ANF - Earnings call transcript Q3 2021 | Abercrombie & Fitch Co.

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Operator

Good day and welcome to the Abercrombie & Fitch Third Quarter Fiscal Year 2021 Earnings Call. Today's conference is being recorded. [Operator Instructions] And now at this time, I would like to turn the conference over to Pam Quintiliano. Please go ahead, ma'am.

Pam Quintiliano

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

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

we be the GAAP additional of certain and to financial details, will this referring non-GAAP reconciliation measures, adjusted earlier morning. are issued financial included a release non-GAAP measures in to addition, In

Fran. financial that, XXXX I providing store will turn And With be the also call of year, for we to fiscal last closures will We to temporary periods disclosing be and sales. comparable corresponding applicable. were driven XXXX comparisons due COVID will over not the

Fran Horowitz

actively hard made business that you closures partners. Together, investments a our navigated and across transportation and rose technology digital like expenses and sales to quarter of square to X.X thank key our reduced delivering off commitment markdowns, you school forward. our a third to and achieved and QX margin concept delays, were sales strategic our to against fleet a to Due and team to fulfillment removal XXXX including morning operating gross best optimization, which joining up strong and our store supply from fourth quarter first and omni-channel drive a year. our start. work Total excited X% But delivered to discuss and global a thank last promotions from QX engagement. lifecycle Pam. Thanks, our quarter ongoing benefited close third decade. faster our factory and chain share and the is year and profit We feet customer base last we XX% since I'd good marketing, and today. our customer in despite which industry-wide to XXXX to Good with for enhancements, constraints manage million us improved strategic and I’m highest begin pillars, results, to we back to of

trends on on Our sales return school XX% largest executed market, with a established a up to and outperformed and U.S. It X-year activities basis. most social and fashion XX% With we back-to-school latest customer. maintaining all the and for. seamless become bodysuits, water fit appropriate including of newness well have fall against known seasonally silhouettes, that interpretations and value and We teen for more millennial our was outfitting providing quality, options. kids to resume compelling leather kid, as and leg wonderful vegan X-year the and calendar, the the while have

the return, basket were by in customer size double-digit highly range. percent and average our of as improved both of illustrated which customers Our lapsed engaged rate

stores a rose speak X% adopt channel, X-year brands sales. roughly grew across the representing quarter store channels acquired our price from our of customers and Results sales four-wall markdowns continue AUR AUR XXXX. Digital, to significantly a improvement sell-throughs. on a sixth which brands. very to X also promotions XX% the XX% as health By we year globally, total signs buy reduced XX% and customers carries addition, In consecutive higher improved you and and us, basis, QX each and than X-year for of on has conditioning, execution. This we margin declined all last from the regarding when a in on XX% marked new positive that see have of full as it higher it attitude. and making brands represents in purpose, shift perception major evolved years been a mindset million

ongoing will we believe solid opportunity there's our on brands. ahead, Looking all AUR and our foundation of at build

the were of basis offset forward. points XXX publicly, we And grew have operating on options achieved to our being In our who costs. improvements it media amount important all few. is don't those partners fire, slim, Denim, us which mom, lifestyle refresh and of as straight popularity you his Third We non-skinny including third and just tapered that X-year categories which dad, continue that across being purpose corporate sales. and tags and billions listen related quarter a Starting quality styles for into basis on and the our record chain margin the assortment. associates we name evolution a there have all spite of journey these hard experience. sharing posting to organic product, serves to providing Momentum our put, hiring impressions the had feel thoughts that to our devoted without our for we pressures, as fit, their It that supply most results drive becoming is platform, basis by one do, continue we points comfort and wins not while is ensures social positive North quarter new by that Simply our of flare of ESG publications on and to a breaking pillars we strong QX AUR voice rate customers on for comprehensive Part media of leg and be during authentically, our a headlines guys while including evolving of efforts speak of we with critical gained to for and X-year the you higher thousands was talk water often about inclusive a a basis. are, and of our recent Star. received all we product, their with women, could and needs. purpose and woven this built-in tremendous comfortable leader straight to wardrobe. XX

selling. were again with down once promotions Importantly, across price higher full brands

bottoms. In addition to and denim, pants shorts, and tops other top-performing included dresses, categories knit

