Sales Gross Profit Rate Operating Income (Loss) (in $ billions) (as a % of net sales) (in $ millions) Decrease from 2021 primarily driven by 520 COVID basis point decline y/y CLOSURE due to elevated freight IMPACT and raw material cost 60.5% 62.3% $343 $3.6 $
Slide 9: Always Forward Plan Pillars
ALWAYS FORWARD PLAN PILLARS ALWAYS FORWARD ALWAYS FORWARD PLAN INTRODUCED AT PLAN JUNE 2022 INVESTOR DAY 1 EXECUTE FOCUSED 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 MA
Slide 10: Focused Brand Growth
1 FOCUSED BRAND GROWTH PRODUCT VOICE EXPERIENCE PRODUCT FRANCHISES DIGITAL CUSTOMER GEOGRAPHIC & EXTENSIONS ACQUISITION EXPANSION • Active (YPB in A&F) • Influencer Channel • Physical/Digital Experiences • A&F Best Dressed Guest • Social Commerce • U.S. & International Stores • Graphics Licensing (I
Slide 11: Enterprise-Wide Digital Revolution
2 ENTERPRISE-WIDE DIGITAL REVOLUTION • Modernize Foundation (Retail ERP, Data Infrastructure) • Consistency between Store and Digital experiences • Powerful, Modern Loyalty Program • Personalization • Fast, Digital Product Testing • Real Estate Location Analytics COMPANY OVERVIEW 11
Slide 12: Financial Discipline
3 FINANCIAL DISCIPLINE GROSS MARGIN expansion from 2022 on 2021 2022 2025 TARGET improved AUR and lower AUC through net NET SALES $3.7B $3.7B $4.1B-$4.3B reduction in freight and raw materials costs GROSS PROFIT (1) 62.3% 56.9% 60% - 63% OPERATING EXPENSE (1) 53.3% 54.5% 52% - 53% OPERATING EXPENSE
Slide 13: 2023 Q2 Highlights
2023 Q2 "These strong results showcase the power of our playbook and our team’s ability to align product, voice, and experience to meet our customers’ needs. Operationally, we are strategically managing inventory, leveraging chase capabilities to support demand, and ALWAYS FORWARD driving efficiency
Slide 14: 2023 Q2 Sales Results by Segment
2023 Q2 SALES RESULTS BY SEGMENT Total Americas Net Sales Total EMEA Net Sales Total APAC Net Sales (in $ millions) (in $ millions) (in $ millions) $971 +19% Y/Y +4% $714 $731 $613 $665 Y/Y +18% $193 Y/Y $165 $172 $139 $138 $35 $32 $32 $27 $27 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022
Slide 15: 2023 Q2 Sales Results by Brand
2023 Q2 SALES RESULTS BY BRAND Total Company Net Sales Abercrombie Brands Net Sales Hollister Brands Net Sales (in $ millions) (in $ millions) (in $ millions) +26% +16% $560 Y/Y +8% Y/Y $639 Y/Y $1,200 $463 $422 $436 $935 $368 $458 $473 $880 $836 $437 $805 $400 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 202
Slide 16: 2023 Q2 Gross Profit / Operating Income
2023 Q2 GROSS PROFIT/ OPERATING INCOME Gross Profit Rate Operating Income (Loss) (as a % of net sales) (in $ millions) +460 +$92M bps Y/Y Y/Y 61.0% 62.5% $87 $90 57.9% 59.2% 55.7% $34 $18 $(2) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 • Benefit from AUR growth (
Slide 17: 2023 Q2 Financial Position
2023 Q2 FINANCIAL POSITION CASH & EQUIVALENTS • $617M as compared to $370M last year Inventory $800M $742M INVENTORIES $708M $700M • $493M, down 30% from last year • Clean, current inventory position with regained chase capability $600M $506M $493M SHORT-TERM BORROWINGS $500M $448M • No borrowings o
Slide 18: 2023 Fiscal Outlook
PREVIOUS FULL YEAR OUTLOOK (1) The following outlook replaces all previous full year guidance. 2023 FISCAL OUTLOOK For fiscal 2023, the company now expects: Q3 2023 Q3 OUTLOOK NET SALES UP LOW DOUBLE-DIGITS(1) OPERATING MARGIN RANGE OF 8% TO 10%(2) EFFECTIVE TAX RATE MID-30s(3) FY 2023 CURRENT FULL
Slide 19: Appendix
APPENDIX 19
Slide 20: Income Statement
INCOME STATEMENT GAAP % OF % OF (in thousands) Q2 2023 NET SALES Q2 2022 NET SALES NET SALES $935,345 100.0% $805,091 100.0% (1) GROSS PROFIT 584,380 62.5% 465,891 57.9% OPERATING EXPENSE 497,232 53.2% 467,129 58.0% OTHER OPERATING (INCOME) EXPENSE, NET (2,694) (0.3)% 953 0.1% OPERATING INCOME (LOSS
Slide 21: Operating Expense
OPERATING EXPENSE % OF % OF 1 YR Δ (in thousands) Q2 2023 NET SALES Q2 2022 NET SALES BPS (1) STORES AND DISTRIBUTION $352,730 37.7% $340,791 42.3% (460) MARKETING, GENERAL & ADMINISTRATIVE 144,502 15.4% 124,168 15.4% — ASSET IMPAIRMENT — 0.0% 2,170 0.3% (30) TOTAL OPERATING EXPENSE - GAAP $497,232
Slide 22: Balance Sheet
BALANCE SHEET (in thousands) JULY 29, 2023 JANUARY 28, 2023 JULY 30, 2022 CASH AND EQUIVALENTS $617,339 $517,602 $369,957 RECEIVABLES 112,597 104,506 79,820 INVENTORIES 493,479 505,621 708,024 OTHER CURRENT ASSETS 87,850 100,289 104,887 TOTAL CURRENT ASSETS $1,311,265 $1,228,018 $1,262,688 PROPERTY
Slide 23: Statement of Cash Flows
STATEMENT OF CASH FLOWS YEAR TO DATE PERIOD ENDED (in thousands) JULY 29, 2023 JULY 30, 2022 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $216,328 $(259,733) PURCHASES OF PROPERTY AND EQUIPMENT (89,780) (59,582) PROCEEDS FROM THE SALE OF PROPERTY AND EQUIPMENT — 7,972 NET CASH USED FOR INVES
Slide 24: 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 (1) (in thousands, except NUMBER OF AVERAGE for
Slide 25: Reconciliation of GAAP to Non-GAAP Results
RECONCILIATION OF GAAP TO NON-GAAP RESULTS STATEMENT OF OPERATIONS NET SALES Q2 2023 Q2 2022 Δ% GAAP $935,345 $805,091 16% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 2,873 0% NON-GAAP CONSTANT CURRENCY BASIS $935,345 $807,964 16% GROSS PROFIT Q2 2023 Q2 2022 Δ BPS (2) GAAP $584,380
Slide 26: Reconciliation of GAAP to Non-GAAP Results
RECONCILIATION OF GAAP TO NON-GAAP RESULTS NET SALES BY GEOGRAPHY AND BRAND Q2 2022 NON-GAAP IMPACT FROM CONSTANT CHANGES IN FOREIGN NON-GAAP CURRENCY CURRENCY EXCHANGE CONSTANT GAAP BASIS (in thousands) Q2 2023 GAAP RATES (1) CURRENCY BASIS Δ% Δ% NET SALES BY SEGMENT: (2) AMERICAS $ 731,427 $ 613,2
Slide 27: Abercrombie & Fitch Co.
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Abercrombie & Fitch Company — Q2 2023 Earnings Presentation on 6ix