Abercrombie & Fitch Company · NYSE:ANF
Abercrombie & Fitch — Q4 2020 Earnings Presentation
38 slides from Abercrombie & Fitch's earnings presentation, Mar 3, 2021
Slide 1: Investor Presentation: Fourth Quarter 2020
INVESTOR PRESENTATION: FOURTH QUARTER 2020
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
2 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 ri
Slide 3: Table of Contents
TABLE OF CONTENTS Safe Harbor and Other Information 2 Company Overview 4 Response to COVID-19 7 Q4 2020 and Full Year Results 11 Financial Position, Liquidity & Capital Allocation 19 Global Store Network Optimization 25 Focus Areas 30 Appendix 32
Slide 4: Abercrombie & Fitch Co.
Abercrombie & Fitch Co.
Slide 5: Brands: Abercrombie & Fitch, Hollister, Gilly Hicks
5 GILLY HICKS BY HOLLISTER Hollister also carries an intimates brand, Gilly Hicks by Hollister, which offers intimates, loungewear and sleepwear. Its products are designed to invite everyone to embrace who they are underneath it all. HOLLISTER The quintessential apparel brand of the global teen cons
Slide 6: Company Overview: Global, Omnichannel Retailer
6 FISCAL 2020 DIGITAL SALES WERE ROUGHLY $1.7 BILLION, 54% OF TOTAL NET SALES COMPANY OVERVIEW GLOBAL, OMNICHANNEL RETAILER THE COMPANY'S PRODUCTS ARE SOLD GLOBALLY, PRIMARILY THROUGH ITS COMPANY-OWNED STORE AND DIGITAL CHANNELS, AS WELL AS THROUGH VARIOUS THIRD-PARTY ARRANGEMENTS 20 CAPABILITY TO S
Slide 7: Response to COVID-19
Abercrombie & Fitch Co. Abeeombic | abersrombio | ypiTfSTeR | = \¢ RESPONSE TO COVID-19
Slide 8: Transformation Initiatives
8 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 across channels INCREASING TH
Slide 9: Focusing on the Well-Being of Associates and Customers
9 FOCUSING ON THE WELL-BEING OF ASSOCIATES AND CUSTOMERS • Requiring associates to use face coverings, depending on geographic region • Encouraging or requiring customers to use face coverings, depending on geographic region • Conducting associate wellness checks in accordance with local government
Slide 10: Response to COVID-19: Stores Currently Open
10 We plan to follow the guidance of local governments when evaluating whether further store closures will be necessary and to determine when we can reopen temporarily closed stores. Stores that are currently open may have reduced operating hours. RESPONSE TO COVID-19 640 STORES, 87% OF STORE FLEET,
Slide 11: Q4 2020 and Full Year Results
11 Q4 2020 AND FULL YEAR RESULTS
Slide 12: Management Commentary on Fourth Quarter
12 “I am proud of our execution in the fourth quarter, where we exceeded initial internal expectations. We listened and remained close to our customer, adjusting our product and messaging to align with their new reality. We drove 34% digital sales growth, expanded gross profit rate by 230 basis poin
Slide 13: Significant Items Impacting Results
13 SIGNIFICANT ITEMS IMPACTING RESULTS • Net sales for the fourth quarter and full year decreased 5% and 14%, respectively, as compared to last year, driven by the adverse impact of COVID-19 on store sales • Store occupancy expense for the fourth quarter and full year decreased $54M and $117M, respe
Slide 14: Q4 2020 Results: Net Sales
14 Q4 2020 RESULTS NET SALES ABERCROMBIE $467M DOWN 2% TO LAST YEAR 41.6% OF TOTAL NET SALES HOLLISTER $655M DOWN 8% TO LAST YEAR 58.4% OF TOTAL NET SALES EMEA $235M DOWN 8% TO LAST YEAR 21.0% OF TOTAL NET SALES UNITED STATES $788M DOWN 3% TO LAST YEAR 70.2% OF TOTAL NET SALES TOTAL COMPANY NET SALE
Slide 15: Full Year Results: Net Sales
15 FULL YEAR RESULTS NET SALES ABERCROMBIE $1.3B DOWN 12% TO LAST YEAR 41.3% OF TOTAL NET SALES HOLLISTER $1.8B DOWN 15% TO LAST YEAR 58.7% OF TOTAL NET SALES EMEA $709M DOWN 14% TO LAST YEAR 22.7% OF TOTAL NET SALES UNITED STATES $2.1B DOWN 12% TO LAST YEAR 68.1% OF TOTAL NET SALES TOTAL COMPANY NE
Slide 16: Q4 2020 Results: Operating Expense
16 GAAP NON-GAAP* Q4 2020 RESULTS OPERATING EXPENSE * Q4 non-GAAP operating expense is presented on an adjusted non-GAAP basis, and excludes the effect of certain items set out of page 33. (1) Includes operating lease costs, other landlord charges, utilities, depreciation and other occupancy expense
Slide 17: Full Year Results: Operating Expense
17 GAAP NON-GAAP* FULL YEAR RESULTS OPERATING EXPENSE * Non-GAAP operating expense is presented on an adjusted non-GAAP basis, and excludes the effect of certain items set out of page 33. (1) Includes operating lease costs, other landlord charges, utilities, depreciation and other occupancy expense.
