Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Abercrombie & Fitch's Second Quarter Fiscal Year 2023 Earnings Call. Today's conference is being recorded. At this time, all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions]

would turn I to conference time, Gupta. Mo this like the to over At ahead. go Please

Mo Gupta

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

Chief Lipesky, today Officer; Chief me on call Fran Joining the Operating Officer. and Financial Chief Horowitz, Scott Officer and are Executive

our we Also on available presentation. website an at this on is morning, earnings which the investor our our issued Earlier corporate.abercrombie.com quarter under second release, available website section. Investors is

call. and assumptions These keep in Private and forward-looking the filings Please of risks mind differ and statements safe subject we to mentioned Exchange the results with the will today. that Securities are our reports Securities to Act the are and certain make statements cause harbor in that we discussed Reform XXXX uncertainties and of These actual to are and subject expectations materially from Commission. on provisions the factors could uncertainties Litigation

will call. we addition, be financial certain non-GAAP In during to the referring measures

of non-GAAP Additional investor this and the financial morning. presentation issued to and in included reconciliations release details are earlier measures GAAP adjusted

our to our & and references Tourist Hicks, Hollister, includes brands brands Abercrombie to Brands Abercrombie kids Gilly Fitch and include brands. Social and references Finally, Abercrombie Hollister

over to With that, will turn the I Fran. call

Fran Horowitz

and in margin you and on provided late pleased Mo. It sales our brands, outlook today second for to call Thanks was summer net for quarter report the delivered operating a and morning, I’m May. Good as ranges everyone, global our thank our results. us we joining we discuss above very we busy

while the brands team growth year-over-year momentum, year. increase quarter, evolve done return Abercrombie net X%. team has over comprehensive increase to to QX, the work and delivering an is the a this customer brands strong Hollister closer and get result assortment our past of important the to showing their a Total improvement Hollister net return This with XX%, of across channels. in sales sales a of net brands, grew continued XX% sales regions,

included unit proud which company, and perception. higher acceptance AUR. both higher how across the value -- we also product I grew, am selling and Looking strong of which in both Showing

operating Our last and our it back combined current year-over-year improvement, a expansion quarter Chase quarter goal of and year. is and leverage operating second to finishing continues X.X%, produced than roughly sales us definitely inventory XX% gross growth total significant inventory keeping a margin profit XXXX. help lower second a break from meaningful with tight delivered even rate with quarter accomplish of when strategic

a highest impress XXXX to quarter the to quarter continued and working, growth. Scott of and in quarter dynamic our our Abercrombie growth brands are the second first-half customer playbook full-year response, the marking quarter we new will X% margin on shortly. of in quarter and operating color, our heights, into consecutive XXth sales brand our our the on is expand outlook, some show second The which for the brands. what brand push continues Diving sales environment, macro to exceeding In growth of second raising be XXXX, expectations. and results XX% top is In and was sales since sales the choosing

Abercrombie into early seen for brands growth We've August. sales also continue

conversion Global traffic our customers. were and both These brands We saw of an lasting sales form improved, in in with second the grew authentic, our shared balance contributed regions, May, units channels to our to all genders positive. and Abercrombie and quarter, call help voice, to long work we the deep positively AUR in growth. to assortment brand, compelling in a elements present As our understanding relationships experience. allows in a together customer us and

office to dresses men's we In continue their in and see through look to workday, them women's, as pants QX. growth in get strength for their and posted women's Both weekend our double-digit to sales getaway. customers

On outfit is on lives. Fitch for versatile transformational the to work seasonless the tops executing and growth. and products of years the knit our pants in focus to Abercrombie a all everyday result to deep saw & we The modernize their brand strength get current of them and back side, men's position of playbook brand

and York the for was the are design, today. in and store updated month It products demonstrate brand and Fifth range the who especially our moment in proud store omnichannel when truly me we showcase Avenue the opened last new of Abercrombie strength The evolution of we New experience City.

