Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — TAG 7th Annual Spring Consumer Conference 2015
22 slides from Abercrombie & Fitch's conference presentation, Mar 26, 2015
Slide 1: TAG 7th Annual Spring Consumer Conference
TAG 7th ANNUAL SPRING CONSUMER CONFERENCE MARCH 24, 2015
Slide 2: Safe Harbor Statement
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: Financial Results | Adjusted P&L Summary
FINANCIAL RESULTS | ADJUSTED P&L SUMMARY* 2014 % OF NET SALES 2013 % OF NET SALES $ $NET SALES 3,744,030 100.00% 4,116,897 100.00% GROSS PROFIT 2,313,570 61.80% 2,575,435 62.60% OPERATING EXPENSE 2 137 116 57 10% 2 375 632 57 70% , , . , , . OPERATING INCOME 191,693 5.10% 222,877 5.40% NET INCOME $1
Slide 4: Financial Results | Comparable Sales
FINANCIAL RESULTS | COMPARABLE SALES* 7% 5% 10% 0% 5% -1% 8%10% -5% -11% - -15% - 2010 2011 2012 2013 2014 (1) 4 *Comparable sales are calculated on a constant currency basis and beginning in Fiscal 2012 include direct-to-consumer. (1) Fiscal 2014 comparable sales exclude Gilly Hicks.
Slide 5: Financial Results | Adjusted EPS
FINANCIAL RESULTS | ADJUSTED EPS* $3.50 $4.00 $2 00 $2.50 $3.00 $1.00 $1.50 . $- $0.50 2009 2010 2011 2012 2013 2014 NON-GAAP EPS $1.12 $2.05 $2.31 $2.90 $1.91 $1.54 5 * Adjusted EPS is presented on a non-GAAP basis from continuing operations, excluding asset impairment, lease termination, store clo
Slide 6: Financial Results | 2014 Takeaways
FINANCIAL RESULTS | 2014 TAKEAWAYS • TRANSFORMATION TO A BRANDED ORGANIZATION – FOCUSED ACCOUNTABILITY – BRAND DIFFERENTIATION • GRADUALISM IN ASSORTMENT CHANGES • STORE FRONT AND U.K. PRICE TESTS • OMNI-CHANNEL CAPABILITIESCHANNE CAPABILITIE • INITIAL STEPS WITH WHOLESALING, FRANCHISING AND LICENSI
Slide 7: Strategic Priorities
STRATEGIC PRIORITIES STORE PRODUCTIVITY DTC/ OMNI-CHANNEL BRAND REACH ORGANIZATIONALCOST STRUCTURE MANAGEMENT 7
Slide 8: Strategic Priorities | Store Productivity
STRATEGIC PRIORITIES | STORE PRODUCTIVITY PRICING CUSTOMER EXPERIENCE EVOLVING MERCHANDISE STORE STORE PRODUCTIVITY ASSORTMENT CLOSURES 8
Slide 9: Store Productivity | Evolving the Assortment
STORE PRODUCTIVITY | EVOLVING THE ASSORTMENT • BALANCING FASHION RELEVANCE, QUALITY AND VALUE • BUILDING TAILORED ASSORTMENTS • BALANCING CATEGORY OFFERINGS • BUYING WITH GREATER CONVICTION 9
Slide 10: Store Productivity | Logo Contribution Impact
STORE PRODUCTIVITY | LOGO CONTRIBUTION IMPACT Q1 Q2 Q3 Q4 LOGO CONTRIBUTION IMPACT TO COMPARABLE SALES • CONTRIBUTED -12% OF THE -10% COMPARABLE SALES IN Q3 AND Q4 -5% -3% -1% •NEGATIVE LOGO HEADWIND CONTINUING IN THE FIRST HALF OF FISCAL 2015 FINDING THE RIGHT BALANCE WITH -7% -12% -12% -5% • FASHI
Slide 11: Store Productivity | Pricing
STORE PRODUCTIVITY | PRICING • GLOBAL PRICING FOCUS • SIMPLER PRICING AND CLEARER PROMOTIONAL CLEARE MESSAGES • U K PRICE TEST ROLL OUT. . • ESSENTIALS AND MUST-HAVES 11
Slide 12: Store Productivity | Customer Experience
