Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q1 2019 Earnings Presentation
22 slides from Abercrombie & Fitch's earnings presentation, May 30, 2019
Slide 1: Investor Presentation First Quarter 2019
INVESTOR PRESENTATION FIRST QUARTER 2019
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: Our Journey
OUR JOURNEY PHASE PHASE PHASE STABILIZING WHILE TRANSFORMING GROWING WHILE TRANSFORMING ACCELERATING GROWTH • BUILT THE FOUNDATION • COMPARABLE SALES GROWTH • EXPAND GLOBALLY • RETURNED TO GROWTH • GROSS PROFIT RATE EXPANSION • TAKE SHARE IN THE U.S. • CENTERED AROUND THE CUSTOMER • LEVERAGE EXPENSE
Slide 4: Our Transformation Initiatives
OUR TRANSFORMATION INITIATIVES 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
Slide 5: Our Fiscal 2020 Targets
OUR FISCAL 2020 TARGETS AS PRESENTED DURING OUR INVESTOR DAY ON APRIL 25, 2018 LOW SINGLE-DIGIT SALES CAGR – POSITIVE COMPARABLE SALES – GLOBAL MARKET EXPANSION MODEST GROSS PROFIT RATE EXPANSION OPERATING EXPENSE LEVERAGE DOUBLE FISCAL 2017 ADJUSTED NON-GAAP OPERATING INCOME MARGIN OF 2.9% 5
Slide 6: Q1 2019 CEO Commentary
Q1 2019 CEO COMMENTARY "We achieved our seventh consecutive quarter of positive comparable sales fueled by ongoing strength at Hollister and a return to positive comps at Abercrombie. This contributed to top-line growth, operating margin improvement and a net loss reduction compared to last year." "
Slide 7: Q1 P&L Summary
Q1 P&L SUMMARY (in thousands) % OF NET % OF NET 2019 SALES 2018 SALES NET SALES $733,972 100.0% $730,899 100.0% GROSS PROFIT (1) 444,090 60.5% 442,345 60.5% OPERATING EXPENSE 471,965 64.3% 487,108 66.6% OTHER OPERATING INCOME, NET (617) (0.1)% (2,560) (0.4)% OPERATING LOSS (27,258) (3.7)% (42,203) (
Slide 8: Q1 Adjusted P&L Summary
Q1 ADJUSTED P&L SUMMARY* (in thousands) % OF NET % OF NET 2019 SALES 2018 SALES NET SALES $733,972 100.0% $730,899 100.0% GROSS PROFIT (1) 444,090 60.5% 442,345 60.5% OPERATING EXPENSE 471,965 64.3% 481,508 65.9% OTHER OPERATING INCOME, NET (617) (0.1)% (2,560) (0.4)% OPERATING LOSS (27,258) (3.7)%
Slide 9: Excluded Items 2018
EXCLUDED ITEMS* 2018 (in thousands) Q1 Q2 Q3 Q4 FULL YEAR LEGAL CHARGES $5,600 $— $(3,005) $— $2,595 ASSET IMPAIRMENT — 8,671 — — 8,671 PRE-TAX EXCLUDED ITEMS 5,600 8,671 (3,005) — 11,266 TAX EFFECT (1) (1,541) (2,689) 1,064 683 (2,483) TAX CUTS AND JOBS ACT OF 2017 CHARGES — 2,042 405 (5,982) (3,53
Slide 10: Q1 Net Sales Increased to $734M
Q1 NET SALES INCREASED TO $734M YTD INCLUDING ADVERSE IMPACTS FROM CHANGES IN FOREIGN CURRENCY ABERCROMBIE BRAND ABERCROMBIE 41.6% 41.6% HOLLISTER ABERCROMBIE HOHOLLISTERLLISTER C CO.O. $428M $306M 58.4%58. 4% • 58.4% OF TOTAL NET SALES • 41.6% OF TOTAL NET SALES • NET SALES UP 1% FROM LAST YEAR • N
Slide 11: Q1 Positive Comparable Sales of 1%
Q1 POSITIVE COMPARABLE SALES OF 1%* YTD EXCLUDING ADVERSE IMPACTS FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ABERCROMBIE ABE41.6%RCRO MBIE 41.6% HOHOLLISTERLLISTER C CO.O. 58.4%58. 4% 2% 4% -4% HOLLISTER UNITED STATES INTERNATIONAL AINTERNATIONALBERCROMBIE 41.6% 36.0% 1% ABERCROMBIE HUNITEDOLLI
