Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q3 2023 Earnings Presentation
28 slides from Abercrombie & Fitch's earnings presentation, Nov 21, 2023
Slide 1: Investor Presentation: Third Quarter 2023
INVESTOR PRESENTATION: THIRD QUARTER 2023
Slide 2: Table of Contents
TABLE OF CONTENTS Safe Harbor and Other Information 3 Company Overview 5 Q3 2023 Results 15 Appendix 20 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 fourth q
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 'Being here for you on the journey to being and becoming who you are' fuels our c
Slide 6: Our Brands
OUR BRANDS COMPANY OVERVIEW 6
Slide 7: For kids through millennials
for kids through millennials
Slide 8: Our Journey
OUR JOURNEY GROWTH FOCUS, LEVERAGING TRANSFORMED OPERATING MODEL LONG-TERM 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 8
Slide 9: 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 10: 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 11: 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 • Localized Physical/Digital • A&F Best Dressed Guest • Social Commerce Experiences • Graphics Licensing (Instagram, TikTok, We
Slide 12: 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 12
Slide 13: Financial Discipline
3 FINANCIAL DISCIPLINE GROSS PROFIT RATE 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 EXP
Slide 14: Q3 2023 Update
GLOBAL SALES GROWTH $ NET SALES 1.06B +20% Q3 Y/Y 2023 UPDATE "Our strong third quarter results, with net sales and EMEA operating margin well- exceeding our expectations, +14%Y/Y speak to the power of our APAC playbook working globally AMERICAS +13%Y/Y across our brand portfolio. +22%Y/Y Entering t
Slide 15: 2023 Q3 Net Sales Results by Segment
2023 Q3 NET SALES RESULTS BY SEGMENT Americas Net Sales EMEA Net Sales APAC Net Sales (in $ millions) (in $ millions) (in $ millions) +22% Y/Y $971 $868 $714 $731 +14% $665 Y/Y +13% $193 Y/Y $172 $158 $139 $138 $35 $32 $32 $31 $27 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q3 2022 Q4 2022 Q1 2023 Q2 20
Slide 16: 2023 Q3 Net Sales Results by Brand
2023 Q3 NET SALES RESULTS BY BRAND Total Company Net Sales Abercrombie Brands Net Sales Hollister Brands Net Sales (in $ millions) (in $ millions) (in $ millions) +30% Y/Y +20% +11% Y/Y $560 $548 Y/Y $639 $1,200 $463 $1,056 $422 $436 $509 $935 $458 $473 $880 $836 $400 Q3 2022 Q4 2022 Q1 2023 Q2 2023
Slide 17: 2023 Q3 Gross Profit / Operating Income
2023 Q3 GROSS PROFIT/ OPERATING INCOME Gross Profit Rate Operating Income (as a % of net sales) (in $ millions) +570 $ + 120M bps Y/Y Y/Y 62.5% 64.9% 59.2% 61.0% $138 55.7% $87 $90 $34 $18 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 • Benefit from AUR growth (appr
Slide 18: 2023 Q3 Financial Position
2023 Q3 FINANCIAL POSITION CASH & EQUIVALENTS • $649M as compared to $257M last year Inventory $800M $742M INVENTORIES $700M • $595M, down 20% from last year • Clean, current inventory position with regained chase capability in 2023 $595M $600M $506M $493M SHORT-TERM BORROWINGS $500M $448M • No borr
Slide 19: Fiscal Outlook
PREVIOUS FULL YEAR OUTLOOK (1) 2023 FISCAL OUTLOOK Q4 2023 Q4 OUTLOOK NET SALES UP LOW DOUBLE-DIGITS (1) OPERATING MARGIN IN THE RANGE OF 12% TO 14%(2) EFFECTIVE TAX RATE AROUND 30%(3) The following outlook replaces all previous full year guidance. For fiscal 2023, the company now expects: FY 2023 C
Slide 20: Appendix
APPENDIX 20
Slide 21: Income Statement
INCOME STATEMENT GAAP % OF % OF (in thousands) Q3 2023 NET SALES Q3 2022 NET SALES NET SALES $1,056,431 100.0% $880,084 100.0% (1) GROSS PROFIT 685,669 64.9% 520,816 59.2% OPERATING EXPENSE 546,393 51.7% 504,278 57.3% OTHER OPERATING LOSS (INCOME), NET 1,256 0.1% (1,005) (0.1)% OPERATING INCOME 138,
Slide 22: Operating Expense
OPERATING EXPENSE % OF % OF 1 YR Δ (in thousands) Q3 2023 NET SALES Q3 2022 NET SALES BPS (1) STORES AND DISTRIBUTION $383,883 36.3% $367,333 41.7% (540) MARKETING, GENERAL & ADMINISTRATIVE 162,510 15.4% 133,201 15.1% 30 ASSET IMPAIRMENT — 0.0% 3,744 0.4% (40) TOTAL OPERATING EXPENSE - GAAP $546,393
Slide 23: Balance Sheet
BALANCE SHEET OCTOBER 28, 2023 JANUARY 28, 2023 OCTOBER 29, 2022 (in thousands) CASH AND EQUIVALENTS $649,489 $517,602 $257,332 RECEIVABLES 96,762 104,506 108,468 INVENTORIES 595,067 505,621 741,963 OTHER CURRENT ASSETS 100,085 100,289 112,602 TOTAL CURRENT ASSETS $1,441,403 $1,228,018 $1,220,365 PR
Slide 24: Statement of Cash Flows
STATEMENT OF CASH FLOWS YEAR TO DATE PERIOD ENDED OCTOBER 28, OCTOBER 29, (in thousands) 2023 2022 NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES $350,142 $(301,194) PURCHASES OF PROPERTY AND EQUIPMENT (128,601) (120,282) PROCEEDS FROM THE SALE OF PROPERTY AND EQUIPMENT 615 11,891 WITHDRAWAL O
Slide 25: 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) 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 Q3 2022 NON-GAAP IMPACT FROM CONSTANT CHANGES IN FOREIGN NON-GAAP CURRENCY CURRENCY EXCHANGE CONSTANT GAAP BASIS (in thousands) Q3 2023 GAAP RATES (1) CURRENCY BASIS Δ% Δ% NET SALES BY SEGMENT: (2) AMERICAS $ 867,566 $ 713,8
Slide 27: Reconciliation of GAAP to Non-GAAP Results
RECONCILIATION OF GAAP TO NON-GAAP RESULTS STATEMENT OF OPERATIONS NET SALES Q3 2023 Q3 2022 Δ% GAAP $1,056,431 $880,084 20% (1) IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES — 6,937 (1)% NON-GAAP CONSTANT CURRENCY BASIS $1,056,431 $887,021 19% GROSS PROFIT Q3 2023 Q3 2022 Δ BPS (2) GAAP $6
Slide 28: Abercrombie & Fitch Co.
Abercrombie & Fitch Co. 5 ; pv . = ercrombie Si Abercrombie | abercrombie | ygiTfsteR | GIELY | RQRBK
Abercrombie & Fitch Company — Q3 2023 Earnings Presentation on 6ix