ANF - Earnings call transcript Q3 2020 | Abercrombie & Fitch Co.

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ConferenceCall Participants

Paul Lejuez - Citigroup Susan Anderson - B. Riley Securities Jay Sole - UBS Carla Casella - JPMorgan Dana Telsey - Telsey Advisory Group Kate Fitzsimons - RBC Capital Markets Janet Kloppenburg - JJK Research Associates Sarah Goldberg - Baird David Buckley - Bank of America Marni Shapiro - Retail Tracker

Operator

Good day, and welcome to the Abercrombie & Fitch Third Quarter Fiscal Year 2020 Earnings Call. Today's conference is being recorded. [Operator Instructions] We will open the call to take your questions at the end of the presentation. Instructions]. [Operator I'd the time, Pam over to Quintiliano. like this conference turn to At go Please ahead.

Pam Quintiliano

morning, to and XXXX Good you. Thank welcome earnings our call. quarter third

of the Chief available the Lipesky, from during Joining and assumptions and Officer; our forward-looking risks uncertainties this third today on release, call These Private that Web A issued uncertainties Fran we could available referring me keep which detailed mentioned the with site at earnings is corporate.abercrombie.com the we statements call XXXX. the presentation. and expectations site morning, today. Please in company's results Securities is we materially and Safe that of factors Web Reform subject Harbor our of Financial discussion cause certain are made differ these under to the to contained Chief Horowitz, Act non-GAAP call. Scott statements quarter will are on subject in the actual on In filings Investors is Litigation to the to an our measures section. Officer. forward-looking Exchange mind the on Earlier addition, be are Also Commission, any Securities provisions and Executive financial investor

the a turn Additional call release are included over issued adjusted Fran. of in reconciliation details will non-GAAP to and the that, With earlier to GAAP financial I measures this morning.

Fran Horowitz

hope that to loved yourself that you weekend to Good morning care no some this planning your and you're healthy. relax. for find time thank how celebrate and you you I are today. and of matter safe us ones joining and take And holiday

a and second tireless partners. quarter decline results. I your shared our hard our Due vendor global thank X% on and Total a better earnings, our above to earnings to forecast would third moment quarter Before work declined XX% expected revenues company call. like for XX% achieved to ongoing to we than commitment, take discussing team

with our expectations. all brands, resonated and internal assortment merchandise channels target with regions balanced Our sales exceeding customers

of driving sites saw play school million. in $XXX back meaningful rose to We this traditional Our quarter company omni-sales our expectations. XX% performance was year-over-year out registered We internal September At was a peak. uncertainty roughly achieved of time on in still activity And August many our of around there one amount and some and back for reduced with October XX% sales our extended of uncertainty, August and to exceeding our record apps revenues States. United significant the from which our two expected of sales QX to a improved closed markets. third margins. in be clearance recoup and Digital school the classifications. of categories, of in and over and to to school students promotional to including call, realized California, the win grow were not improvements our traffic stores is and our selling new but must We digital the high loss this largest summer conversion all record back of to acquisition. majority we our customer season Web must to Due and thirds margin

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global incentivized who with carriers approximate store set QX. resulting came to although in team DC success help and it last sequentially holiday us of has XX% anticipated top additional are ahead year-over-year store base Reopened for by from Looking with our remains reduced side, at we In this store XX% still stores On the Customers demand. a adding and ended for season albeit high quarter bigger of up down our improved baskets. hours. operated higher traffic year. for productivity to conversion open, stores

total of shrink gross manage At we Our expanded as company from better tightly income benefiting breadth promotions QX in expenses and margin time, and rates. our FX as the well same by points, continued operating best reduced depth XXX to achieving XXXX. basis

in the October Hollister, month teams slow to began and California on August, school to Now our stores as largest is QX, rebounded school reopened we back brands. varying back were After of the ways with nationwide. quarter. pleased We despite a in which to unprecedented typically unpredictable September At nicely and results go to and the season.