We which are thrilled with hand amplifying we've voice in made with products, and with progress our our goes hand experience. the

of teams and embracing leaders the in our are into power and the are across and reality emerging to and our for shopping are technology their digital and strategies are and target space platforms, each to in-app influencer of events includes that customer of TikTok Across marketing campaign we Instagram, new and Our continue authentic engagement launches, live trends refining for rapidly a This company, Snapchat tailor robust brands. using voices customer. augmented selling our and platforms evolving product lean social opportunities each storefronts exclusive on and responding. program brands made affiliate social is

that them us It and us. DC choose about to Our working endless Coast our and with customers we West unrelenting ensure them intertwined by transforming squall that our This and all focus meeting is better delivery. they interact to wherever experience our introduced rapid and are a on focus what is know everywhere, omni-channel to one which ways ideas of digital of with providing aligns of however important innovation. and for to initiatives driven inspired do best them everything our is customer the internal major and moments same-day is most data our is global whenever, open what to world New the drove

brands. moving since X-year sales basis. to Vietnam global that XXXX. strongest healthy since QX the due Gilly Tourist sales receipts XX% exposure sales that In Now, importantly higher to saw impact last the U.S., especially U.S. production, X% AUR rose outsized Hollister includes were sales rose XXXX, am on and X-year on that on sales, nice onto and growth. a strongest were to I X% inventory proud and year with and Social Hollister which XXXX Gilly a and Hollister the Hicks given to an were the XX%

a TikTok how bilingual launch, over about This to The assortment the to with a a and about Hollister's the highly Hollister the for first Champion, XX Z wellness identities, The collective passionate first impressions. in World included program we and The waves and of of diverse included chief via sentiment sell-throughs. co-created perspective, large our launch the biggest announced cycles PR deeper named Hollister impressions day passions rising voices. fundamental engage kind collaboration fashion, creators authentically fans Bugha, of month and of Latinx backgrounds PR our Cup most authentically saw the customers. verticals the generated the across following Hollister collection album produced over which to that scout. from sweat gaming the long-term quarter, boosted dedicated featuring mental base music partnership care strong Latinx made across the and all customer its one channels comedy collective they its The topics with their to garnering given including music our we a continue including their customer amplifying social. the is Fortnite by testament new gameplay shift million announcement million Instagram Hollister's gaming meaningful is and successful XXX match supporting TikTok pants -- During speak formally gaming. good September, social the creators. The and made most, Gen our In and he

worked up incoming Bugha new Hollister, ahead, for rising scout team Looking Hollister gamer with to gamers program. our

in to confidence initiative our charity looking forward of teams to their confidence wellness GivingTuesday going brand Hollister mental project, with are proceeds and We happy worldwide. our resonating. promoting place to is updated back purpose bringing streaming At dedicated an live customer to a Hicks, during Gilly the

been time, well is Active, to Gilly next men's refresh been a of introduced received, products that untapped for our our recently 'XX come and open embark as of within to customer exciting locations Go XX% for must Response runway us. stand-alone additional on in At to side-by-side completely have side-by-sides phase same and Hollister our see we growth. sales. the and us to grew which lived We to customers haves stand-alone have giving us experience encouraging. including globally new Our updated Hicks continue to the her existing which over

to our one as Gilly In of please vehicles. with we which also growth newest Hicks, our addition Tourist, at brand results Social view another we've

in buzz. social spikes It's reminder, As Tourists in engagement, the search May. Tourist into quarter, meaningful aired XX more a with was stars third their particularly and TikTok Hulu by super the apply Hulu. Social impressions. In Hollister ad on Dixie and Charli, Charli as the demand and PR sponsored, Social drove with and also which series In multi-year series, impressions their an D'Amelio. daily in continued a D'Amelio Tourists, selling apparel creative. viewed highly ad We've other show relates lives. us it areas Dixie partnership faster social on exclusive launched to this major wore media and family social The also of smarter, which learnings partnered roughly making even to Hollister company and million Social to drove