Slide 18: Q4 2020 and Full Year Results: Income Statement
18 Q4 2020 AND FULL YEAR RESULTS INCOME STATEMENT (1) Gross profit is derived from cost of sales, exclusive of depreciation and amortization. Q4 GAAP FULL YEAR GAAP (in thousands) Q4 2020 % OF NET SALES Q4 2019 % OF NET SALES 2020 % OF NET SALES 2019 % OF NET SALES NET SALES $1,122,044 100.0% $1,184
Slide 19: Financial Position, Liquidity & Capital Allocation
19 FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATION
Slide 20: Financial Position and Liquidity Summary
20 FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATION FINANCIAL POSITION AND LIQUIDITY SUMMARY CASH & EQUIVALENTS $1.1B AS COMPARED TO $671M LAST YEAR SHORT-TERM BORROWINGS NO BORROWINGS OUTSTANDING UNDER ABL FACILITY $215M OF BORROWING AVAILABLE UNDER ABL FACILITY GROSS LONG-TERM BORROWINGS $350M O
Slide 21: Operating Cash Flow, Capex and Free Cash Flow
21 (in thousands) NET CASH PROVIDED BY OPERATING ACTIVITIES CAPITAL EXPENDITURES FREE CASH FLOW (2) FY 2015 $315,755 $143,199 $172,556 FY 2016 $185,169 $140,844 $44,325 FY 2017 $287,658 $107,001 $180,657 FY 2018 $352,933 $152,393 $200,540 FY 2019 $300,685 $202,784 $97,901 FY 2020 (1) $404,918 $101,9
Slide 22: Share Repurchases and Dividends
22 FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATION SHARE REPURCHASES AND DIVIDENDS SHARE REPURCHASES (in thousands, except for average cost) NUMBER OF SHARES COST AVERAGE COST DIVIDENDS TOTAL FY 2015 2,461 $50,033 $20.33 $55,145 $105,178 FY 2016 — $— $— $54,066 $54,066 FY 2017 — $— $— $54,392 $54
Slide 23: Balance Sheet
23 FINANCIAL POSITION, LIQUIDITY & CAPITAL ALLOCATION BALANCE SHEET (in thousands) JANUARY 30, 2021 FEBRUARY 1, 2020 CASH AND EQUIVALENTS $1,104,862 $671,267 RECEIVABLES 83,857 80,251 INVENTORIES 404,053 434,326 OTHER CURRENT ASSETS 68,857 78,905 TOTAL CURRENT ASSETS $1,661,629 $1,264,749 PROPERTY A
Slide 24: Cash Flow Statement
24 YEAR TO DATE PERIOD ENDED (in thousands) JANUARY 30, 2021 (1) FEBRUARY 1, 2020 NET CASH PROVIDED BY OPERATING ACTIVITIES (1) $404,918 59 $300,685 PURCHASES OF PROPERTY AND EQUIPMENT (101,910) (202,784) WITHDRAWAL OF RABBI TRUST ASSETS (1) 50,000 — NET CASH USED FOR INVESTING ACTIVITIES (1) $(51,9
Slide 25: Global Store Network Optimization
25 GLOBAL STORE NETWORK OPTIMIZATION
Slide 26: New Store Openings & Closings
26 NEW STORE OPENINGS & CLOSINGS* GLOBAL STORE NETWORK OPTIMIZATION 735 STORES AS OF Q4 2020 * Prior period numbers have been revised due to a change in the temporary store definition to only include store leases with original terms of 18 months or less. (1) Store count excludes one international th
Slide 27: Gross Square Footage Reduced 28% Since 2015
27 GLOBAL STORE NETWORK OPTIMIZATION GROSS SQUARE FOOTAGE REDUCED 28% SINCE 2015 HOLLISTER ABERCROMBIE TOTAL COMPANY (in thousands) U.S. INTERNATIONAL U.S. INTERNATIONAL U.S. INTERNATIONAL TOTAL FY 2015 2,856 1,183 2,634 619 5,490 1,802 7,292 FY 2020 2,309 1,219 1,311 393 3,620 1,612 5,232 % CHANGE
Slide 28: Fiscal 2020 Store Optimization Activity and Fleet Detail
28 FISCAL 2020 STORE OPTIMIZATION ACTIVITY Q4 2020 STORE FLEET DETAIL GLOBAL STORE NETWORK OPTIMIZATION STORE FLEET DETAIL 48% OF GLOBAL FLEET IN UPDATED FORMATS HOLLISTER ABERCROMBIE TOTAL COMPANY # OF STORES % OF FLEET # OF STORES % OF FLEET # OF STORES % OF FLEET LEGACY STORES 199 40% 123 52% 322
Slide 29: Flagship Store Fleet
29 GLOBAL STORE NETWORK OPTIMIZATION FLAGSHIP STORE FLEET FLAGSHIP STORE CLOSURES/ LEASE EXPIRATIONS The company ended fiscal 2019 with 15 flagships after closing five flagship locations since the beginning of fiscal 2017. In fiscal 2019, the combined 4-wall operating margin of the 15 flagships rema
Slide 30: Abercrombie & Fitch Co.