at X% just exceeded declined which internal quarter sales expectations. result, a Hollister for the As

over category assortment XXX% year. the At strength several to underwear. margin digital last drive with XXXX. a Hicks, gross and and helping three Our perspective, margin from we girls our in architecture top outperforming, saw high achieving our have Gilly rates off focus again sweatshirts, on growth QX since of shorts From once Hollister experienced dresses, shorts items at continued must best and to and golf double-digit sales including bottoms growth, we pay

collection, sales cozy refined customer as to and lounge our assortment. We're significant underwear intimate excited wide sleep comfy embrace our well new a offerings, as Go, Our space see Gilly continued customer growth. we and about active that and Based the including bralettes, spoke make with their accelerate Gilly to its unique how heard. Gilly. resources the on for expansion, on we additional Throughout track voices we margin to dedicating quarter, Hollister both record are

storytelling. As for on up into weighed series promotions team shifted our of into amplifying and away from our which we show focus heavily on campaign, volume both XXXX further We messaging voices.

Pugliano now stars which the with and late Charli exclusive TikTok. up we nine our designed back our helped In number along September, views launch XX X.X more Dixie posts and TikTok in of and we based Noah and top billion During July, the Nye, lift to campaign campaign recently on the Instagram Hollister strong Guy. campaign both jeans school one and the driven has than fellow the with D'Amelio. influencer partnership TikTok girls successful quarter, the introduced on media growth also fan sweatshirts This Sisters year Dixie introduced been has favorite metrics. Bill highly brand The had Instagram Charli account and social team out. built brand on on make by In of sold Science

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to the we will addition, more set In drop Sisters December. exclusive cards designed by in have two

Abercrombie. to turning Now

gain. with marketing in above a and and X% to Our experienced fleece back women's denim, In merchandise significantly also new combined and At providing tough double-digit internal and the which In serving jogger. our in part We Across improved was expectations. both Abercrombie runway double-digit swim genders September a registering quarter is sales and we declining Now brand. collections, strategy and Performance school men's in adult bottoms, October. our Kids build all August. Strength to including by and summer, sales both sweaters a response with which assortment, and tops September trends customers a have our broader essentials lapsed offset and generators, within resonate. continue in Wear resonated skirts knit-tops great fleece, Hours premium These new XX a saw attracting to growing are and XX -based softAF broader kids adults been October growth. partially and the traveler sales to including jeans traffic was franchises and driven halo. shorts of and Hours August see strong these for

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meaningful XX% store which with Fitch our of and out an time years drag due on better to drag network point associated tourism representation is comps, This for combined million our resources Abercrombie accounted fiscal our square stores our performance Fitch a are of liabilities result represent are lease payroll X% of base XXX,XXX $XX heavily worth our basis gross expense actions, flagships of levels. and point brand locations work reposition contributed and flagships footage to square as customer locations feet, has updated million Fiscal $XX have roughly brand outside occupancy seven were to the combined an these a is stores our XXXX, roughly and we that more local are the XXX, part and of announcement in roughly today. of many ongoing of this XX-basis brand of on intimate margin. year-to-date positioning. dependent and In taken store a global COVID-XX at accurate constraints. serve only seven uniquely While Abercrombie our critical portion removed not sheet. have These balance which our been were to in for and traffic and flagship These revenues operating a enabled XXXX, XX omni or store

global penetration, continue on as our and for meaningful we are in. remain for square fleet, reminder third higher accounted we set our percent renewal ongoing our This to rest this committed in we to year us digital year. our a opportunity the as which Across as increases the footage approach track XX% up revenues the have roughly being year operate our a they agents the stores, approximately of last to of level we realize occupancy exiting Although already and end. of gives the we markets much

changed. and size, right the the stores said in right must But be has believe that to before, they economics. mindset continue with location, We as not we've the right in

moment store a political season. I call of thoughts well as to considerable the to and share the COVID year on turn unrest. holiday Before constraints uncertainty ongoing over related obviously Scott, my and as social and spikes amount a global take the to handling closures shipping I want This there's and to

move inventory As of to including big store pandemic, maximize on responding commitments we've capacity. remain we focused are can and control a increasing key what and done we ship that while popping what our the controlling since the conservative capabilities and we digital cannot. start We to from curbside, thoughtfully throughput