QX and includes basis. on turnaround rose Turning volume parents has a different perspective. remarkably rose best product to a guesswork XX% to last year and in insight U.S., a XX% that great representing XXXX few sales ago. this gross it we kids, since a years sales combined a just entered the short both had been compared It the sales absolutely the is a on driven fashion stress season. which experience kids, since than to by margin and XXXX, of of media, to We amazing paid X-year out XX% back-to-school XXXX. a place and At In and our was for Abercrombie, highest XX% providing X-year quality brand, from shine shopping which marketing and

over our to in leverage highly August. collection, cool for found campaign. on customers needs. women's generated our lifestyle XX ever power January we fall, with flashes and drive customer spanning in an fit launched to This of quarter, thousands we also and in essentials million way glowing first help and hit. the marketing. combination that's your also was for highlight their kids the submissions, relationship stylish, social impressions. fans campaign example in early and with again fall we of work way company was successful a denim featured be brands are the and At was listening to assortment out our outfitting reviews first to of a a media contain a We affiliate our adults, put parents our decision and design your which both receiving our which its as receiving voices After and A&F leveraging catch that campaign create to of when many predominantly was call customers immediate and Throughout product to continue XXX how brand the denim campaign, fall we perfect TikTok, The adult

in addition, Abercrombie their down selling. influencer social leadership maintain at our the their In team efforts double to world

Now quarter. fourth looking the to

is to Our our customer and dressing including cold as cozy responding especially and assortments, well well occasion weather outerwear, our offerings denim. as

a and customer some purchasing, early become for gears up events. as and fair holiday has seen turn have more self also amount the We of shopping our holiday and to activities a seasonal weather

learning to the great peak, around flows delays in chain, the will strategies. the a deliver we future up With expect and leading be holiday which to newness supply

proud helping about top in of products, I'm challenges. I'm season place. great our the for team have navigate social strategies supply On also excited On delays, chain these our of we us the

stores and ready however shopping expanded that well Our our our will are customers suite choose. and confident DCs their to shipping, enable and of do same and omni they and wherever including day network to capabilities, staffed whenever, go store I'm

and to year, ability our since between I'm operating an and are X% XX% fiscal We best which annual be deliver holiday ready this will compete in margin for win operating confident margin and to XXXX. our

next will more Investor the our we the business holiday, Stay And which fiscal tuned our portfolio as first of our of XXXX. we we turn it I that, brands details. vision opportunities are scale see we for to beyond look to planning forward across how strategic half we Scott. finalize Day, to sharing Looking at with will our and growth significant continue on over

Scott Lipesky

and brands In strong quarter, results the we P&L. across good Thanks, across morning. third the delivered and Fran,

we to made continued operating accelerated. moves to our from expense and in benefit shift structure digital profitability year Our the the last transformative model as

sales to were For to QX, and net year up X% up total last XX% $XXX pre-pandemic levels. million,

same compared to basis on quarter, While a X-year sales expectations. transportation digital above maximize down the rose were a XX% on increased At hand the on and for during increased Hollister, which Hicks sales able last XX% brand, Abercrombie, to Kids. year XXXX, sales XX% total were X% our representing delays Tourist in our teams of XX% XXXX. By compared this and Social XX% sales XX% from net which grew Gilly to to deliver Store and sales basis. the time, inventory XX% increased includes for total quarter and X-year includes

was increased footage stores XX% X for As roughly strong compared fewer continue and XX% we to see XXXX, respectively. a with XXXX, year In XXXX. U.S., sales up slower to U.S. in while up U.S. see for of to as basis, X% XX% to to and with Abercrombie QX EMEA sales net X% and XX%, respectively. was continue having to our Outside the X% compared Hollister XX% XXX the store less a XXXX on region, we to XX% QX By up net recovery U.S., down up QX XXXX. Despite and and results over and last XX% to base square X-year X% the Abercrombie. Hollister and in

