Exhibit 99.1
ABERCROMBIE & FITCH CO. REPORTS
RECORD FIRST QUARTER SALES AND EARNINGS
NEW ALBANY, OHIO, MAY 17, 2005: Abercrombie & Fitch Co. (NYSE: ANF) today
reported unaudited results which reflected record first quarter net income of
$40.4 million and net income per share on a fully-diluted basis of $0.45 for the
first quarter ended April 30, 2005.
FIRST QUARTER HIGHLIGHTS
o Total Company net sales increased 33% to $546.8 million; comparable
store sales increased 19%.
o Abercrombie & Fitch first quarter net sales increased 16% to $302.1
million; Abercrombie & Fitch comparable store sales increased by 16%.
o abercrombie first quarter net sales increased 36% to $63.0 million;
abercrombie comparable store sales increased by 32%.
o Hollister first quarter net sales increased 71% to $179.2 million;
Hollister comparable store sales increased by 21%.
o The Company's operating income increased 46% to $68.3 million,
reflecting a 13% operating margin.
o Net income per share on a fully-diluted basis rose 50% to $0.45 from
$0.30 in fiscal 2004.
o Abercrombie & Fitch Co. repurchased 475,000 shares of its Class A
Common Stock.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie
& Fitch Co., said:
"Our outstanding results this quarter reflect the success of our strategy. We
continue to focus on achieving the highest quality products in the casual
sector. I am very pleased with the improvement we have made in our organization
both in merchandising where we have focused on building great strength in each
category across our brands, as well as in the stores where our investment in
additional staff and management hours as well as training have contributed to
substantial improvements in store productivity. We believe we are well
positioned for continued strong performance as the year progresses."
FIRST QUARTER FINANCIAL RESULTS
Net sales for the thirteen weeks ended April 30, 2005 increased 33% to $546.8
million from $411.9 million for the thirteen weeks ended May 1, 2004. Comparable
store sales increased 19% in the quarter versus last year.
In the first quarter, sales from the direct-to-consumer business, excluding
shipping and handling revenue, increased 19% versus last year. International
direct-to-consumer sales increased 20% versus the prior year.
The gross margin rate for the quarter, reflecting the reclassification of
certain costs as described below, was 65.3%, up 30 basis points compared to last
year.
Marketing, General and Administrative expense, as a percentage of sales,
declined to 12.3% from 13.5% reflecting in part the charge in 2004 of $8 million
associated with the previously announced settlement of three related diversity
lawsuits.
The effective tax rate for the first quarter was 41.9% as compared to 38.5% for
the 2004 comparable period. The increase in the rate was primarily due to a $2.3
million charge related to the Company's change in estimate of the potential
outcome of certain state tax matters. The company expects the full year
effective tax rate to be approximately 39%.
Net income for the quarter increased 38% to $40.4 million from $29.3 million for
the first quarter of fiscal 2004.
Net income per share on a fully-diluted basis for the first quarter ended April
30, 2005 rose 50% to $0.45 versus $0.30 for the comparable period last year.
During the first quarter of fiscal 2005, Abercrombie & Fitch Co. repurchased
475,000 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
$26.9 million.
The Company previously said it intends to manage its capital structure by
maintaining a level of approximately $300 million to $350 million in cash and
marketable securities. Based on its plan to increase inventory commitments for
the back-to-school selling period, particularly in the denim category, the
Company now expects its cash and marketable securities balance to be between
$150 million and $200 million at the end of the second and third quarters of
fiscal 2005. Based on seasonal shopping trends, the Company expects its cash and
marketable securities level will increase during the fourth quarter of fiscal
2005 and at that time the Company expects to return to a level of $300 million
to $350 million in cash and marketable securities.
By the end of fiscal 2005, the Company plans to increase gross square-footage by
approximately 11%, primarily through opening flagship Abercrombie & Fitch stores
in New York and Los Angeles, as well as through the addition of approximately 60
new Hollister stores. In addition, the Company plans to convert approximately
five Abercrombie & Fitch and five abercrombie kids stores into Hollister stores
during fiscal 2005. The Company also expects to open approximately seven RUEHL
stores by the end of fiscal 2005.
The Company now expects total capital expenditures for fiscal 2005 to be between
$250 million and $275 million. The majority of the expenditures are related to
new store construction, remodels, and home office investments. These amounts do
not reflect construction allowances which are recorded on the balance sheet as a
deferred credit as opposed to a reduction in capital spending.
OTHER DEVELOPMENTS
The Company has signed leases for six Canadian locations during the quarter
including three Abercrombie & Fitch and three Hollister stores expected to open
in late 2005 or early 2006.
The Company has established subsidiaries in Europe and Japan and has begun to
seek locations for stores to open in late 2006 or 2007.