STORE PRODUCTIVITY | CUSTOMER EXPERIENCE • MORE INVITING AND EASIER SHOPPING EXPERIENCE • HOLLISTER STORE FRONTS • IN-STORE ENVIRONMENT • TESTING NEW STORE FORMATSTESTIN STOR FORMAT • STORE ASSOCIATE TRAINING AND INCENTIVE PROGRAMS 12
Slide 13: Store Productivity | U.S. Store Closures
STORE PRODUCTIVITY | U.S. STORE CLOSURES* • CLOSED 51 U.S. STORES IN FISCAL 2014 • CUMULATIVE CLOSURES SINCE 2010 OF APPROXIMATELY 275 U.S. STORES • EXPECT TO CLOSE APPROXIMATELY 60 STORES IN FISCAL 2015 • NEARLY 70% OF U S LEASES EXPIRE OVER THE NEXT THREE YEARSNEARL 70 . . LEASE EXPIR OVE TH EX TH
Slide 14: Store Productivity | European Stores Sales per Gross Foot
STORE PRODUCTIVITY | EUROPEAN STORES SALES PER GROSS FOOT HAVE $1,116 $1 100 SALES PER GROSS SQUARE FOOT* • DECLINED BUT ARE STILL HEALTHLY $965 $862 $900 $1,000 , • OVER 90% OF EUROPEAN STORES OPERATE AT FOUR-WALL EBITDA MARGINS ABOVE 20% $735 $604 $600 $700 $800 $390 $463 $485 $417 $381 $400 $500
Slide 15: Strategic Priorities | DTC/Omni-Channel
STRATEGIC PRIORITIES | DTC/ OMNI-CHANNEL • ENSURE CONSISTENT SEAMLESS EXPERIENCE SITE AND MOBILE OPTIMIZATION• OPTIMIZATIO • OVER 40 LOCALIZED SITES IN 10 LANGUAGES • OMNI-CHANNEL CAPABILITIES 15
Slide 16: Strategic Priorities | Cost Management
STRATEGIC PRIORITIES | COST MANAGEMENT CUMULATIVE ANNUAL PROFIT IMPROVEMENT SAVINGS • $250 MILLION IN CUMULATIVE SAVINGS 8% SUPPLY CHAIN HOME OFFICE (BY WORKSTREAM) • REDUCING AVERAGE UNIT COST 21% • “PRODUCTIVITY AS A WAY OF LIFE” 19% 52% NON-MERCHANDISE & MARKETING EXPENSES STORE OPERATIONS 16
Slide 17: Strategic Priorities | Capital Expenditures
STRATEGIC PRIORITIES | CAPITAL EXPENDITURES FISCAL 2015 CAPITAL EXPENDITURES • DISCIPLINED CAPITAL ALLOCATIONS 21% IT/ DTC NEW STORES • CAPITAL EXPENDITURES OF AROUND $150 MILLION IN FISCAL 2015 45% • FOCUSED INVESTMENTS TO SUPPORT 34% INVESTMENT STRATEGIC PRIORITIES STORE ENHANCEMENTS 17
Slide 18: Strategic Priorities | Brand Reach
STRATEGIC PRIORITIES | BRAND REACH SELECTIVE INTERNATIONAL• SELECTIV INTERNATIONA GROWTH • OUTLETS • WHOLESALE, FRANCHISING AND LICENSING ABERCROMBIE & FITCH / abercrombie kids EXPECTED 2015 INTERNATIONAL STORES 18 HOLLISTER CO.
Slide 19: Strategic Priorities | Organizational Structure
STRATEGIC PRIORITIES | ORGANIZATIONAL STRUCTURE • COMPLETING TRANSITION TO A FULLY BRANDED MODEL • INCREASED ACCOUNTABILITY • INCENTIVE COMPENSATION ALIGNED WITHINCENTIV BRAND PERFORMANCE 19
Slide 20: 2015 Outlook
2015 OUTLOOK* • SIGNIFICIANT FX HEADWIND • CONTINUED PRESSURE FROM REDUCED LOGO, PARTICULARLY IN THE FIRST HALF OF THE YEAR • GROSS MARGIN FLAT TO SLIGHTLY UP • CAPITAL EXPENDITURES OF AROUND $150 MILLION *O tl k f th f ll d t i l d h l t d t t i i t l t i ti t l fit i t t t t i 20 u oo or e u year
Slide 21: 2015 Outlook | Operating Expenses
2015 OUTLOOK | OPERATING EXPENSES 21
Slide 22: Abercrombie
Abercrombie abercrombie
Abercrombie & Fitch — TAG 7th Annual Spring Consumer Conference 2015 on 6ix