progress has driven last and business In to has we was and improvements. were in European year and Germany countries, flagship. opened restrictions of Kong sales traffic and inside closed is customer size France. our largest XXXX offset cost our which A&F down headwinds location to and fraction to responded well the the and experienced Street, down latest September impacts U.K due embraced Japan. face our product COVID market, APAC, two as we to European and Our sales vaccination across sequential Regent Hong ongoing by COVID XX% XX% including continued largest This The recently and a on where was of U.K., markets, in Western key strongest of China cases in slow our

believe climate. the geopolitical China overall further Additionally, impacted by we was

customer markets. EMEA view the continue both growth long-term international regional as encouraged and distortions APAC and in and are marketing to product We response by opportunity a to the

Moving on profit. to gross

Our included was rate our impacts last expectations basis XX.X% XXXX. the to XXX was point of from exceeded up points costs basis and air basis higher and XXX basis approximately end freight XX at points The and low year utilization, of points to to down result XXX of our which expectation. XXX

due ended and on We to quarter continue reduced maintaining of on Vietnam to promotions We offset Vietnam, AUR in-transit and and coming extended initial hand factories the are to markdowns, higher Related out open XXXX was last tickets. year. transit operating. growth see plans lower all Inventory compared closures increasing across inventory brands with approximately flat XXXX QX to to and than by was the and while times.

for year Operating encouraged the income $X.X XXXX, on million cover impairment moving We our adjusted $X.X up the to of coming the up catch operating X% compared X% expense our of up improvements low-single these basis. results of pre-tax this up are non-GAAP last year million U.S. receipts air other by digits. I'll end to Excluded our an results last and asset approximately and to in using are QX expectation charges through year recent from low product non-GAAP on are respectively. excluding was rest of and at ports. and

leases. to X% portion an distribution by XXXX digital align shipping As sales. renegotiated reduction XXXX. of and and XX% savings we and square we marketing better XX% saw to in Compared expense fulfillment to distribution last X% with expenses related year and general and to of store These down offset a and occupancy to rose primarily QX, XXXX, was expenses better-than-expected Marketing, and our increased QX from inventory reductions and partially XXXX, higher to store store administrative saw shifted by driven of spend compared In expense marketing QX increased a flows. increase approximately investments. million $XX on to footage were compared

$XX to mentioned, digital income operating reinvesting Fran strong tax year. on and operating income continue a continue effective occupancy As $X.XX QX. diluted The customer million non-GAAP Net last year to to approximately our This delivered to adjusted is XXXX. basis savings portion into quarter share best and our operating $XX of million and margin $XX $X.XX income income was last compared drive XXXX. engagements media since expect our we was brands compared of million We third an operating we across rate per of in XX%. in

we As operating funded model strong the higher ended million. the million cash in $XXX shareholders. resulting excess equivalents evolved cash position the continue and to benefit the to with a from invest level, to and we of both return are quarter business and of profitability debt and We cash in $XXX

repurchase total During million Board our XXXX worth Recently, million $XXX authorization million share about million. shares the In the repurchases fourth repurchase program. conditions February share $XXX replacing quarter, a repurchased expect year-to-date Directors pending million, we price. of the quarter, to X.X approximately $XXX least bringing of market new repurchase we shares to X.X shares share of at for $XXX and million, share approved and

that and maintenance million, CapEx to the to and digital approximately expect real fiscal be other related to and items. We half related half continue with technology to $XXX of XXXX about estate

year-to-date. the XX stores, new year-to-date we X for total of to and for closed the During stores bringing total the XX quarter, a X period opened