encouraged are by it early. is still While quarter-to-date trends, we

and customers volume responding continue we are growth. largest ahead restrictions see be new facing digital closures. weeks further historically and have and our this we Our been ongoing to double-digit may products uncertainty, to Despite COVID-related well

it While we to of place be promotional expect always plans to this is, recent in with as holiday season successes. build thoughtful off

unknowns. firmly believe our ever future also a chain the and company our as technology have year to to global our this brands. key react into coming We investments talent remain optimistic that it today I as We positioned supply of about is financial pandemic and than better and strong flexibility growth heading team was I the foundation. this made that fortified into potential

market our utilize I the call gain and playbooks in ability our Scott. over We And close to with turn we will confident continue to to and our customers mindshare are proven share. both that, will and stay to

Scott Lipesky

I'd vendor operating of teams thanking operating perseverance were partnership, With to since off your $XX flow. XXXX like able income generate best our our Fran. we and cash our and and Thanks also by start third to quarter million partners. achieve global

improvements declined Now the XXX Kids. Gilly sales compared as sales region, partially but sales and on which X% million and down includes last X% conversion in by our was net and sales year-over-year APAC, channels and By for to Globally, below last X% brand, X% growth. value is improved declined traffic By includes store QX were smallest average across which U.S., region. in Abercrombie, in results, which transaction year. EMEA, X% Hicks offset for of net This XX% digital the Hollister, to in XX% year. sequentially, net remained

store reopened at specifically Looking performance.

store digital region. trend generally roughly the reopened higher XX% was Abercrombie as down further outperformed a penetration. with of a by global Hollister By stores U.S. quarter global productivity on Third our year prior basis, at level. Abercrombie, has market, Starting Breaking largest brands

with at was Third year, quarter all was closed. stores with August end. store reopened delayed to year the back roughly the open of California Productivity last productivity store one XX% and XX% in of at school our weakened

was year, U.S. all the countries productivity In experienced closures of of we reopened renewed As are in store EMEA, open. at of but at have last end XX% XX% of quarter. Monday, four stores several COVID on stores with approximately recently, the our open of More restrictions.

of closures other countries. was roughly with and in have Monday, stores England, As XX% base of digital France our EMEA had reclosed Has store open sales accelerated.

selected across in shipped store. will major for brands exposure realized in improvements ads in our cross Hollister's our media drove and we were to among In industry team Tmall other ahead, appear benefits store subway October. Looking from with was continue region end ever to cities quarter. the increased Recently maximize growing was digital as market our APAC, We've two Shanghai. This the traffic stations we encouraged XX opened at and mark in the Hollister Shanghai reopened productivity of to and demand curbside weeks XX% been by from also and smallest top-tier largest have Beijing, available. store our pickup roughly trend

As in stores of region. the all open Monday, are

Moving XX% year AUC. gross on basis last clearance year. up promotions AUR of from below benefited a and to points lower last higher was profit, rate XXX Results and with to

benefit points benefit addition, basis from points XX another from saw and basis In we shrink XXX FX. favorable

X% last inventory, QX we to to and entered with current inventories down Turning year.

our holiday. We are positioning comfortable into with heading

digital basis. basis rest and flagships, As gross $X to international $X.XX. charges decreased and was results on fulfillment million certain through. cover through the a payroll excluded an rate by last compared excluding offset to inventory of decline adjusted related driven profit adversely we store our the operating in impairment $X.XX. asset million I'll pretax sales. from quarter, to a impact occupancy our by to in leveraged by to store on impacted we attributable rate and by move year, other and plan continue impairment of increased non-GAAP Excluded higher distribution with year we sell income the of COVID. million Operating $XXX million basis expense expense XXX adversely and this results charges Last charges $XXX principally year, shipping dollar which pretax results These Stores as results our points. expense $XX partially asset non-GAAP balance

to recognized of asset a related current severance obligations addition, benefit retirement accruals pre-tax updates a lease early the we In previously assignment in four $X approximately established to the million primarily for flagship due and access. gain quarter, on and to