Abercrombie & Fitch Co.
Slide 31: Focus Areas for 2021
31 WE ARE EXCITED ABOUT OUR RECENT RESULTS AND THE LONG-TERM GLOBAL GROWTH OPPORTUNITY ACROSS ALL FOUR BRANDS We enter 2021 on the offense while working towards recapturing lost sales due to COVID-19. While we continue to operate in an uncertain environment, we will focus on what we can control, inc
Slide 32: Appendix
Abercrombie & Fitch Co.
Slide 33: Excluded Items
33 EXCLUDED ITEMS (in thousands) Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019 ASSET IMPAIRMENT $— $— $10,468 $2,284 $12,752 TAX EFFECT (1) — — (2,485) (1,528) (4,013) TOTAL EXCLUDED ITEMS $— $— $7,983 $756 $8,739 (in thousands) Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 ASSET IMPAIRMENT $42,928 $8,083 $6,32
Slide 34: Q4 Reconciliation of Adjusted Non-GAAP Results
34 Q4 RECONCILIATION OF ADJUSTED NON-GAAP RESULTS Q4 2020 GAAP EXCLUDED ITEMS Q4 2020 NON-GAAP ASSET IMPAIRMENT, EXCLUSIVE OF FLAGSHIP STORE EXIT CHARGES $15,597 $15,597 $— OPERATING INCOME 115,899 (15,597) 131,496 INCOME BEFORE INCOME TAXES 106,902 (15,597) 122,499 INCOME TAX EXPENSE (1) 21,646 (66
Slide 35: Full Year Reconciliation of Adjusted Non-GAAP Results
35 FULL YEAR RECONCILIATION OF ADJUSTED NON-GAAP RESULTS FY 2020 GAAP EXCLUDED ITEMS FY 2020 NON-GAAP ASSET IMPAIRMENT, EXCLUSIVE OF FLAGSHIP STORE EXIT CHARGES $72,937 $72,937 $— OPERATING (LOSS) INCOME (20,469) (72,937) 52,468 (LOSS) INCOME BEFORE INCOME TAXES (48,743) (72,937) 24,194 INCOME TAX E
Slide 36: Q4 Reconciliation of Constant Currency Results
36 Q4 RECONCILIATION OF CONSTANT CURRENCY RESULTS NET SALES Q4 2020 Q4 2019 Δ % GAAP $1,122,044 $1,184,551 (5)% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 19,511 (2)% NON-GAAP CONSTANT CURRENCY BASIS $1,122,044 $1,204,062 (7)% GROSS PROFIT Q4 2020 Q4 2019 Δ BPS (2) GAAP $679,019 $6
Slide 37: Full Year Reconciliation of Constant Currency Results
37 FULL YEAR RECONCILIATION OF CONSTANT CURRENCY RESULTS NET SALES FY 2020 FY 2019 Δ % GAAP $3,125,384 $3,623,073 (14)% IMPACT FROM CHANGES IN FOREIGN CURRENCY EXCHANGE RATES (1) — 22,459 (1)% NON-GAAP CONSTANT CURRENCY BASIS $3,125,384 $3,645,532 (14)% GROSS PROFIT FY 2020 FY 2019 Δ BPS (2) GAAP $1
Slide 38: Abercrombie & Fitch Co.
Abercrombie & Fitch Co. | wogttGter | ep rie Abercrombie & Fitch Co. Abercrombie | abercrombie | HOLUTER | Gilly thie & Fitch kids