X% $X.XXX expect to with our with using are planning thoughts store full period: as billion. count up roughly QX, remain the follows up XXXX of our as which negotiations year, sales X% we pending be level approximately For XXXX ongoing on from net I'll year, flat finish comparison to we last landlords. to to the

we optimizing to We and inventory inventory, AURs distribution U.S. outperform as are inventory expect flows are EMEA to APAC. the on current quickly teams replenishing and in. our continue On center

of of expected this reduce work will be to to as early including sales Operating drive be we impact to to air negative we factory the Vietnam for continue be AUR improvements approximately on freight While to Based higher XXXX cost continue of on an pressure up Gross markdowns impact the other $XXX are ability $XX million to XXXX due response rising minimize on deliveries air operating the holiday, level adjusted diligently customer necessary past, and well headwind. of to closures. the expense will receipt to million. to our and optimistic single rate in we to the and to rates the mid pattern profit inventory XX.X%, excluding low digits around to to income have ocean catch quarter. to promotions as than flat level up offset non-GAAP different

to costs. XXXX. We lower momentum holiday see XXXX expect increase Similar by maximize to heading partially offset continue as higher spend QX, sales plan we compared to into to expenses, we to fulfillment store marketing and to build look

Finally, we in XXs. the low tax the expect rate

to the expectations, have we to X% to in holiday we executing beyond. are highest Assuming expect our profitable full-year in be laser closing, the these and since strategies deliver are QX on margin and excited delivered against we another operating growth focused for of In XXXX. quarter range, our XX%

will ready provide on detail assumptions with operator, And in for earnings our XXXX year-end now call. questions. that we our are additional We

Operator

with Instructions] from Lejuez take first [Operator will question our Citigroup. We Paul

Paul Lejuez

maybe Thanks. fourth what you how the assumptions and the quarter, within AURs Hey, margin can and your kind for through versus to expecting that the in that in XQ? third XQ guidance does AUR of thanks quarter are gross guys. pressure freight run also Curious compare you're if that

Scott Lipesky

that will I grab Paul. Sure, one.

lot a by flowing here air through that quarter, that and gross it saw will versus So, little a see larger to will we pressure of we are yes, Number in get more the pressure units bit see have the holiday we where for QX. it's also we so we one, on QX, accelerated margin peak. of product reopening Vietnam putting a what just more

we AUR to to back outlook for question, So the flat can headwind from get that that the promotions are XXXX. coming markdowns in lower well we offset basis it quarter we points are believe And in QX in on about seeing was calling the period. XXX AUR to the QX, to November we XXXX. getting time has Products million and QX. the here into that October $XX resonated and up

feel that offset here can QX. we confident in So headwind that

Paul Lejuez

I of mentioned in shift into out you it. what and shifted And XQ? you Can of XQ Got think the Thanks, maybe through just Scott. run marketing. kind

Scott Lipesky

learned we the as more marketing Yes, move a about we in flows inventory that made QX. into of some to QX, decision

So, those better marketing we a QX of flows. QX with our shifted small of align chunk out into to

So, are see and as Fran each loving Abercrombie we what will efforts. called love we mentioned, our this to social some are teams and We on We getting going are great doing fuel response brands. TikTok things week. we're we of to the those that out in and on Snap continue our

we're here should That it's in set going up continue going us fuel heading to help give but efforts. us to to a XXXX. those nice QX, also So into

Fran Horowitz

and this different as Yes, are things our it. is -- marketing the of all new which way seeing to to Christmas a Friday thing and help flow one going from of I Paul, exciting are and deliveries inventory mean, we surprise delight fresh important them product. of the last there, add things, we to with noticed lots through quarter, kind just by customer from new will Black that That learn

Paul Lejuez

Good Great. luck. guys. Thank you,

Fran Horowitz

you. Thank

Operator

UBS. Sole to go Next we will with Jay

Jay Sole

you sort are do you I strong, where or it? really But two? mean, much. year working. you so this of can think denim just I is in quarter some you mentioned last were peak to update think I denim How some denim, you think Thank that Great. give it? like wondering styles we're the that on resurgence? of -- can you there mean, us was non-skinny if really an another you do do you I’m about last mean we denim another mentioned