The Company remains on plan to open its 34,000 gross square foot flagship
Abercrombie & Fitch store, located on the corner of 5th Avenue and 56th Street
in New York, 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 on June 21, 2005 to
shareholders of record at the close of business on June 1, 2005.
During the first quarter, the Company opened seven new stores: four Hollister,
two Abercrombie & Fitch and one RUEHL store. The Company temporarily closed six
Abercrombie & Fitch stores during the first quarter due to remodeling. The six
stores will reopen during the second and third quarters of fiscal 2005.
Additionally, the Company closed two abercrombie stores and one Abercrombie &
Fitch store.
RECLASSIFICATION OF INCOME STATEMENT
First quarter results reflect a reclassification of the Company's income
statement. In prior periods the Company included buying and occupancy costs as
well as certain home office expenses as part of the gross margin calculation.
The Company believes that presenting gross profit as a function of sales reduced
solely by cost of goods sold, as well as presenting as individual expense
categories store and distribution expenses and marketing, general and
administrative expenses, provides a clearer and more transparent representation
of gross selling margin. Prior period results have been reclassified
accordingly.
The Company operated 351 Abercrombie & Fitch stores, 167 abercrombie stores, 260
Hollister stores and 5 RUEHL stores as of April 30, 2005. 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 live 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 9675046; 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
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 Press
Release, A&F's Form 10-K or made by management of A&F 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 "FORWARD-LOOKING
STATEMENTS AND RISK FACTORS" in "ITEM 1. BUSINESS" of A&F's Annual Report on
Form 10-K for the fiscal year ended January 29, 2005, 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 or otherwise made by management:
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, including, but not limited to, acts
of terrorism or war; the impact of competition and pricing; changes in weather
patterns; postal rate increases and changes; paper and printing costs; market
price of key raw materials; ability to source product from its global supplier
base; political stability; currency and exchange risks and changes in existing
or potential duties, tariffs or quotas; availability of suitable store locations
at appropriate terms; ability to develop new merchandise; and 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 will prove to
be accurate. In light of the significant uncertainties in the forward-looking
statements included herein, the inclusion of such information 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
(UNAUDITED)
THIRTEEN WEEKS ENDED APRIL 30, 2005 AND THIRTEEN WEEKS ENDED MAY 1, 2004
(IN THOUSANDS EXCEPT PER SHARE DATA)
ACTUAL ACTUAL
----------------------- -------------------------
2005 % of Sales 2004 % of Sales
--------- ---------- --------- ----------
Net Sales $ 546,810 100.0% $ 411,930 100.0%
--------- ----- --------- -----
Cost of Goods Sold 189,558 34.7% 144,005 35.0%
Gross Profit 357,252 65.3% 267,924 65.0%
--------- ----- --------- -----
Total Stores and Distribution Expense 222,223 40.6% 165,515 40.2%
Total Marketing, General and Administrative Expense 67,146 12.3% 55,784 13.5%
--------- ----- --------- -----
Other Operating Income, Net (406) -0.1% (97) 0.0%
--------- ---------
Operating Income 68,289 12.5% 46,722 11.3%
Interest Income, Net (1,220) -0.2% (985) -0.2%
--------- ----- --------- -----
Income Before Income Taxes 69,509 12.7% 47,707 11.6%
Income Tax Expense 29,150 5.3% 18,390 4.5%
Effective Rate 41.9% 38.5%
--------- ---------
Net Income $ 40,359 7.4% $ 29,317 7.1%
--------- ----- --------- -----
Net Income Per Share:
Basic $ 0.47 $ 0.31
Fully Diluted $ 0.45 $ 0.30
Weighted Average Shares Outstanding
Basic 86,221 94,709
Fully Diluted 89,800 96,872
ABERCROMBIE & FITCH CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ASSETS APRIL 30, 2005 JANUARY 29, 2005
- ------ -------------- ----------------
Current Assets
Cash and Cash Equivalents $ 136,578 $ 350,368
Marketable Securities 177,174 --
Receivables 32,284 26,127
Inventories 227,205 211,198
Store Supplies 38,944 36,536
Other 27,844 28,048
---------- ----------
Total Current Assets 640,029 652,277
Property and Equipment, Net 693,802 687,011
Other Assets 8,420 8,413
---------- ----------
TOTAL ASSETS $1,342,251 $1,347,701
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts Payable $ 129,982 $ 137,337
Accrued Expenses 177,182 194,729
Deferred Lease Credits 30,331 31,135
Income Taxes Payable 2,351 11,183
---------- ----------
Total Current Liabilities 339,846 374,384
---------- ----------
Long-Term Liabilities
Debt -- --
Deferred Income Taxes 50,334 55,346
Deferred Lease Credits 183,482 177,923
Other 79,854 70,722
---------- ----------
313,670 303,991
---------- ----------
Total Shareholders' Equity 688,735 669,326
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,342,251 $1,347,701
---------- ----------