Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q1 2015 Earnings Presentation
18 slides from Abercrombie & Fitch's earnings presentation, May 29, 2015
Slide 1: Investor Presentation 2015 First Quarter
INVESTOR PRESENTATION 2015 FIRST QUARTER
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: Q1 Adjusted P&L Summary
Q1 ADJUSTED P&L SUMMARY* * The Q1 Adjusted P&L Summary for the current and prior period is presented on a non-GAAP basis and excludes the charges set out on page 4. A reconciliation between GAAP and non-GAAP results is included as an appendix to the presentation. 2015 % OF NET SALES 2014 % OF NET SA
Slide 4: Excluded Charges (Pre-Tax)
EXCLUDED CHARGES (PRE-TAX) 2015 Q1 Q2 Q3 Q4 YEAR TO DATE INVENTORY WRITE-DOWN $26,861 $26,861 ASSET IMPAIRMENT, STORE FIXTURES, LEASE TERMINATION AND STORE CLOSURE COSTS 10,112 10,112 CONTINUOUS PROFIT IMPROVEMENT PROGRAM 2,479 2,479 GILLY HICKS RESTRUCTURING CHARGES (1,598) (1,598) TOTAL $37,854 $3
Slide 5: Q1 Comparable Sales and Geographic Sales Mix
*Comparable sales are calculated on a constant currency basis and exclude Gilly Hicks. (1) Abercrombie includes the Company's Abercrombie & Fitch and abercrombie kids brands. Q1 COMPARABLE SALES* GEOGRAPHIC SALES MIXQ1 TOTAL COMPANY -8% GEOGRAPHIC: US -7% INTERNATIONAL -9% BRAND: ABERCROMBIE (1) -9%
Slide 6: Q1 Adjusted Operating Expense
Q1 ADJUSTED OPERATING EXPENSE* * Q1 Adjusted Operating Expense excludes the charges set out on page 4. A reconciliation between GAAP and non-GAAP results is included as an appendix to the presentation. (1) Includes rent, other landlord charges, utilities, depreciation and other occupancy expense. (2
Slide 7: Share Repurchases
SHARE REPURCHASES FY 2015 FY 2014 SHARES REPURCHASED COST AVERAGE COST SHARES REPURCHASED COST AVERAGE COST FIRST QUARTER — — — 3,825.7 $150,000 $39.21 SECOND QUARTER 1,459.4 $60,000 $41.11 THIRD QUARTER 2,039.0 $75,038 $36.80 FOURTH QUARTER — — — TOTAL — — — 7,324.1 $285,038 $38.92 7
Slide 8: Q1 Store Openings
Q1 STORE OPENINGS BRAND CENTER CITY DATE Hollister Dubai Mall Dubai, UAE 2/20/2015 A&F 360 Mall Kuwait City, Kuwait 4/2/2015 Hollister Lalaport Fujimi Fujimi, Japan 4/6/2015 A&F Outlet Mall of Savannah Pooler, GA 4/15/2015 A&F Edinburgh Premium Outlets Edinburgh, IN 4/18/2015 A&F Asheville Outlets A
Slide 9: Full Year Outlook Updates
FULL YEAR OUTLOOK UPDATES* CONTINUED HEADWINDS FROM FOREIGN CURRENCY EXCHANGE RATES CONTINUED SEQUENTIAL COMPARABLE SALES IMPROVEMENT INTO THE SECOND QUARTER AND THE SECOND HALF OF THE FISCAL YEAR GROSS MARGIN RATE FLAT TO SLIGHTLY UP OPERATING EXPENSES NOW TO BE DOWN APPROXIMATELY $40 MILLION COMPA
Slide 10: Q1 Store Count Activity
Q1 STORE COUNT ACTIVITY * Includes Asia, Australia and the Middle East. ALL BRANDS TOTAL U.S. CANADA EUROPE REST OF WORLD* START OF Q1 2015 969 799 18 121 31 OPENINGS 6 3 — — 3 CLOSINGS (13) (13) — — — END OF Q1 2015 962 789 18 121 34 A&F START OF Q1 2015 279 250 4 16 9 OPENINGS 4 3 — — 1 CLOSINGS (
Slide 11: Strategic Actions
STRATEGIC ACTIONS • CUSTOMER CENTRICITY • BRAND POSITIONING • COMPELLING AND DIFFERENTIATED ASSORTMENTS • CHANNEL OPTIMIZATION AND REACH • CONTINUOUS PROFIT IMPROVEMENT • ORGANIZATION 11
Slide 12: Customer Centricity
CUSTOMER CENTRICITY • MORE INVITING AND EASIER SHOPPING EXPERIENCE • SIMPLER AND CLEARER PRICING • ADJUSTMENTS TO INTERNATIONAL PRICING • NEW STORE FRONT AND PROTOTYPES • SEAMLESS DTC/ OMNICHANNEL EXPERIENCE • STORE MANAGEMENT INCENTIVE AND TRAINING PROGRAMS 12
Slide 13: Compelling and Differentiated Assortment
COMPELLING AND DIFFERENTIATED ASSORTMENT • BALANCING FASHION RELEVANCE, QUALITY AND VALUE • BUILDING TAILORED ASSORTMENTS BY CHANNEL • BALANCING CATEGORY OFFERINGS • EXTENDING SIZE RANGES AND EVOLVING FITS 13
Slide 14: Channel Optimization and Reach
CHANNEL OPTIMIZATION AND REACH • REPOSITIONING OF THE STORE FLEET • SELECTIVE INTERNATIONAL GROWTH • OUTLETS • WHOLESALE, FRANCHISING AND LICENSING 14
Slide 15: Continuous Profit Improvement
CONTINUOUS PROFIT IMPROVEMENT • COMPLETION OF PROFIT IMPROVEMENT INITIATIVE WITH $250 MILLION OF ANNUAL SAVINGS CAPTURED • CUMMULUATIVE CLOSURES SINCE 2010 OF APPROXIMATELY 275 U.S. STORES • IMPLEMENTATION OF CONTINUOUS PROFIT IMPROVEMENT • DISCIPLINED AND FOCUSED INVESTMENTS 15 IT/ DTC 45% STORE EN
Slide 16: Organization
ORGANIZATION 16 • BRANDED ORGANIZATION COMPLETED IN FIRST QUARTER • SUPPORTED BY NEW HIRES AND INTERNAL PROMOTIONS IN DESIGN, MERCHANDISING AND PLANNING • CLEAR MEASUREMENT AND ACCOUNTABILITY AT THE BRAND LEVEL
Slide 17: Appendix: Reconciliation of Q1 2015 Non-GAAP Financial Measures
APPENDIX: RECONCILIATION OF Q1 2015 NON-GAAP FINANCIAL MEASURES GAAP EXCLUDED CHARGES (1) ADJUSTED NON-GAAP (2) GROSS PROFIT $411,549 $26,861 $438,410 STORES AND DISTRIBUTION EXPENSE 391,638 4,688 386,950 MARKETING, GENERAL AND ADMINISTRATIVE EXPENSE 107,533 1,770 105,763 RESTRUCTURING INCOME (1,598
Slide 18: Appendix: Reconciliation of Q1 2014 Non-GAAP Financial Measures
APPENDIX: RECONCILIATION OF Q1 2014 NON-GAAP FINANCIAL MEASURES (1) Excluded Charges consist of pre-tax charges of $5.6 million related to the restructuring of the Gilly Hicks brand, $3.1 million related to the Company's profit improvement initiative, of which $0.8 million was recognized in stores a