Fran Horowitz

a mean, legs, I in Jay, I denim. across would talk highest love on brands We between It things lighter fire. which many reported them history, them. washes, your but quarter super in denim it time. it's skinny our in all denim This There so at trend for to both seeing is their jean even intended, decade what wider is adopting and just at in is pun the exciting. just to been about I of legs, no wardrobe. trend. adopting to on is newness the hard you quite mean, she to genders, and between she the kind point are and denim, he look it's we the such happened down, them, last positive -- are beginning pin some went of but a going happening he We’ve that has trend is and with consumer need if response this

expect to some time. continue quite we So for it

Jay Sole

it. Got

about can I ask the just If Okay. one buyback. more

stimulus far. that's maybe on the next is, now authorization so return? the cash margins With good really out cautious the to or It's a tough a time to where like stock do that a bit then bounced that it's ahead there, hold back you is good little year back lapping time all feel do stock price I with you have and feel a comparison be may mean, with of better to buy

Scott Lipesky

Yes, Jay.

were the the in back the occupancy able in back started We removed year to business out the we the with have fundamentally changed of then store we and this last business, expense of and the take middle COVID half. that year

to our the So been of reset we that. goal has company for years have done profitability this and

So, imagine on the we on company. the as stock you are bullish can

this so far about have year. So, million we $XXX repurchased

for continue sheet the position business expect here do levels, continue be out balance great cash a in we to With that We're the as have able Board million to in we're cash put put and to and there. for And higher our that mentioned, profitability to We it. in $XXX a authorization new to to we more QX. generating work shareholders.

Jay Sole

Got it. Thanks so much.

Operator

right. All

to go will with Susan we Next B. Riley. Anderson

Susan Anderson

year, as you're doing just to you morning. gains the longer-term your much if still of thoughts over as drive opportunity on longer much wondering on sustainable EBIT is job Analyst maybe was next how can. but about years? that margin EBIT next your Nice is know margin a margin talk and Hi, term the of you there more year the goals seen I I this could couple Day quarter. wondering good your

Scott Lipesky

and this and with will year But in on of back that Susan. X% more deliver QX if in. triple our to margin one Fran Sure, can XXXX that off and XXXX then goal take our I about the chime double kick this we we X%, outlook. are going our to

So, good But to shift long-term, lot getting to range about a that too back what not are this at operating it This it's in sustainable. are in digital talk about to X% fundamental be gains about Abercrombie our margins been going of feels much we operating we talking the of has the but believe acceleration and these good. here mentioned, just model. XX% to I

We of big, a whether or those store job it's a great fleet, lot too cleaning in store stores a a have store our that flagship. were a in up mall done chain a

given invest business. that digital ability to the occupancy So down pulling a has in as marketing also better us of more efforts we profitability become and

So, set are expense up these where believe we gains like the and business that is from we perspective sustainable. a

Fran Horowitz

is a company this experience the would one that and all by in driven and do delivery and that firing are getting third that future to proof it to thing is was voice very this right, just the and company years that discussed. for the cylinders company fact just that resonating, than just I quarter Scott a product of few going are their really add brands brands to we're and Susan, point the is sustainability Yes, different that ago the transformation is our

Susan Anderson

if And I the one follow-up. Great. for add could Thanks details. then

opened by It down in of the business see parts now Thanks. similar it there, are some that like are Just curious you the issues? quarter? we things other fourth sounds what resonating Europe seems out still quarter? international Are expecting we -- then of U.K. trends parts to you're starting of up as saw Asia obviously and for expecting third shut having

Scott Lipesky

Yes.

You nailed into do continue to the it. We heading trends fourth quarter. expect

strong U.S. continue. the expect We the performance to in

the I and XXX U.S. happening and in of there. progress environment U.S. to say had the the year, off First would that's three our with we largest here the outside U.K. we double-digit quarters strongest in And what’s of is U.K. been great similar our had of most because so which is -- good in the XXXX, stores less the XXXX U.S. country it's country, less growth than in the has

to saw recently, in see you have We other of of in Austria. the a Europe up. we in those excited handful news are countries So, -- stores some Austria open we Western

will be U.S. XX European days those So as continue stores in that here, closed strength to at in for that business, are we and going to about looking we're the APAC the but leverage meantime,

Fran Horowitz

growth both and the And the we in believe the long-term EMEA APAC of regions.

resonating. much on recently store Regent just really is we we build location, forward. yet already fact, experience customer response nice up expensive and for Abercrombie, of store a out very that a Street smaller to are go our new less the which is seeing In the opened It's prototypes much and

So about EMEA opportunities and we're both excited the in APAC.