Our websites on rate customer including partially goals. and income and as $X $X.XX Operating costs. on increased additional last and will Net compared marketing, in We reinvestment $XX diluted by marketing, compared managing was or to was facing to reductions $X.XX expenses, from transformation XX%. focused in-store initiatives, included on tax Effective a achieve by we areas benefit basis key million enable last well driven continue FX. to year $X.XX rate a momentum compensation, million tightly dollar apps per administrative general our income and million year in build basis. facing to remain non-customer was $XX a and to currency our savings constant as share longer-term for performance-based primarily and offset expenses marketing rose look

XXX Our million ended balance remains and the of approximately with billion. we strong, and cash equivalents sheet total quarter cash of $X.X liquidity

hold in growth, We XXX of capital suspended. environment, programs digital the we flexibility than dividend experience. a of will higher have experienced to half half closed uncertain and other because approximately average XX of attributable We have that preserve and stores repurchase stores the expenditures cash and about brand continue technology now continued maintenance in this remain accelerated XX. we digital year with year-to-date, expect omni-channel our we for share balances to and opened at the part are Fiscal invest to they If stores needs. had critical million profitable

our we we store to We're global our further beneficial and right optimize format mutually and forward. a a closures opportunity store a year have We've path base stores. of and been find base flagship with agreeable partnering up quarter of about As large sizing footage XXX leases. mall global for excited landlords end, the about our to approach or the square of through combination over renewal

With we invest basis, our continue evolve. will shopping preferences. experiences to base on to XX% planning the inventories, the reevaluate Reflecting opportunity roughly a off increased channel, global shifting leases two-year capacity goods with and our renewal we're our local business with rolling our thoughtfully we We ongoing to smaller how expenses that quarter. ongoing we we have are digital the of and not chase positioning continue customer managing as up between in fourth conservatively are omni-enabled to for center region while business. store optimizing I'll finish starting tightly distribution uncertainty, managing align demand, inventory for

will eyes growth not We near-term our our brands. off significant taking manage opportunity while the of global across long-term

the For current from follows. the can sale be which Net business fourth to quarter, down deceleration a trends. are X% XX%, as assumes planning we

willingness do when in Europe. in including not change the closures. We rising, there's quarter-to-date a With may traditionally as physical demand COVID and strong enter our a Although for pleased are of results, numbers a countries there digital year. is looming of ongoing into the with unknowns what growth, potential have possibility weeks certainty there of volume restrictions lot to head highest and Also, reopen store renewed we apparel are stores. customer

from We to year. up are slightly last be rate planning gross flagged profit XX.X%

through the drive our improvements are optimistic activity. promotional in ability quarter cautiously in to lower We fourth clearance AUR

of do and magnitude realize However, not to benefits expect FX same the QX. shrink we at

more as at should and With to income mall-based marked clear operating pressure the anticipate the down those on and that which last locations. the will non-GAAP isolated closures, million, for be year's reflecting store excluding expense planned ongoing Abercrombie store through level adjusted as pressure we to and inventories holiday, demand elevated these higher quarter fulfillment could be clearance X% of up expected locations strong for other Operating expected XXX and With to carrier fourth of which offset handling payroll we closing. digital flagships The exit shipping and Fitch than operator, and to costs, X% savings. ready occupancy surcharges store we're questions. continued including

Operator

our Citigroup. Thank Instructions] we'll Paul question from with first you. [Operator And Lejuez take

Paul Lejuez

Scott, the Nice of provided getting info job size, Gilly Also should terms that a out of takes? info can and helpful both to and for remain on today talked you fast brand share if sales EBIT? just you're flagships year a How curious, the looking we bit Thanks. the that any seven that Curious, in about How and think you grow? guys how little big about growing faster? is form what bit exiting.

