Exhibit 99.1
ABERCROMBIE & FITCH CO. REPORTS
RECORD FOURTH QUARTER PROFITS
NEW ALBANY, OHIO, FEBRUARY 15, 2005: Abercrombie & Fitch Co. (NYSE: ANF) today
reported unaudited results which reflected record net income of $104.5 million
and net income per share on a fully diluted basis for the fourth quarter ended
January 29, 2005 of $1.15.
FOURTH QUARTER HIGHLIGHTS
o Total Company net sales increased 23% to $687.3 million; comparable
store sales increased 9%.
o Abercrombie & Fitch fourth quarter net sales increased 6% to $396.4
million; Abercrombie & Fitch comparable store sales increased by 4%.
o Hollister fourth quarter net sales increased 74% to $210.2 million;
Hollister comparable store sales increased by 19%.
o The Company's gross income rate was 49.0%, an increase of 240 basis
points versus last year's fourth quarter rate.
o The Company's operating profit increased 10% to $170.6 million,
reflecting a 24.8% operating margin.
o Net income per share on a fully diluted basis rose 19% to $1.15 from
$0.97 in fiscal 2003.
o Abercrombie & Fitch Co. repurchased 5.2 million shares of its Class A
Common Stock.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie
& Fitch Co., said:
"I am extremely pleased with the progress we have made in recent months. We have
delivered outstanding fashion, continued to improve the quality of product as
well as the presentation, environment and service level in our stores. The
expenditures we made to achieve these results have been more than compensated by
improved sales and gross margin and have allowed us to deliver record fourth
quarter profits. Looking forward to 2005, we will continue to invest in our
merchandising and design teams as well as in the recruiting, training and
retention of store management and staff. We will begin international expansion
in 2005 as we open our first stores in Canada and the development of RUEHL will
proceed at a measured pace. In closing, I am very pleased with our business and
I am optimistic about our opportunities for profitable growth in 2005 and
beyond."
FOURTH QUARTER FINANCIAL RESULTS
Net sales for the thirteen weeks ended January 29, 2005 increased 23% to $687.3
million from $560.4 million for the thirteen weeks ended January 31, 2004.
Comparable store sales increased 9% in the quarter versus last year.
The gross income rate for the quarter was 49.0%, up 240 basis points from last
year's fourth quarter rate of 46.6%.
Net income for the quarter increased 11% to $104.5 million from $94.5 million
for the fourth quarter of fiscal 2003.
Net income per share on a fully diluted basis for the fourth quarter ended
January 29, 2005 rose 19% to $1.15 versus $0.97 for the comparable period last
year.
During the fourth quarter of fiscal 2004, Abercrombie & Fitch Co. repurchased
5.2 million shares of its Class A Common Stock as part of its previously
announced stock repurchase program. The total cost of the common stock
repurchased was $236.8 million.
2004 FISCAL YEAR FINANCIAL RESULTS
Net sales for the 2004 fiscal year increased 18% to $2.021 billion from $1.708
billion last year. Comparable store sales increased 2% for the year.
The gross income rate for the year was 45.1%, up 300 basis points from last
year's rate of 42.1%.
Net income for the year increased 6% to $217.5 million from $205.7 million for
fiscal 2003.
Net income for fiscal 2004 includes a $25.6 million ($0.27 per fully diluted
share) non-recurring net of tax charge that reflects the previously announced
settlement of three related diversity lawsuits.
Net income per share on a fully diluted basis for the fiscal year ended January
29, 2005 rose 11% to $2.29 versus $2.07 for last year.
During the year, Abercrombie & Fitch Co. repurchased 11.2 million shares of its
Class A Common Stock. The total cost of the common stock repurchased was $434.7
million, an average price of $38.98 per share.