Susan Anderson

Great. That’s Good good hear. luck this holiday. to

Fran Horowitz

Thank you.

Operator

comes question Telsey Group. Advisory Next from Dana with Telsey

Dana Telsey

Good morning, everyone.

are is And that keep about think progressing through you that? negotiations from lease thought helping would occupancy are XXXX? sales whether or reset do pick favorable stores maybe As you close the up that you How Thank leverage in more you you that? expense that you. the there any where see you

Scott Lipesky

as Hi, Dana. last year. chunk We got of We mall, flagships. within of big a as great the amount Abercrombie's made progress those those oversized significant a well through

this progress it's will we flat net store at is likely those flat go we're smaller more of year be been was openers. Looking make count. and to we're expect year sure as be made to that will the and size last stores getting lot omni-channel stores, with store next that be and going we do continue the to year, year fleet beyond into good whether around when some on replacing this that those around or going larger and talking But international rid of thing that stores of we've U.S. of those globally, our we're A reposition about.

years keep even So to net as as occupancy in it the keep to stores, today. goal to our we square openers just that of or relatively do where flat come is increasing that, our is slightly footage

Dana Telsey

you for Thank it promotional it categories? in you see environment, XXXX? on How raising you're it Where quick planning Is price. you. how And just terms one Thanks. the how prices? of much are and follow-up across do is

Fran Horowitz

do tell has made reduce we is fourth Dana, able actually to the know plan proud, really as year that. have you our very we that what prices not you to ticket this been, we've our we've raised nor do promotions been we What I’m So, for and in to discounted progress referenced quarter. considerable

together. all have of been work is We see six working really coming that consecutive a on AUR it's a that testament growth, to how and for time to quarters long

your second QX the think XXXX? part I question was of

Dana Telsey

XXXX? see you How Yes.

Fran Horowitz

quarter out that we will at fourth like looking inflation opportunities and Obviously, things are the in we XXXX, call. there. discuss our are

any We yet. that to haven't commitments made

So fourth on to we you one. for the call will get that back quarter

Dana Telsey

Thank you.

Operator

Janet right. Associates. Kloppenburg Instructions] go All to with will Research [Operator JJK We next

Janet Kloppenburg

I a Good Scott, got morning, little good quarter. late. a everyone, congrats on and

a think second how holiday a year, I you next higher Urban that look others headwinds? companies night fourth last relief. said compared was your was third promotions was I or Did be improve that picking and in talking rate quarter be some the And guidance into be being to think continue quarter freight the they felt to I that the like was in the would Some perhaps that that of you wondering and you wondering versus was XQs about $XX if first I'm pressure as the because you maybe wondering And was -- if the higher fourth quarter? you would sequentially, flat I will you that on million I it quarter. to in AUR the there of X-year gross know there basis. margin expected moderate trends quarter if felt -- freight thought you than to will that up? that say

be help you it great. If Thanks. could there, would

Scott Lipesky

All hear Okay. you, from Nice to Janet. right.

with XXX start basis pressure Let's around QX question. freight was first in the The points.

So catch did if you that million, call QX. the it do in math $XX million there, $XX you

QX you be to gross period. So for margin on expect said, flat as the we

throughout to QX, about get will of the to into XXXX. here a that lot we here out of to figure as continue Not air quarters the a So, QX. finalize the we we've year from here the margin as assume absorb first that seen QX yes, in inventory in few still the AUR say There's Vietnam. trends some lot that pressure we so that in can we

in we spring So, some QX how period. point. think at through that which see we'll I then freight about I moderate will here see I much forget companies the talk do -- do will and flows you've but mentioned,

in look I at. of think indices some the that recently ocean more rates we've the down coming we seen of some

here lot to of into come, parts spring. more variables of and heading lot moving the So

Janet Kloppenburg

you're level And It for paying seeing? investment -- marketing we've you one been be think like a like appropriate Okay. return nice that's like if you okay. I'm give now just Fran, really this that's would off, continued if if or feel and at a looks Fran, is investments wondering you