Scott Lipesky

year. planning we it will Hey, flagship seven Paul. were We're to Yes, this year. seven more kick off the closings question. get excited with closings I for through very more this

from we've these been this more that locations stores, locations into are expensive goal many As is you smaller more path for large our markets years, know, in these reposition local heavy omni-enabled. on to tourist very

have So that seven eight this great we that. is or forward into and XXXX a beyond. The carry for will step remaining

XXXX the us XXXX will XX out called margin at year in drag the drag, points numbers, that with have we that still Looking future. last basis carrying into levels about EBIT

future as with at markets. locations, We but step to forward continue remain a the in nothing Fran? this point but we on landlords contact these announce current great to our repositioning

Fran Horowitz

Paul. exciting. Super Hey,

super the in we telling pleased exciting. consumers to another So, XXX% on to marketing. digital responding two in the our the this really seeing growth It's a growth and that Gilly our row Gilly we're us are is question, that quarters to have with really quarter, product

we know approach As to Currently, and Gilly. test the do back we learn test store this stores We're base be as running far the normal. sure with goes, continuing and for I that will as of say to with would brand. to growth guess inconsistency see the a I until with are going

also we as really having Gilly as seeing, of where so all what have we year mentioned the this Cozy well particularly additional added marketers a the excited resonating. that's We lounge we're merchants, launch well, and business. added Go, ago, a general about about We're as manager planners to

Operator

And up Anderson a from we'll Securities. next, Riley take B. Susan with question

Susan Anderson

Nice performance op of I'm How of seen in in then, how obviously the curious And uncertain the opportunity confidence now? in margin a quarter. this about benefits margin quarter. job the know think you fix? its are quarter much does thinking environment. long-term op longer But guidance on double-digit I very strong the third increased do your for give margin? longer-term you will op term stick you kind

Scott Lipesky

is payroll, in of in fixed the the of in We are reduce occupancy. as in here this But payroll, confident income as business last as statement of the pressed And we that to last that shift is margin here, store couple the this we've out has to target, ago. been COVID out set the variable. this threw seen long-term pause We ever few a profitability store fixed seeing of years store we a business, there in a couple model cost the Clearly piece quarters XXXX. build one the more bit quarters to year. towards seen you've that adjusted little we've lower we you've want lower want what the P&L

do. can it's in of have past, Now, and the profitable future. leverage we've shipping the situation talked and variable the you those these business a you'll which are And how digital of as But but digital with coming some assets and we a business, along little fixed about that, handling. nicely interesting see we've there, costs that a that's COVID through gotten been

also that excited lot we're end, to see excited that work up. have growth A towards P&L over we of to in see we're to and XXX kind do, year channel, takes us the shaping trying of we're place, landlords, size deals get right we're deals working have move in store the leases right and forward. to to they of for be our with us coming the due, to So right

us excited ahead the the So of of about opportunity quarter. rest in the

that Since want the a QX about working the goal what we're beginning of side, kind year we fixed we some especially base, and and theme especially That's fixed in couple out we a same long-term, take and variable. taken cost, and the themes on. reinvest of the make plan. lot talked these move variable stick, of the the of back on the lot a of the of As about hundred to less since million marketing out to it expense benefits took is And think that we that of customer more in COVID facing. there, from of for then

Operator

comes next UBS. Our from Jay Sole with question

Jay Sole

Great. about Thanks customers responding talked new and you Fran, to so favorably product much. messaging.

the improve you you. you right profit? like of terms to when improvement the year tell see percent as product, did now, about category? the were in you trends markdowns improve on the you're want total next then, Scott in the that And of of do where sort you in markdowns happening trends Specifically, your about can some points How to you new business? seeing be markdowns continue last And a much in quarter piece where us be it? about there, silhouettes after? versus what maybe or you such of talking basis Have lower which to new year XXX the to can of key a that Thank obviously, seen you denim, terms new important gross could and of just talk get

Scott Lipesky

Sure.

Let me and and pick shrink basis up it first We XX that On currency. foreign had break I'll the of to XXX second one markdowns, points we points basis basis XXX kick over of points. apart Fran.

last our about where raise here fall down to bit demand the sourcing great of our goes inventory inventory a nice merchandising has that down position our supply and take back a feel Fran? last to kick whenever with talked was outstrip get season. what We points We've lot really saw due And that a versus a work we AUR for markdowns receipts conservative a quarter have comfortable quarter level, done COVID of the this lower in The teams remaining hits the And kind let's XXX that place, we year. to through. to markdowns. one in taken in and our the played and our level So day planning, basis is. nice aside. us and the great to right puts

Fran Horowitz

Sure.

