Abercrombie & Fitch Co. Reports Third Quarter Results

Abercrombie & Fitch Co. (NYSE: ANF) today announced results for the third quarter ended November 2, 2019. These compare to results for the third quarter ended November 3, 2018. A description of the use of non-GAAP financial measures and a schedule reconciling GAAP financial measures to adjusted non-GAAP and constant currency financial measures accompanies this release.

A summary of results for the third quarter ended November 2, 2019:
•Net sales of $863.5 million were approximately flat on a reported basis and up 1% on a constant currency basis as compared to last year.
•Comparable sales were approximately flat against positive 3% comparable sales last year. ◦Both Hollister and Abercrombie delivered positive U.S. comps, resulting in a total company U.S. comp of positive 3% against positive 6% last year. This was offset by international comps of negative 8% against negative 3% last year.
•Gross profit rate of 60.1%, down 120 basis points on a reported basis and down 80 basis points on a constant currency basis as compared to last year.
•Operating expense, excluding other operating income, of $504.7 million, which includes $13 million of asset impairment charges, was up 3% to last year. Operating expense as a percentage of sales deleveraged 150 basis points on a reported basis and was flat as a percentage of sales on an adjusted non-GAAP basis as compared to last year.
•Operating income of $14.5 million as compared to $39.7 million last year on a reported basis. Operating income on an adjusted non-GAAP basis, which excludes pre-tax flagship store asset impairment charges this year and legal benefits last year was $24.9 million down from $36.7 million last year, reflecting the adverse impact of changes in foreign currency exchange rates of $5 million.
•Operating income margin of 1.7%, down 290 basis points from last year on a reported basis. Operating income margin on an adjusted non-GAAP basis was 2.9%, down 140 basis points from last year.
•Net income per diluted share of ◦$0.10 as compared to $0.35 last year on a reported basis; ◦$0.23 as compared to $0.33 last year on an adjusted non-GAAP basis; and ◦$0.23 as compared to $0.27 last year on an adjusted non-GAAP constant currency basis.

Fran Horowitz, Chief Executive Officer, said “We achieved another quarter of constant currency revenue growth and positive U.S. comps across brands, while maintaining tight expense management. Continued U.S. momentum was offset by challenges across several of our key international markets as well as a complicated global operating environment, which weighed on overall results. Despite these challenges, we ended the quarter with a balanced inventory position and have seen good response to our new assortments as weather has turned more seasonal, giving us confidence in our product and messaging for the important holiday period.”

“While we are focused on the upcoming holiday season, we also continue to make progress against our long-term transformation initiatives including: delivering 34 new store experiences, keeping us on track for our goal of 85 for the year; continuing the global rollout of omni capabilities and new payment options; and building our customer and product-facing teams in the EMEA and APAC regions. These transformation initiatives, along with accelerating top line growth, are essential to achieving our 2020 profitability target.”
more detail at: http://corporate.abercrombie.com/investors/newsevents/press-releases

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