and happy more to to are forward world opening we the updated in around We our to bring the in Avenue, stores look Fifth months the express brand come.

continue Our to a months exceeding our than sales brands, for we a year, by teen of team rate significantly gross in customer. profit see first higher improvement second We AUR assortment. our improvement levels, lower as average. company expectations costs validating to business point evolve internal freight total over profitable with we and Hollister with quarter, X% last quarter drove a environment where this growth healthier, work the returned and milestones more year-over-year key challenging quarter inventory an proof more brand down and the positioning Consistent the with lower on with our

the second inventory, controlled supporting year. last profit from further and rate current clean discounts the With quarter, promotional we expansion reduced calendar gross in

was to conversion using more developed a distortions of the tops. to quarter second seasonal research purposeful We customer women's assortment. testing, dresses, in selling balanced non-denim bottoms, On response by from and saw which driven months product, and was strong

across in we also and saw non-denim progress While bottoms. men's, top

are we to working. genders We our tightly in across more who fully and needs enter mode team's chase deliver of with our what's quickly second-half the aligned assortment are they with represent, to becoming,

to we're changes brand highlighting social in brand product, assortment, continuing also to authentically. updated while use Hollister, the to the bringing the present media voice Beyond

important, digital as if just We digital, further have so, team amplify not deeply of a customers We throughout brand. more planned this the know but number will experience current connected the that of the fall for store projection campaigns the the through is customer.

the XXXX and an of Hollister's in-store, about second for was area As quarter. two-thirds store in shared we've strength us channel the previously, sales were of

shop, Hollister As seen tell to to we're we ready believe improvements is growth we in the embedded into positioned fall, updated can deliver engage continue August, we nice are and us customer that growth brands optimistic outlook. year to conversion early for well We're traffic growth sales the remainder channels across them. sales and that is with that look for we the and of we've to happy see our

XX% performance, we also sales, the second the delivering sales EMEA brands Shifting sales in saw Both APAC. were QX results quarter Americas in contributed and In with milestone and across to in growth an growth important for Outside strongest regional to our both X% regions growth. and And XX% the saw our regions, targeting Americas, we the growth EMEA product brands. organized of seasonal has sizable through along distortion and around in first-half, depth both from in for We've made APAC, promotions, our Hollister with regional the to operating a local support and Abercrombie of timing pricing, better we benefited regional provides customer. terms model evolution inventory. resets that foundation team our XXXX.

in we in much environment, We've operating believe enabler to results relentless so and regional the moving model close remain forward. achieved this believe macro a strong key as of our a deliver the profit they first-half delivered XXXX customer making to investments growth execution deliver quarter choose continue our demonstrate forward is believe this while growth dynamic plans and brands. success. -- expansion, relevant the We highly lifestyle their and achieve position inventory to needs, critical assortments we and strategic company for our balancing with long-term always and are We

Scott for to quarter over it to some detail financial turn now outlook XXXX. additional on the I'll give updated our you and

Scott Lipesky

Fran. to Thanks, note before One and second full-year I speak quarter updated to outlook. our item the

leverage and enable and of growth. regional experience quarter we've the XXXX, knowledge teams global our During better to the operating of second to model our evolved structured

APAC. regions: With to reporting EMEA these segment focused Americas, three on moves, will geographically our the be and shift

our second quarter statement disclosures footnotes. XX-Q additional will Our in show financial

gains shared month to quarter second Comparable each on second top quarter to above year. sales year-over-year driving We improve progressed million, the on we in up the May. the delivered We Now the line XX% net of for last expectations a sales saw strong as total XX%. quarter results up $XXX were sales with quarter results.

saw with last to positive benefit In growth. We led over from X% year. continued in EMEA delivering the China with basis, way growth inflected On growth. the a we the a APAC, regional XX% Americas XX% sales reopening,

brands brands XX% we saw step and the a grew the at second and delivered back. Abercrombie take brands off XXXX, growth of Looking our market performance X% the Hollister where quarter teen

the genders, the while brands, business led in growth women's consistent Hollister Abercrombie Brands. way across was For

gross on Moving profit. to

compared There in the XX.X% the key point improvement. rate several to was basis Our drivers for were quarter of XX.X%, XXX XXXX.