2005 OUTLOOK
In the current fiscal year, the Company plans to increase gross square-footage
by approximately 9% by the end of fiscal 2005 primarily through opening flagship
Abercrombie & Fitch stores in New York, Los Angeles and through the addition of
approximately 55 new Hollister stores. In addition, the Company plans to convert
approximately three Abercrombie & Fitch and five abercrombie kids stores into
smaller formatted Hollister stores during fiscal 2005, the first of which is
planned to open during the first quarter. The Company also expects to open
approximately five RUEHL stores.
Assuming net sales growth of approximately 20% in 2005, management expects net
income per share on a fully diluted basis for fiscal 2005 to be in the range of
$2.80 to $3.00 per diluted share. This does not include the impact on 2005 net
income per share resulting from the implementation of Statement of Financial
Accounting Standards No. 123R, "Share Based Payments," which will be effective
beginning in the third quarter of 2005.
OTHER DEVELOPMENTS
During the fourth quarter, the Company continued its store investment program
through increased levels of visual presentation, service and store management
training.
The Company established a European subsidiary and hired executives dedicated to
the rollout of Abercrombie & Fitch stores in Europe, which is planned for 2006.
The Company plans to open a total of up to five Abercrombie & Fitch and
Hollister stores in Canada during fiscal 2005.
The Company also opened its fourth RUEHL store at the Twelve Oaks Mall near
Detroit.
During the fourth quarter, the Company initiated construction of its 33,826
gross square foot flagship Abercrombie & Fitch store located on the corner of
5th Avenue and 56th Street in New York and expects to open the store in the fall
of 2005.
The Board of Directors declared a quarterly dividend of $0.125 per share on the
Class A Common Stock of Abercrombie & Fitch Co. payable March 22, 2005 to
shareholders of record at the close of business on March 1, 2005.
RESTATEMENT OF FINANCIAL STATEMENTS
The Company will restate its consolidated balance sheets, consolidated
statements of cash flows, and consolidated statements of income for certain
prior periods to reflect a correction of an error in the manner in which the
Company accounted for construction allowances from landlords of properties
leased by the Company for its stores.
In prior periods, the Company's consolidated balance sheets have reflected the
unamortized portion of construction allowances as a reduction of property and
equipment instead of as a deferred lease credit. Further, in prior periods, the
Company's consolidated statements of cash flows have reflected construction
allowances as a reduction of capital expenditures within investing activities,
rather than as an increase in deferred lease credits within operating
activities.
Like many other publicly traded companies, the Company recently reviewed its
accounting practices with respect to leasing transactions. As a result of this
review, the Company determined that in order to comply with Statement of
Financial Accounting Standards No. 13, "Accounting for Leases" and Financial
Accounting Standards Board Technical Bulletin No. 88-1, "Issues Relating to
Accounting for Leases," the Company would restate its consolidated balance
sheets as of February 1, 2003 and January 31, 2004, and subsequent consolidated
interim balance sheets, as well as interim consolidated balance sheets within
the fiscal year ended January 31, 2004, to reflect the unamortized portion of
construction allowances as a deferred lease credit rather than as a reduction to
property and equipment.
The Company will also restate its consolidated statements of cash flows for the
fiscal years ended February 2, 2002, February 1, 2003, and January 31, 2004, and
for subsequent interim periods, as well as for interim periods within the fiscal
year ended January 31, 2004, to present construction allowances within operating
activities, rather than as a reduction of capital expenditures within investing
activities.
Finally, the Company will restate its net income for the fiscal years ended
February 2, 2002, February 1, 2003, and January 31, 2004, and for subsequent
interim periods, as well as for interim periods within the fiscal year ended
January 31, 2004. The adjustment for the restatement will affect net income each
fiscal year by an amount which is less than $1.0 million.
The effect on the Company's January 31, 2004, consolidated balance sheet will be
to increase property and equipment and establish a corresponding deferred lease
credit in the amounts of $184.1 million and $187.5 million, respectively. The
effect on the Company's February 1, 2003, consolidated balance sheet will be
similar adjustments in the amount of $150.0 million and $154.3 million,
respectively.
