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Details on Industry Insight.
New Albany, Ohio, August 17, 2011: Abercrombie & Fitch Co. (NYSE: ANF) today reported unaudited results which reflected net income of $32.0 million and net income per diluted share of $0.35 for the thirteen weeks ended July 30, 2011, compared to net income of $19.5 million and net income per diluted share of $0.22 for the thirteen weeks ended July 31, 2010. Net income for the thirteen weeks ended July 31, 2010, included a charge of $0.02 per diluted share associated with store closures.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:
"We are pleased that our results for the quarter continued to reflect strong momentum, both in the US and Europe, resulting in a 71% increase in operating income for the quarter. Going forward, our focus remains very much on execution against our long-term strategy and roadmap objectives. Costing pressures will be greater in the second half of the year, and macroeconomic uncertainty has increased. However, our strong top-line momentum and overall performance for the past several quarters give us confidence that we are well positioned to navigate through this environment."
Second Quarter Summary
Net sales for the thirteen weeks ended July 30, 2011 increased 23% to $916.8 million from $745.8 million for the thirteen weeks ended July 31, 2010. U.S. sales, including direct-to-consumer sales, increased 12% to $684.9 million. International sales, including direct-to-consumer sales, increased 74% to $231.9 million. Total Company direct-to-consumer sales, including shipping and handling, increased 28% to $102.1 million.
Total comparable store sales for the quarter increased 9%. By brand, comparable store sales increased 5% for Abercrombie & Fitch, 7% for abercrombie kids, and 12% for Hollister Co. Total sales by brand were $383.4 million for Abercrombie & Fitch, $83.3 million for abercrombie kids and $434.2 million for Hollister Co.
The gross profit rate for the second quarter was 63.6%, 150 basis points lower than last year`s second quarter gross profit rate. The decrease in the gross profit rate was driven primarily by an increase in average unit cost partially offset by a higher AUR and an international mix benefit.
Stores and distribution expense, as a percentage of net sales, decreased to 46.4% from 48.9% for the second quarter last year. The decrease in the stores and distribution expense rate was primarily driven by lower store occupancy costs as a percentage of net sales.
Marketing, general and administrative expense for the first quarter was $110.0 million, a 16% increase compared to $95.2 million during the same period last year. The increase in marketing, general and administrative expense was due to increases in compensation, including incentive and equity compensation, marketing, and other expenses, net of favorable prior year legal settlements.
The effective tax rate for the thirteen weeks ended July 30, 2011 was 30.7%. The current rate reflects a lower than anticipated full year rate as a result of an increased share of the company`s pre-tax income coming from international operations with a lower effective tax rate.
Net income was $32.0 million and net income per diluted share was $0.35 for the thirteen weeks ended July 30, 2011, compared to net income of $19.5 million and net income per diluted share of $0.22 for the comparable period last year.
During the second quarter of Fiscal 2011, the Company repurchased 950,142 shares of its common stock at an aggregate cost of approximately $64.4 million. As of July 30, 2011, the Company had approximately 8.4 million remaining shares available for purchase under its publicly announced stock repurchase authorizations.
In addition, the company repaid outstanding borrowings of $44.3 million and ended the quarter with $539.6 million in cash and cash equivalents, compared to $596.5 million in cash and cash equivalents at the comparable point last year.
The Company continues to anticipate opening five Abercrombie & Fitch flagship locations during Fiscal 2011, including the flagship opened in Paris in May. The Company expects to open up to 40 international mall-based Hollister stores, of which six had opened in the first half of the year.
The Company expects to open two domestic stores in Fiscal 2011 and now expects to close approximately 60 to 65 domestic stores, primarily at the end of the year through natural lease expirations.
Based on current new store plans and other planned expenditures, the Company continues to expect total capital expenditures for fiscal 2011 to be approximately $350 million.
On August 16, 2011, the Board of Directors declared a quarterly cash dividend of $0.175 per share on the Class A Common Stock of Abercrombie & Fitch Co. payable on September 13, 2011 to shareholders of record at the close of business on August 29, 2011.
An investor presentation of second quarter results will be available in the "Investors" section of the Company`s website at www.abercrombie.com at approximately 8:00 AM, Eastern Time, today.
At the end of the second quarter, the Company operated a total of 1,073 stores. The Company operated 316 Abercrombie & Fitch stores, 179 abercrombie kids stores, 501 Hollister Co. stores and 18 Gilly Hicks stores in the United States. The Company operated 10 Abercrombie & Fitch stores, four abercrombie kids stores, 44 Hollister Co. stores and one Gilly Hicks store internationally. The Company operates e-commerce websites at www.abercrombie.com, www.abercrombiekids.com, www.hollisterco.com and www.gillyhicks.com.