activity promotional a by contribution Abercrombie First, total, we of from lower saw the in driven some XXX better-than-expected approximately Abercrombie. business points basis mix ticket benefits for higher AUR, and

points. of approximately we freight a saw basis Second, benefit XXX

benefits and and estimated points. XX were costs from going from The line by XXX expectations points with impacting approximately higher full-year with the basis the for offset benefit currency. basis basis rate QX consistent the cotton from freight points cotton was net adverse foreign around impact and XXX approximately basis points these benefit in Finally, XXX by our into quarter of

a business times drive a to would With we leveraging in can and and Chase supply costs, the The significantly functioning again we react run and supply better place receipts. way shipping with freight the year. chain than once good last is inventory chain, like, performance read

to XX% year, and leveraging Our brands inventory our was the down all both are last capabilities. regions for quarter and Chase

year. income year third to adjusted inventories to was $XXX flat and than million last $XXX in expect operating We At asset lower to by inflation, year. last and had was Operating to $X year-over-year impairment higher technology, continue million, quarter year. based finish We of to pretax incentive excluding compensation. compared expense expense, other be last to expect The exclusions we operating expense with last charges digital the down this year-end, year. investments increase excluded no of million driven and

income XX.X% saw leverage we leverage. sales XX% our higher and of better-than-expected sales with driven last year. the to expense million, compared representing year, expense approximately expense $XX breakeven of combination in the last to Operating higher-than-expected quarter compared Operating of this by With improved profit year. gross sales, rate improved expectations exceeded was income operating

of compared loss per Net income $X.XX last per an diluted year. share adjusted was $X.XX, to share net

ended balance million. On cash quarter million of we the with of and liquidity $XXX $XXX sheet the

approximately outlook. for of replaces approximately guidance. first-half had of and For and our flow $XXX we Hollister million. previous start This are quarter second million solid cash Based operating outlook full-year on the results of to updated we the full-year August XXX $XX stores. expenditures increasing Abercrombie capital first-half We a all both with and ended the XXXX, brands,

the in around sales X% our the the XX% to This to is billion. $X.X For second approximately the our expectations to and from expect of of quarter net we X% for second-half. growth due level full-year, outperformance up up outlook of XXXX previous current

to $XX expect contribute XXrd XXXX. to fiscal the continue We week approximately million to

rate expect stores, stores, closures. XX approximately XX For we remodels new sizes, combined and and XX

margin, higher expansion operating approximately expense on We to of to higher contonjue higher in previous the gross profit the cotton improved from to and range expectations AUR X% X% driven XXX expect X%, full-year. net we X% up basis expect increase benefit with points for the of rate of be from outlook and by on For to freight leverage sales. the for our

continue an high-XXs, CapEx low-to-mid-XXs, and $XXX compared expect previous approximately of higher we the levels, expect effective expected tax to expectation profitability We due to in rate million. our of to

level to fiscal we the expect growth compared third sales the across compared up regions see saw $XXX third growth XXXX, million. sales XXXX in we the a year-over-year of of net Abercrombie quarter. the Embedded assumption is trend assumes we the and with remains that quarter to to continuing to For XXXX in low-double-digits, brands outlook outperform quarter Brands. outlook second The also and with total brands consistent first Hollister be

range compared margin, of year. of be to an margin operating XX%, operating we expect adjusted For a in X.X% to last to X%

driven well and expect expense We sales. as higher as inventory on improvement lower be lower the higher on gross rate year-over-year on freight leverage higher AURs by healthy to promotions, and profit costs

To back had believe we mid-XXs. the expect each position a an year we and out, to year-over-year strong deliver is in rate a effective the in and first-half the tax brand it close of half. we region sales in Finally growth

remain We campaigns plan and back-to-school the sheet product Chase improved holiday, with into cash expect XXXX, we to to as flow leverage against through marketing as we are stores, to in execute offense key acceptance. the open of and balance pleased we move first-half on generated drive and

And for that, we're with operator, ready questions.