The impact on the Company's consolidated statements of cash flows will be to
increase both "net cash provided by operating activities" and "net cash used for
investing activities" by equal amounts. These adjustments will be $60.6 million
for the fiscal year ended January 31, 2004, $54.3 million for the fiscal year
ended February 1, 2003, and $45.2 million for the fiscal year ended February 2,
2002.
The Company will file a Form 8-K reporting these restatements under Item 4.02.
and will file the restated consolidated financial statements as amendments to
its periodic reports with the Securities and Exchange Commission on the
appropriate forms as soon as practicable.
The Company operated 356 Abercrombie & Fitch stores, 171 abercrombie stores, 256
Hollister stores and 4 RUEHL stores as of 2004 fiscal year-end. The Company
operates e-commerce websites at www.abercrombie.com, www.abercrombiekids.com,
and www.hollisterco.com.
Today at 4:30 PM, Eastern Time, the Company will conduct a conference call.
Management will discuss the Company's performance, its plans for the future and
will accept questions from participants. To listen to the conference call, dial
(800) 811-0667 or internationally at (913) 981-4901. To listen via the internet,
go to www.abercrombie.com, select the Investor Relations page and click on
Calendar of Events. Replays of the call will be available shortly after its
completion. The audio replay can be accessed for two weeks following the
reporting date by calling (888) 203-1112 or internationally at (719) 457-0820
followed by the conference ID number 718076; or for 12 months by visiting the
Company's website at www.abercrombie.com.
# # # #
For further information, call: Thomas D. Lennox
Director, Investor Relations and
Corporate Communications
(614) 283-6751
Or
Mike Woodworth
Senior Financial Analyst, Investor Relations
(614) 283-6156
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) made in this Press Release or
made by management of A&F, during the fourth quarter earnings conference call
and webcast or otherwise, involve risks and uncertainties and are subject to
change based on various important factors, many of which may be beyond the
Company's control. Words such as "estimate," "project," "plan," "believe,"
"expect," "anticipate," "intend," and similar expressions may identify
forward-looking statements. The following factors, in addition to those included
in the disclosure under the heading "RISK FACTORS" in "ITEM 1. BUSINESS" of
A&F's Annual Report on Form 10-K for the fiscal year ended January 31, 2004 and
those described in A&F's other filings with the Securities and Exchange
Commission, in some cases have affected and in the future could affect the
Company's financial performance and could cause actual results for the 2005
fiscal year and beyond to differ materially from those expressed or implied in
any of the forward-looking statements included in this Press Release, made
during the fourth quarter earnings conference call and webcast or otherwise made
by management of A&F: changes in consumer spending patterns and consumer
preferences; the effects of political and economic events and conditions
domestically and in foreign jurisdictions in which the Company operates and the
resulting impact on consumer spending patterns, including, but not limited to,
any effects of acts of terrorism, military actions or other hostilities; the
impact of ongoing competitive and pricing pressures in the apparel industry;
risks associated with the seasonality of the retail industry; risks related to
customer acceptance of the Company's merchandise and the ability to develop new
merchandise; risks and uncertainties associated with the Company's new store
concept(s); effective management of the Company's growth; changes in weather
patterns; the effects of severe weather or natural disasters; unanticipated
postal rate increases and changes; paper and printing costs; market price of key
raw materials; the ability to source product in a timely manner from our global
supplier base; political stability; currency and exchange rate risks and changes
in existing or potential duties, tariffs or quotas; the availability of suitable
store locations at appropriate terms; the ability to hire, train and retain
associates; and the outcome of pending litigation. Future economic and industry
trends that could potentially impact revenue and profitability are difficult to
predict. Therefore, there can be no assurance that the forward-looking
statements included in this Press Release or the fourth quarter earnings
conference call and webcast will prove to be accurate. In light of the
significant uncertainties in the forward-looking statements included herein, the
inclusion of such statements should not be regarded as a representation by the
Company, or any other person, that the objectives of the Company will be
achieved. The forward-looking statements herein are based on information
presently available to the management of the Company. Except as may be required
by applicable law, the Company assumes no obligation to publicly update or
revise its forward-looking statements even if experience or future changes make
it clear that any projected results expressed or implied therein will not be
realized.