Slide 12: Q1 Operating Expense
Q1 OPERATING EXPENSE GAAP % OF NET GAAP % OF NET (in thousands) 2019 SALES 2018 SALES Δ BPS (3) STORE OCCUPANCY (1) $153,015 20.8% $162,214 22.2% (140) ALL OTHER (2) 205,341 28.0% 198,941 27.2% 80 STORES AND DISTRIBUTION 358,356 48.8% 361,155 49.4% (60) MARKETING, GENERAL & ADMINISTRATIVE 111,947 15
Slide 13: Share Repurchases and Dividends
SHARE REPURCHASES AND DIVIDENDS SHARE REPURCHASES (1) (in thousands, except NUMBER OF AVERAGE for average cost) SHARES COST COST DIVIDENDS TOTAL Q1 2019 — — — $13,246 $13,246 (1) At the end of the first quarter, the company had approximately 3.6 million shares remaining available for purchase under
Slide 14: Stores Globally as of Q1 2019
857 STORES GLOBALLY AS OF Q1 2019 EXCLUDING 16 INTERNATIONAL FRANCHISE STORES ACROSS BRANDS 122 18 CANADA EUROPE 660 9 48 UNITED STATES MIDDLE EAST ASIA 542 HOLLISTER 315 ABERCROMBIE 14
Slide 15: Q1 Store Count Activity
Q1 STORE COUNT ACTIVITY UNITED MIDDLE TOTAL COMPANY TOTAL STATES CANADA EUROPE ASIA EAST START OF Q1 2019 861 663 18 123 48 9 OPENINGS 1 1 — — — — CLOSINGS (5) (4) — (1) — — END OF Q1 2019 857 660 18 122 48 9 HOLLISTER (1) START OF Q1 2019 542 393 11 104 29 5 OPENINGS 1 1 — — — — CLOSINGS (1) (1) —
Slide 16: Q1 New Store Openings
Q1 NEW STORE OPENINGS BRAND CENTER CITY DATE HOLLISTER LAS AMERICAS PREMIUM OUTLETS SAN DIEGO, CALIFORNIA 4/19/2019 16
Slide 17: Global Store Network Optimization
GLOBAL STORE NETWORK OPTIMIZATION Q1 2019 ACTIVITY HOLLISTER ABERCROMBIE (1) TOTAL COMPANY NEW STORES 1 — 1 REMODELS 5 — 5 RIGHT-SIZES 1 3 4 TOTAL NEW EXPERIENCES 7 3 10 STORE CLOSURES (1) (4) (5) (1) Includes two right-sizes related to the abercrombie kids brand. FULL YEAR 2019 OUTLOOK (1) HOLLISTE
Slide 18: Fiscal 2019 Outlook
FISCAL 2019 OUTLOOK PREVIOUS FULL YEAR OUTLOOK CURRENT FULL YEAR OUTLOOK NET SALES (1) UP IN THE RANGE OF 2% TO 4% * CHANGES IN FOREIGN CURRENCY $15M ADVERSE IMPACT TO NET SALES $30M ADVERSE IMPACT TO NET SALES COMPARABLE SALES (2) UP LOW-SINGLE DIGITS * GROSS PROFIT RATE (3) UP SLIGHTLY * GAAP OPER
Slide 19: Appendix
Abercrombie ARF | af | wl | pit hicfoy & Fitch Co. APPENDIX
Slide 20: Q1 Adjusted Non-GAAP Reconciliation
Q1 ADJUSTED NON-GAAP RECONCILIATION 2018 EXCLUDED 2018 GAAP ITEMS NON-GAAP MARKETING, GENERAL & ADMINISTRATIVE (1) $124,897 $5,600 $119,297 OPERATING LOSS (42,203) (5,600) (36,603) LOSS BEFORE INCOME TAXES (45,221) (5,600) (39,621) INCOME TAX BENEFIT (2) (3,713) (1,541) (2,172) NET LOSS $(42,461) $(
Slide 21: Relaunch of Iconic Fierce Fragrance
RELAUNCH OF ICONIC FIERCE FRAGRANCE THE CAMPAIGN HAS GARNERED OVER 300 MILLION MEDIA IMPRESSIONS SINCE ITS FEBRUARY INTRODUCTION. FIERCE HAS ALWAYS BEEN POPULAR, BUT AFTER THE RELAUNCH, THE COMPANY SAW ITS BEST COMP PERFORMANCE IN OVER FIVE YEARS. 21
Slide 22: Abercrombie ARE | at | a | hiheg
Abercrombie ARE | at | a | 9 hiheg & Fitch Co. Abercrombie & Fitch Co. Abercrombie abercrombie | HOLLISTER | 9% bichey & Fitch kids