Operator

comes The with Instructions] Corey Jefferies. [Operator question first from Tarlowe

Your open. line is

Corey Tarlowe

the Abercrombie. really coming upside the thought start Great. initially seen as where into thought Fran this some specifically you I it where perspective seeing and for Thanks that quarter What to brand want that Is the so the the Abercrombie quarter? back-to-school. at actually that think much trend commentary And you've with may made would you you noting? into from be that question. you're be out impressive to on call wanted you also ended you positive about you then might either there taking anything is worth momentum a to surprised

Fran Horowitz

Good morning. Corey. Hey,

so momentum with it's see the exciting to yes, So continue A&F.

it's XXth The a growth playbook our culmination really years of hard As quarter reminder, is and consecutive of the is work. it working. of

business great today. us, a talked going several before, longer lifestyle a certainly are I no and the are a franchise newer this we we've for it is categories, what's t-shirt we is win You brand. there. have but about know, and brand mean, jeans a We pants And driving

our really back that well. very exciting to YTD exciting is It's also business men's now as Our noticing our very, the see him dress franchise comping is nicely. continues, business business in

trends specifically news good any we're business bottoms than seeing. Back-to-school is, that that The denim. is more is the

You assortments. are The things And lot got to our we happening, team of cargo work. came to a bottoms, last focused jean pants of year, from of wider out QX knit really on know, legs. kind there to

we're the business. current So that's what seeing in

Corey Tarlowe

the you've the year How then, trend saw really And are seems with seen should in the this on it and what like how AUR thinking AUR. Scott, about we've some versus second-half? great. of seen That's you nice in AUR, you first-half just -- momentum

Scott Lipesky

did some see coming great we through first-half. the momentum Yes,

You Abercrombie Hollister so And higher got chase nice much point fall AUR year. we It benefit into that key able the get that lap off And with get expecting We weren't Hollister, coming a last where we to know, then we that business AUR. for from we than some. a quarter, mix to few real any different as we volume came from pivot second One, were really outperforming promotions. just didn't there. places.

and So AUR healthier also. Hollister just we run raise that we able were to for about year-over-year in a something that QX up talked business,

that out trend would about we get lot we AUR year promotions we point, to last once really second-half some go feel As there, this QX. more had I out have inventory off where in of at there we like say, a specifically that fell think Hollister, of getting in

where we're So that's focused.

into We current in puts QX, have and us to so lean across that inventory in down brands XX position coming off best we're the regions, pull promotions the future.

Corey Tarlowe

much Great. the of color for Thank you all so and best luck.

Fran Horowitz

Corey. Thanks,

Operator

next Advisory The question Dana from with Instructions] Telsey [Operator comes Group. Telsey

Your line is open.

Dana Telsey

I Scott, terrific about the target, or operating operating achieving This And And basically margin when margin right Fran. quarter. was Hi, around that year, X%. X% for you're congratulations on think XXXX target so. of around the the a

long-term How as year, we you. sticky? reach go and journey? the now this what this on to target to of target was much have target is the So this X% that you Thank have X%, obviously, So X%. X% XXXX XXXX could opportunity of XX%

Scott Lipesky

-- nice back the a got as we And really in we freight targets. sitting question. Obviously, cotton the come come. that's And something put markets we for back sure almost into future zoom, of some time we quickly us. that we XXXX weren't in levels. to these that about for it's XXXX had come lot quickly how would zoom look and And needed here as middle full-year. XXXX has in back XXXX, the X% to back there pretty seen get that tumultuous the pretty we cotton, today when freights mix. Great a in at the out set in think And we've to was of When out It year assumptions. Dana. X% back Hey, and it