ABERCROMBIE & FITCH CO.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THIRTEEN WEEKS ENDED JANUARY 29, 2005 AND THIRTEEN WEEKS ENDED JANUARY 31, 2004
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED) (RESTATED)
--------------------------- --------------------------
2004 % of Sales 2003 % of Sales
--------- ---------- --------- ----------
Net Sales $ 687,254 100.0% $ 560,389 100.0%
--------- ---------- --------- ----------
Gross Income 337,036 49.0% 261,388 46.6%
Gen'l, Admin. & Store Oper. Exp 166,449 24.2% 106,734 19.0%
--------- ---------- --------- ----------
Operating Income 170,587 24.8% 154,654 27.6%
Interest Income, Net (1,301) -0.2% (1,099) -0.2%
--------- ---------- --------- ----------
Income Before Income Taxes 171,888 25.0% 155,753 27.8%
Income Tax Expense 67,380 9.8% 61,250 10.9%
Effective Rate 39.2% 39.3%
--------- ----------
Net Income $ 104,508 15.2% $ 94,503 16.9%
--------- ---------- --------- ----------
Net Income Per Share:
Basic $ 1.19 $ 0.98
Fully Diluted $ 1.15 $ 0.97
Weighted Average Shares Outstanding
Basic 87,640 96,105
Fully Diluted 90,750 97,839
ABERCROMBIE & FITCH CO.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FIFTY-TWO WEEKS ENDED JANUARY 29, 2005 AND
FIFTY-TWO WEEKS ENDED JANUARY 31, 2004
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED) (RESTATED)
-------------------------- ---------------------------
2004 % of Sales 2003 % of Sales
----------- ---------- ----------- ----------
Net Sales $ 2,021,253 100.0% $ 1,707,810 100.0%
----------- -------- ----------- -------
Gross Income 911,648 45.1% 718,361 42.1%
Gen'l, Admin. & Store Oper. Exp 562,158 27.8% 385,764 22.6%
----------- -------- ----------- -------
Operating Income 349,490 17.3% 332,597 19.5%
Interest Income, Net (5,218) -0.3% (3,708) -0.2%
----------- -------- ----------- -------
Income Before Income Taxes 354,708 17.5% 336,305 19.7%
Income Tax Expense 137,219 6.8% 130,625 7.6%
Effective Rate 38.7% 38.8%
----------- -----------
Net Income $ 217,489 10.8% $ 205,680 12.0%
----------- -------- ----------- -------
Net Income Per Share:
Basic $ 2.34 $ 2.12
Fully Diluted $ 2.29 $ 2.07
Weighted Average Shares Outstanding:
Basic 92,780 96,833
Fully Diluted 95,110 99,580
ABERCROMBIE & FITCH CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED) (RESTATED)
ASSETS JANUARY 29, 2005 JANUARY 31, 2004
- ------ ---------------- ----------------
Current Assets
Cash and Marketable Securities $ 350,367 $ 521,073
Receivables 26,127 7,197
Inventories 211,199 170,703
Store Supplies 36,536 29,993
Other 28,048 23,689
---------- ----------
Total Current Assets 652,277 752,655
Property and Equipment, Net 681,312 630,022
Other Assets 8,413 552
---------- ----------
TOTAL ASSETS $1,342,002 $1,383,229
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 137,336 $ 91,364
Accrued Expenses 206,588 138,232
Deferred Lease Credits 29,777 30,936
Income Taxes Payable 34,687 50,406
---------- ----------
Total Current Liabilities 408,388 310,938
---------- ----------
Long-Term Liabilities
Debt -- --
Deferred Income Taxes 40,214 18,152
Deferred Lease Credits 180,275 156,542
Other 31,241 28,388
---------- ----------
Total Long-Term Liabilities 251,730 203,082
---------- ----------
Total Shareholders' Equity 681,884 869,209
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,342,002 $1,383,229
---------- ----------