So very excited, Jay.

consumer seeing brands. response quarter of four regarding third the really we're With our our nice all our product, from across

tremendous that You specifically silhouettes. to Abercrombie leg key events and denim. mom our about well all response of with nice fashion sorts our about Abercrombie overall, digitally the continue our strong, customer we our denim ask this like women's we our and newness marketing a for in denim, to response start run the Straight But specifically to remain fit. on we've that And call coming by denim, seeing last in skinny we the ever encouraged one talked biggest we've quarter, to responding mentioned is as seen to our and women's just we're what came product. of key just of but is as part up

again, third a little back quarter just Going bit. the

Dixie one over seen Our our campaign and Hollister to lift campaign back with TikTok number X the one school we've billion far views the on year-to-date. campaign on Charli that and was of brand best so

come the the and a fourth to exciting things So of for to third quarter. quarter lot more

Operator

Carla we next, will JPMorgan. with up hear from Casella And

Carla Casella

key in a to and reverse quarter. or capital. It terms source I it be And timing cetera? was if I'm on unusual quarter fourth for wondering of what had the in one et accruals payments question an on you of drivers working would expect the payable, third

Scott Lipesky

Yes, this Carla, this I'll grab Scott, is one.

been huge and So our capital working great this partners, yes, And extended They've our year. to both non-merchandise. with pleased getting thanks been performance a vendor we've merchandise very terms.

to is get permanent terms in more nature. these a goal Our

are year-over-year. been make in these day could Also our inventory, the there lean since one our capital, is remaining focused goal some that stick. receipts on to here on something But pickups working inventory future. reversal down be and So we've on is

we little inventory, past. the it's we've of than seen a see less as So drag there benefit on on of a bit

to things XXXX So take that we beyond and for want into sure.

Carla Casella

Okay. just can you many And off help how your today stores of me, mall? are

Scott Lipesky

We of A stores stores in flagship primarily are very our mall world, of stores. We're Europe. the around off small a primarily percentage of got mall. street our handful in outside

Operator

Dana hear Advisory we next, Group. Up will with Telsey from Telsey

Dana Telsey

everyone, and see progress. nice morning, Good the to

store that network, delivery do Do and renegotiate chain of flagships, for they part about you this Thank emphasis increased digital, on costs. think think leases? and that on the remaining you season, do And the planning you expanded how As about you any stay for thoughts Thoughts you. supply on next net year? how that then, flagships those on given the have?

Fran Horowitz

It's Dana. morning, Good Fran.

of flagships morning. landlords for So we've company part few been really the really diligently announcement was our this working not are forward And exciting with that make past our so strategy. large go the And it expensive to years. over

Our experiences and that customers, how know goal intimate brand really today. with deliver closely to real needs we shop they is our aligned

the balance with next of So go continue will of is over remain those part that But ultimately, couple our we strategy. the it years. not negotiations forward

Scott Lipesky

I'll pick up supply the chain.

the place, regional couple to that sheer then, that QX, costs digital a see These here bits these key basis. carriers. into seen and some quarters point dollar the we than our So with QX. of that up A Shipping to we number be comes carriers. volume play yes, as carrier that. your surcharges along put And and the of say the efforts into an forward spiking of impact top-up to rate a going DC looking for XXXX a handling is guess add and going and with of just here be across in with of pieces we've an in one, interesting to come then increases mentioned how going business are it I'd past QX. costs it's delivery beyond, and to going good ours differences at of customer quarter as costs probably that's these out are even just in some to this when we in of in will outsize expense strong QX, the We're the that this on more have up quarter of growth. couple

So we're we can this focused that that on through one to delivering holiday right and to now we'll then and getting peak season. our get address through as quickly customers as and peak