XXXX to business So changes we at number. want Hopefully get to sitting key a these year. make the talk here XXXX XXXX we this which that, us really next. sticky, getting to We're water of our is about today, is we're We are But this business, OpEx, we to the feel sticky. bridge cost formula exciting. little the good. A the of to and that to parts to of be out growing into go freight point. leverage the here that's want starting We're control. going back that not and to All lot cotton

really little about little talked a coming us in we Fran, bit, them And those both lot long-term nice a bit margin maybe about ago, position a perspective. AURs growing we but second this a from year, puts a gross talked to a holding AURs,

to that. been we've We've do gross margins. those grow to been able So able

nice about to year. targets X% today, here this again, And for put good still. feel those sitting So that out to X% we

Dana Telsey

Got whatever. think quarter the overall, it progression then think how's Fran, And or in Hollister, positive was the first you Thank sales just with How to improvement ’XX seeing you trending? fourth it. are you. on What there? the Hollister, back-to-school And of holiday? the since I do just of

Fran Horowitz

Sure, Dana.

we're So, very I'm the and team of proud on seeing. what excited know, very you

So back point, retailers. last many your a significant and QX, of to teen step other the ourselves saw we for

understood an where would back You that and is say team we I a know, us? was how took and their got we customer assortments. to introspection we closer got to The to said, Is work, landed really where macro? their were. it to being And we of lot owned evolve and it really

back is that's has mentioned, of You Chase one know, know, the best have team the best reading, that and to what and the reacting, you tools news and all year. chain supply up that is we Scott been

evolved. for So known, great very us. for a is They're are thing also assortments very which back-to-school our

growth see to Our expectations Hollister. is we back half the in head to continue into

Dana Telsey

Got it. Thank you. Congratulations.

Fran Horowitz

Dana. Thanks,

Operator

comes JPMorgan. The Matthew next with from Boss Instructions] question [Operator

open. is line Your

Matthew Boss

really quarter. nice Great. and on Thanks a congrats

Fran Horowitz

Matt. Thanks,

Matthew Boss

continue share, year to relative back given both speak I Scott, just a just momentum to maybe the brand the the concepts ability and that the this speak see. supply to last guess, ago, the trends at performance chain to just your year? driving could at you sustained time to what into then help relative across magnitude And think of half the Fran, you you could and customer broadly inventory you Abercrombie levels this acquisition. to same us market new see to about So, chase year

Fran Horowitz

Hey, thanks, Matt.

this take I’ll So off. one

the that So is I doing. jeans consumer responding the momentum growth like grow your no for it this have expanded new to And continue, we've magnitude. words is really really and that is exciting what We a It's business. consecutive and categories. nice seen. It lot to quarter of very matter. see of longer We're XXth and a t-shirt into we're

now we're this work So extension a seeing where categories. this example, can of brand getaway. wear young Matt, weekend to And of their that's millennial from great that

iterations. We all over it that fabrics different franchise have a We're Sloane. called women's, It's TikTok. are in and Women pant offering loving pant. many

has business a destination. real dress become Our

guest a have We continues best collection year-over-year. dressed to grow that

for to she's all important she's owing of and out You out occasions know, to men's coming us wearing and her from business. that social those the things now

You know, that we back. got

gotten a we've with as men's and business too. started we focus, the women's So now again moving

week, and a So with supply business you Chase. and is very team can chase they're Abercrombie This our the traceable the They is. teams part asked agile. very into got the now respond supply it second chain where the what's very is working. of about with your to every work question strong where sourcing We've expectation, business

Scott Lipesky

the need are to a with are of was chase. about Then the when capacity happy Yes. inbound, UPS, in activity Fran's factories, for better which factories, rail, have us better. than at and lot with then when most there point, able good with supply of, sailings kind There's in years. be are chain, the you West capacity get some the ground Coast a are we ports. really able at in be the Matt, business. a out run U.S., they been it we on settling, think better. inventory Timing the nice even chain, there's rates that here to And fast. recently is where start lean ocean whether supply able And be to is on to been unions to transportation We Fulfillment so you

And to And of good in have the that we lot stability, supply want how can we chase. just run the a So stability news, means that's hopefully chain. business. if but we equal

we with very where today. So happy sit

Matthew Boss

Congrats again. Best of luck.

