Abercrombie & Fitch Co. Reports Second Quarter Results

Abercrombie & Fitch Co. (NYSE: ANF) today announced results for the second quarter ended August 1, 2020. These compare to results for the second quarter ended August 3, 2019. Descriptions of the use of non-GAAP financial measures and reconciliations of GAAP and non-GAAP financial measures accompany this release.

A summary of results for the second quarter ended August 1, 2020 as compared the second quarter ended August 3, 2019:
*Net sales of $698 million, down 17% as compared to last year, reflecting the adverse impact of COVID-19 on store sales.
*Digital net sales increased 56% to $386 million, reflecting robust growth in every month of the quarter.
*Gross profit rate improved 140 basis points to 60.7% on lower promotional and clearance activity.
*Operating expense leveraged, reflecting an ongoing focus on tightly managing costs. Operating expense as a percentage of sales decreased 490 basis points and 610 basis points on a reported and adjusted non-GAAP basis, respectively, reflecting the adverse impact from flagship store exit charges last year of approximately 530 basis points.
*Operating income improved to $14 million and $22 million on a reported and adjusted non-GAAP basis, respectively, as compared to an operating loss last year of $39 million, which reflected $45 million of flagship store exit charges.
*Net income per diluted share improved to $0.09 and $0.23 on a reported and adjusted non-GAAP basis, respectively, as compared to net loss per diluted share last year of $0.48, which reflected the adverse impact from flagship store exit charges of approximately $0.50 per diluted share, net of estimated tax effect.
*Generated positive operating cash flows of $187 million during the second quarter ended August 1, 2020, ending the quarter with $767 million of cash and equivalents and liquidity of approximately $1.1 billion.

Fran Horowitz, Chief Executive Officer, said, “We are listening, learning and evolving, and staying nimble in this unprecedented period of turmoil and uncertainty. Since the start of the pandemic, our global teams have been tirelessly at work, rapidly pivoting in response to the changing environment due to COVID-19 and calls for social justice. We have made many difficult decisions with a purpose of strengthening our company for near-term success and long-term growth.”

“We ended the quarter with approximately $1.1 billion of liquidity, reflecting $187 million of operating cash flow generated in the second quarter. By managing to the tough current environment and our daily demand trends, we were able to grow our highly penetrated digital revenue base by 56% year-over-year to $386 million, expand our gross profit rate by 140 basis points and leverage operating expense, resulting in robust operating margin improvement.”

“We are proud of our recent execution, although cognizant and humbled by the many unknowns we as individuals and as a company continue to face. Looking ahead, the physical and mental health and safety of our customers, associates and communities remains a top priority. We will continue to be vigilant, thoughtfully managing operations while leveraging our strong liquidity position to strategically invest in critical functions that support our future global growth opportunities.”
details at: http://corporate.abercrombie.com/investors/newsevents/press-releases

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