Operator

will And RBC hear Fitzsimons next with Markets. we from Capital Kate

Kate Fitzsimons

In digital, as XX%. that So XX%, I in quarters, sequential but restrictions, in was I Europe. And you prior can believe are ago margins you XX more market you any guess, commentary, quickly compared costs, the flagship, you least said obviously said profitability some here volatility learnings of your curious we lot I on I'm exiting channel. out just even Europe, for a improvement look renewal, in with you're Thank believe on certainly the understanding channel, rebase at Fran some am now front, roughly I in push and strong it's higher to with margin of that digital this much that last I next pivoted be last about the to you're at you're making curious call you're that in the the a the level you I can look business, of running we guess, about on demand ability seeking channel? and business with in beyond guess, online, with of how higher to your your of digital how of year-to-date, the And with meet And to XX% when and gross then, that a last just the feeling the to in up XXrd as guys business, that absorb surcharges? holiday year delivery you exited about market mix of at it maybe you. at think seeing shift XX% digital productivity stores think year level, associated months that a of incremental we the curious,

Scott Lipesky

right, All perfect.

your I'll first. Fran on take the business. Let me pick up digital to And it

and Europe see in some the we More seeing bit in yes, key countries were like France. Europe, that. to So we settle to recently, business. see European starting through store nice as England of a good our in in sequential the QX, Things some went mentioned closures of little improvement to

certain a been countries here in about spike good seen for chain today that closures, supply as stores Hopefully, planning we've not be where coming point, when on seen reacting day. The reading we've this sitting But is, these our every fulfilling nice these soon. at demand, news in we some and the can imagine, there'll teams we're reopen. businesses, might thing out here this. you we're have So positive digital feel

planning been have We and of for wave this this next March April as for an COVID. since organization planning really,

put that will hopefully, all in bear place So here the in the fruit help of things quarter. we

it. that's think I

Fran Horowitz

Sure.

about incredibly seeing. So regarding business, we're are excited what our we digital

seen expression build what whole a think growth certainly that's lean year, we've to crisis catered the on in mentioned you of throughout our third goes our quarter. and of this able digital And we've really that, accelerates over as I the in omni-capabilities business, XX% the bid strength been change. into XXXX, just $X billion

what's is going We've of are we really answer up. of at don't know the to end a that, the got due watch end stores year. to lot to So leases continue where the have we happening, the

So a in you omni-channel the our do stores as matter, effective order be be global need ultimately, goal is both because both in omni. to balancing well retailer stores, to digital as

the to half and So we're into we lean in first year. certainly to continue head the for as going quarter fourth next

Operator

hear Research. [Operator Instructions] Next, Janet with JJK from Kloppenburg we'll

Janet Kloppenburg

for flat wondering about that up looks you. Fran, a little for on think I'm I well. to digital closed out wondering, you as to and And Maybe carve to you model have stores will about arm the guidance. more gross how bit how make or about are you start opportunities margin, there continue existing thinking a could talk strong daily just Scott, was standalone in the you stores

shrink me the might some sure be competitor quarter the you couldn't the also than closings? better be understand outlook to FX AUC think you. in an liquidation that could Thank promotions against Maybe I flat just for increased pretty and flagship opportunity. significant some Does help out. not less fourth it weigh why opportunity of

Scott Lipesky

off it guidance. last on question, kick I'll gross the part the the of margin Yes,

So going probably different interesting and a happen will yes, most on pattern what's with of in-store. be peaks in quarter will the as I quarter sales up the I then is mean, to to slightly. it think, December promotional flat the it it going the be an year, this historically to are then

excited a So about fall with then, there. liquidation hurt, little how brought we quarter be to a AUR assortment. to with around We raise closures, into it's store We're that that that'll that's is we're out up thinking the about a planned hopeful we're good potentially inventory And really the it plays going and interesting quarter bit demand very but season a of to be where we're lot feel will is, you supply. going about out the there here. our And our points be the And excited there. uncertainty but some how outstrip that how ability the world. positioning, inventory that about to our of

Janet Kloppenburg

promotions? increased and …cost

Scott Lipesky

comfortable like pulled spread. constraint forward the just to pulled promotions have We've spread that we of done the would demand. do promotions I is digital people shipping. we've to of with some mean, little I try say, bit little we've demand have I you've a here been for bit a that mean, seen biggest that

promotions a spreading the So to the good out for is industry. thing do

Fran Horowitz

that are we we're XXX% omni-capabilities. us in so Gilly, our really about what seeing as helping Regarding excited growth Gilly, is mentioned digital into in I lean