Fran Horowitz

Thanks.

Operator

from with [Operator Retail Marni The The Shapiro Instructions] comes next question Tracker.

line line open. your is open. is Marni, now Your

Marni Shapiro

new amazing on that. morning pant for Congrats on curious of on these bit guys are Good guys. side back touch it's the little Could the of exciting. talk impressive. Stores you year? an half And Because the quarter. shoppers It's for insights back the very on about TikTok, what look look to marketing days. you spend the are getting you And touched should Sloane a brands? you everywhere business? Could Fran, that bit lap Sorry of little like you I'm fantastic. and there? little the a

Fran Horowitz

good the in Sure. are really Marni. goes, us we all leading Yes, really we say this as morning, Hey, in, I'm so I our as as you marketing everywhere. seeing say, is marketing team far you really their time, proud, know, but

of The really there's And they that's there mean, Hollister, behalf, and know, responds even customers out in Abercrombie consumer. evolved win who actually our And on product getting nicely team and for in that We're and very the positioning and on of, you focus right place is their their a brand lot seeing know, better out more machine. she and other truly you that customer a for back-to-school now, the are putting there. a of to, I customers. you're today, genuine a best what today our today. friends much to he speaking lot marketing reflection very So we've we’re do that it's to

exciting half. coming So lots for the back up things of

Scott lab I'll speak new shoppers. to, and let

Scott Lipesky

Yes.

we were I'll to was back for flat first-half, Hollister. the the pulled Abercrombie We the we'll continue On up start the down gas about the start on ramp We'll Hollister thinking working as in around press half in as brand the in marketing were for expression, on there back little that spend, we a there, year-over-year, we’re as brand well up on Abercrombie. And to the Hollister. then product. bit positioning,

up expect across marketing for total back total be we in to the company. So half the

And then for Abercrombie, and it the shoppers, piece, last lot over lap call we talked new the a last year. yes,

a this large to age expanded we've market. group As addressable let's very that's XX, XX it, call

people trying They that to We're brand. a the the there reintroduce we're been also haven't customers to So never us. have for while. shopped brand new to introducing with

teams So share more side obviously. finding has point TikTok our here to in helped, we're amazing the there. And Fran’s consumers has the out an job half. spending done our going to on back do by

Marni Shapiro

the Fantastic. the season, luck Best for guys. of of rest fall

Fran Horowitz

Thanks, Marni.

Operator

next The Mauricio Instructions] [Operator question with from comes Serna UBS.

Your line open. is

Mauricio Serna

good the question morning. on and congratulations taking very results. the Great, for strong Thanks

you you if stores, higher see XX also to I the you it know, pretty break and sales with levels between AUR units? wanted opening, share you wanted Could new for think us XX growth and, and store confirm, down maybe impressive growth, quarter. to this mentioned the know, maybe, you closures. Just could And

increase. a you Hollister? Thank like like maybe like opening skewed be that talk that or Abercrombie just So towards net, you. it's where, more five Could store like, about,

Scott Lipesky

bets the been seeing continue store more great the our there. press the obviously for Abercrombie a we'll in U.S. Yes, years and specifically on now, tilted in we'll side, bit little to that brand here side, trends towards We've be

the closure maybe little brands, little will bit a Hollister. side, a be bit tilted On across towards it

also and right again, sizes there's in remodels So and said net we XX openers there. that's where

new store, new consumer. that's our not it's expression for a while So a

also. that like we So

awesome. of we've for coming add you about XX kind and sizes expressions that's got those openings, remodels So and and right when consumer, the new the

little in specifically, a of promotions Abercrombie, On we purposeful a the growth from little comp up. down that tilted it's was year. and those And were last more then growth towards and it's we AUR on growth sales and growing side It's both. since didn't AUR. AUR and AUR side, growing saw Hollister bit Units units lot a the unit was bit,

So in what the obviously seeing really like Abercrombie we're brand.