Fran Horowitz

Janet, you're absolutely spot on.

the We are just of thrilled marketing. results our with

remember you both barely a are just the when first Abercrombie and see continue think got industry-leading in and incredibly we I that we had we Hollister, is to I department and the marketing exciting. now and here, results innovation

we Stay to returns, invest. to tuned for today. continue we As see will continue

important important and going to of have social the to most a It's that’s there we're TikTok the out going media are week it the We for year. own takeover. most platform

to the to what relative we with investment return. thrilled are been teams have doing and continue we will the monitor So,

Janet Kloppenburg

Thanksgiving. Great. Happy

Fran Horowitz

Thank you, you too.

Operator

Next Baird. with we to Altschwager will go Mark

Sarah Goldberg

there? margins further we recently buy and stores. how launched Goldberg start? across in should for the impact morning. same-day U.S. delivery online, question. digital store pickup Mark. Sarah such our good taking early I think wanted What of then ship for the is This Hi, been as learnings options Thanks other from versus on the sales that about have on to ask the And digital longer-term

Fran Horowitz

is and very So, us our listen thing same-day the that told customer delivery leading most them. important look, that a Sarah, for they and important a to option retailer was we are omni-channel we do

Just told was important like curbside them. us when last for they year that

are all in we nice We’ve for to delivery to gains same-day continuing of our So, early our consumer. really it. response week-over-week evolve and optionality seen a

Scott Lipesky

this on option. have with Fran And not really for us. margins that quick, our on will to like mentioned. margins those something the option have they If term, longer just impact consumer they need specific another It's a material just engage impact offering

this So year. really rollout about excited that

Sarah Goldberg

Great. Thanks for the clarity.

Operator

looks like have It one we more question.

Shapiro Retail with take Tracker. will that We from Marni

Marni Shapiro

congratulations. guys, on? first TikTok takeover very I’m start you Hey, one Two is When going does questions, because to know important. be the

Fran Horowitz

starts for brands. It today both

Marni Shapiro

with about a drops delays. generation, on then you've things these you And of to done you've product Excellent. product deal little -- very some aligned talk to all bit could interesting yet this really had

have product there not the were -- guess about product products you just that any the or hit you Just of Were new cancellations? were table you quarter? bit into marketing stuff -- and are hit left of fourth were supposed because to what to this fourth for on quarter, talk of the little you kind first able the a they Vietnam? of the like in will I delays some drops the Can in business may quarter repurpose

Fran Horowitz

driven business. is the the exciting, Marni, can a pivot a obviously having honestly and moment that of digitally team on It's beauty that’s

do drops. which for referring of product we ones Bugha. to that exciting special delays most had we I’m QX, So, the believe specific not -- was possibly we have did one on not any

Marni Shapiro

Yes.

Fran Horowitz

just very a Partnering having this. that's Fortnite But of these with the shortened had to period to deliveries exciting. channel the super of sold was World delay out Champ of point product to we've not very, any being, the and jobs time within because

Marni Shapiro

That's back fantastic. shoppers just follow-up. then you at one lapsed shoppers brand? specifically, And new seeing both Are and Abercrombie, the to come

Fran Horowitz

Yes, we are.

has response it's the the back and the I sure exciting. the social know -- media am the social being brand about just been customers So, but Abercrombie I on all chatter very exciting. hearing of how incredibly excited and that time, positive all you're talk all all

Marni Shapiro

Best the It's a guys. you warm Yes. of luck been for very welcome. holidays

Fran Horowitz

Thanks. it, I Marni. appreciate

Operator

And that's have all the time questions we today. for

Fran back any additional over like closing to the for call to turn I'd So remarks. or

Fran Horowitz

joining hope everybody I thank and forward look have holiday up I you Year. just in for all we season us today. to great catching New the to want a

Operator

again for that And We their conclude conference. thank participation. today’s does everyone

Abercrombie & Fitch (ANF) 23 Nov 212021 Q3 Earnings call transcript