But continue the for taken have moment standalones will on are the Regarding with our shop with the we at there. will at the some uncertainty and certainly where the will we and shops, out store gets point carve with this carve of point, because have we and once we that days outs outs a to obviously base standalones, pause some we in-store, continue normalized that

Operator

with take we'll Mark And Altschwager Baird. a upnext, question from

Sarah Goldberg

This is our morning. taking on Thank Mark. you good for Hi, for Sarah Goldberg question.

build about confidence you the holiday? thinking for in As to spend marketing the How the reception product. are you

Scott Lipesky

Yes, And of on marketing been media, -- costs that the what some done out one. back-office for goal taken back this about to that We reduce. QX remarks, we've in some is, holiday, we type costs to on our able digital protect we've year are end. we've is the number mentioned prepared

done Abercrombie Fran the brand digital with to that that will into media. customer mentioned is program we've And the goal Charli QX QX the So the here. that facing in influencers. work and on Dixie great protect great with continue then,

seen absolutely marketing is the here holiday. that to really an excited we've expense in protect and that about want So we

Operator

of we'll David Bank hear with next, Up Buckley America. from

David Buckley

channel Factor the year? next the about much third contributed of ecom Thank how you vaccines, operating in first improved are multiple for channel, profitability you. expansion. can then, margin the to talk using you And business the half putting how quarter

Scott Lipesky

one. this grab I'll David, Yes.

growth the came saw primarily the in It assets. leveraging ecom lot yes. from channel profitability, improved the we that talked So a about with quarter the great those

to big a we that of able with digital those saw. spike were leverage assets we So further, even XX% growth fixed

on obviously in We store we the as side, and store the occupancy also mentioned saw benefits store payroll quarter saving.

numbers we some helps the talked many thinking the news that vaccines, those industries. It's which about great timing hit for great the about side. know. really industry, blow store productivity we will soften of us. that the this on And But don't this the is for So of from news yes,

just So throughout investment we're in planning Inventory planned our conservative. at this is point, going we number the we company. this one to like 'XX, XXXX, be in are business

to gone seen as So to conservatively ability long we're chase for we're benefits with going gross using chase to margin stay plan in the and up the growth XXXX take through mode as and mode AUR we've bottom-line. here being as going from it possible. fall the We've in to

our as to be going XXXX. into that's plan go So we

Operator

from Shapiro Retail with Marni Tracker. question Next, we'll a take

Marni Shapiro

Abercrombie two for beautiful Hey, I guys, the quick have stores congratulations, really questions. the look holiday.

ago little it ago. I've you years along the and bit pandemic, than reactivating now successful Have and even hope. through lapse XXXX the stores, into of as two of feels to As sort because some again, the come attracting have style heading a are be really the also the or as same in shopper who we programs that their walked your as or in about new talk a teens been of you late different out it could shoppers those life could shoppers? XXs, important year And used the -- loyalty normal seems age if lines, we

Fran Horowitz

that the as the on with Yes, marketing. complexities product for reaction added as all on consumer and proud a teams focused both Marni, they've millennial, we really very the in able the is getting thank of to well the this you Abercrombie strong been are year. accomplish the incredibly young from to what store, compliment

actually to shoppers we new We as of seeing some -- file to have nice, our growth activated we're well.

Our grow. loyalty continue programs to

seeing be important exciting what into head but point 'XX in we the So will we're those as to brand. your

Operator

remarks. Fran That question-and-answer turn call closing will or Horowitz for to back the additional I any our session. concludes

Fran Horowitz

all I forward participating Thank talking you you and safe all holiday Year. a and happy our for you all in I season have and of look New to the in hope call today. to healthy

Operator

concludes that your participation. today's We for you call. thank And

You disconnect. may now

Abercrombie & Fitch (ANF) 24 Nov 202020 Q3 Earnings call transcript