Mauricio Serna

market, on can mean, two commentary other that to still follow-up seeing? Any that in regions, And provide what the the back the across of just sorry, Got I regional you the it. second strongest -- do you delivering performance. relatively I the expect continue? the like if results EMEA, U.S. delivering trend to on maybe growth, may underperforming you it's half And Americas are but

Scott Lipesky

that our that of was that balancing say, Europe, saw China good and would was We'll and The Yes. continue assortment, I good And And second the U.S., about should point business, lot in far out we're making assortment by then quarter, Hollister call sign months a We've it the thing. of the our we see expect think to biggest guess, trends company, and a assortment. but outside for or the of for that's EMEA about obviously, I the it, Kong. and nine the part we six outperform. of think we when it's inflection hoped, we in Hong to us continuing the APAC, proof smallest total to that good Whenever so Americas Hollister. moves in knew help there right good of that to in region, over that us. there talked a evolution a the, about we that

momentum So keep is our that goal rolling. to

Mauricio Serna

much. Thanks Great. so

Operator

with Instructions] from [Operator comes Paul Citi. The next question Lejuez

is line Your open.

Paul Lejuez

brands. sales thanks, you've in Hey, both Scott, seen then performance could you that said each know denim I at just right, at quarter. if and further heard each Curious, guys. think said in maybe denim you you if bottoms. just And improved month region, August. if about that brand, clarify each curious I that not I acceleration the comment was that during

else leading could on you Thanks. think the the we're And denim business? charge, share I performed. but curious specifically has China how anything

Fran Horowitz

the in with Paul? start I'll Let's the that, see, we where should denim. start middle with

business pleased bottoms I And bottoms for mentioned, we're our than is brands denim as strong second a yes, genders. But quarter, much, very we is much across with bigger across had denim and So today. business.

excited things starting what about is there. there happening. fits bag and rise the are to actually to we're emerge So he, Within low denim, again. denim, and we're seeing looser She's both your responding are

we but are things still there's are fact are focused bottoms much that really So that than today. denim the on are that exciting, more happening

Scott Lipesky

saw improvement, we quarter the take to went through part for month each on yes, acceleration in the back improve of second our the across sitting the us QX up Back there start. sales outperformance It and saw we a we the that to nice in at enabled for beginning May, quarter. some brands reason sales then as outlook

haven't then for an there put we good August, about we raise line. there to XX% us in think to year the also outlook and QX numbers we position and where But sales QX. to outlook of out for our feel the compare As puts around a low-double-digits on given up enough

kind thoughts I were we're small many China. us a -- share back. of minute brands ourselves been it out piece others. but and a our slow part business, return COVID coming Last of It's of get ago, a said our for on some Again, seeing

things. the that digital setting control make right pleased well performing headlines of the our and we're business. of feel China, can So that with coming teams in platforms in we're doing can country, at sure a lot that but making Obviously, we assortments, the distort those we is it times, what out all do sure we're locally there's we're make confident we sure assortments, good control, all and balanced that's

Paul Lejuez

Thank Good you. Great. luck.

Fran Horowitz

Paul. Thanks,

Operator

JJK Instructions] Research. next comes with Kloppenburg The question Janet from [Operator

Your line is open.

Janet Kloppenburg

Hi, you me? hear everybody. Can

Fran Horowitz

we Yes, can.

Janet Kloppenburg

maybe could Thank particularly where of than nice you. Congratulations that Europe, Hollister to see for turbulence to expected. some consumer market all. Really you outlook the for Hollister pull distinguish on about and there been And the sustained. inflect. Fran, and performance talk be thrilled and more has back the in particularly if U.K. spending to you performance

when men's increases are far like opportunities turned. is? brand, given how for And the said, lastly, A&F the forward? success women's wondering you charge the did Thank you. As there behind I'm is Abercrombie And more it just at at leading that going price

Fran Horowitz

Okay.

So top, at let's the start Janet.

the marketing in So we're both inclusive the them some time excited Germany, in in saw excited sure but we put well. specifically was with the journey this on new apply business both of we and really this about talent to where markets make this model offices first. inflect Hollister to quarter, been know in the over those in really regional two you've We which techniques is evolved those see I these past turn and we're in team and total and us, operating as Shanghai, and EMEA U.K. market. London focused strength have that's significant

the we're to EMEA well. come see as but to So inflection happy more in there,

I turn, how see far proceeded meant we behind didn't that men's now with for Abercrombie. the to in that Hollister as we're for see that excited women's and mean see in to do was continue businesses Abercrombie Hollister women's was when well. we What guide turn not expectation to our see well first start it and I is that's normally

voice more because And increases, our telling experience opportunity price that and thinking quality is is us that, perspective. for that regarding that them, value lined enjoying A&F prices getting our that giving product the it and a the the way and we they for consumer are we're about and the we're up are

to into hold make. So year back the we and of really planned progress We and the expecting proud increased really that do to have able for pleased AUR see our we've half. been to some came the AUR

Scott Lipesky

Abercrombie. Yes. thing One last on

as point we maybe made last cycled this through have of at We plan back is the half. up through about in planned go year, of We increases ticket fall the some kind for ticket mixing those Abercrombie, the and have no assortments. increases

many mix not working assortment, are that in to mean things years working that brand sweaters, ago. that I continue that years there's We and up were jackets,

still here a targeted. on little little we a run up take pull promotions really bit that, it's But top soften us maybe to it to being strategically able off that. more. those So that gives chance then AUR we excited and see promotions, and And bit there, can a to of if some

Janet Kloppenburg

back-to-school What comment Hollister's could said you And you you know trends? I about Hollister momentum. sustained the A&F has have third on quarter to-date? Scott, said in

Scott Lipesky

Same thing, July, June off of that into seeing coming momentum nice August. into

the outlook So of take the second-half. for we reason can is QX part that here that year believing here inflection and up in and seeing full the Hollister

Janet Kloppenburg

You're momentum seeing right? improve? globally, And that's

Scott Lipesky

Yes.

Janet Kloppenburg

so Have good day. a much. you Thank

Fran Horowitz

Janet. Thanks,

too. You

Operator

Alex [Operator Stanley. with Instructions] Our Morgan next question from comes Straton

Your line is open.

Alex Straton

great right give here, operating a perhaps should from about maybe any the that, two guys the quarter. history? how just to between particularly in difference we if brands on aggregate, on the Great. Hollister? just and color opportunity margin for Thanks Can Scott, And us now, the think two where sits congrats Fran lot. compared Hi, not at a and another sense you for the

Scott Lipesky

Abercrombie Alex. don't having margins. about by Sure, would business, on the being say nice that terms operating I in years we're is over higher operating of seeing margins our that brand business. operating operating edge than than publish that about grab what really And I'll couple store past more towards digital is higher a our margin. lot much we're a But one. digital what We But brand. margin brands with gives for of Abercrombie margin tilted operating across a pleased We've Hollister. the talked

for outlook cotton come and brands across with side next, to coming that the and to X%, benefits taking seeing product Obviously, up year in and the that us that's from the across helped cost freight hopefully in brands. X% on

business And the high very we have brands for in help Hollister, brand to Hollister margin Fran also the also. operating penetration. thing a store That's across store being talked solid about and that business that a seeing where good

feel where half. we with the here and for today back So sitting optimistic good we're

Alex Straton

Congrats. a Thanks lot.

Operator

back show I turn to at questions time. like I the Fran closing this no to remarks. call would for now further

Fran Horowitz

the all to forward just I to and look you. call to joining thank today, soon. want updates more you Thank everyone providing for we of

Operator

you This concludes Thank call. conference participating. today's for

disconnect. now may You

Abercrombie & Fitch (ANF) 23 Aug 232023 Q2 Earnings call transcript