Abercrombie & Fitch Co. Reports First Quarter Fiscal 2024 Results

NEW ALBANY, Ohio, May 29, 2024 (GLOBE NEWSWIRE) Abercrombie & Fitch Co. (NYSE: ANF) today announced results for the first quarter ended May 4, 2024. These compare to results for the first quarter ended April 29, 2023. Descriptions of the use of non-GAAP financial measures and reconciliations of GAAP and non-GAAP financial measures accompany this release.

Fran Horowitz, Chief Executive Officer, said, “Our outstanding first quarter results reflect the power of our brands and strong execution of our global playbook. We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, driving sales above our expectations. Growth was broad-based across regions and brands with Abercrombie brands registering 31% growth and Hollister brands delivering growth of 12%. Strong top-line growth, along with gross profit rate expansion, led to record first quarter operating income and an operating margin of 12.7%.

With excellent first quarter performance, we are increasing our full year sales and operating margin outlook. We remain on track to achieve our 2024 goal of demonstrating sustainable, profitable growth after a defining year for the company in fiscal 2023. Our brands are delivering high-quality, on-trend assortments for new and retained customers across regions and brands. Importantly, we continue to make strategic investments across stores, digital and technology to further strengthen the company in pursuit of our long-term ambition.”

Details related to reported net income per diluted share and adjusted net income per diluted share for the first quarter are as follows:

A summary of results for the first quarter ended May 4, 2024 as compared to the first quarter ended April 29, 2023:

• Net sales of $1.0 billion, up 22% as compared to last year on a reported basis and constant currency basis.
• Comparable sales up 21%.
• Gross profit rate of 66.4%, up approximately 540 basis points as compared to last year.
• Operating expense, excluding other operating income, net, of $549.6 million for the quarter, decreased to 53.8% of sales from 57.3% last year.
• Operating income of $130 million as compared to operating income last year of $34 million and $38 million, on a reported and adjusted non-GAAP basis, respectively.
• Net income per diluted share of $2.14 as compared to net income per diluted share last year of $0.32 and $0.39 on a reported and adjusted non-GAAP basis, respectively.

Net sales by segment and brand for the first quarter are as follows:

As of May 4, 2024 the company had:

• Cash and equivalents of $864 million. This compares to cash and equivalents of $901 million and $447 million as of February 3, 2024 and April 29, 2023, respectively.
• Inventories of $449 million. This compares to inventories of $469 million and $448 million as of February 3, 2024 and April 29, 2023, respectively.
• Long-term gross borrowings under the company’s senior secured notes of $214 million (the “Senior Secured Notes”) which mature in July 2025 and bear interest at a rate of 8.75% per annum.
• Borrowing available under the senior-secured asset-based revolving credit facility (the “ABL Facility”) of $293 million.
• Liquidity, comprised of cash and equivalents and borrowing available under the ABL Facility, of approximately $1.2 billion. This compares to liquidity of $1.2 billion and $0.8 billion as of February 3, 2024 and April 29, 2023, respectively.

Details related to the company’s cash flows for the year-to-date period ended May 4, 2024 are as follows:

• Net cash provided by operating activities of $95 million.
• Net cash used for investing activities of $39 million.
• Net cash used for financing activities of $93 million.

During the first quarter of 2024, the company purchased approximately $9 million, at a slight premium to par value, of its outstanding Senior Secured Notes. In addition, in the 2024 first quarter, the company repurchased 119,000 shares for approximately $15 million. The company has $217 million remaining on the share repurchase authorization established in November 2021.

Depreciation and amortization was $38 million for the year-to-date period ended May 4, 2024.

The following outlook replaces all previous full year guidance. For fiscal 2024, the company now expects:

• Net sales up around 10% from $4.3 billion in fiscal 2023. This is an increase to the previous outlook of growth in the range of 4% to 6%. We expect Abercrombie brands will continue to outperform Hollister brands and the Americas will continue to lead the regional performance.

The following table illustrates the expected quarterly and full year net sales and related basis point impact of the calendar shift and loss of one selling week in fiscal 2024 compared to fiscal 2023.

• Operating margin to be around 14%. This range improves from the previous outlook of around 12%. We expect the year-over-year improvement to be driven by a higher gross profit rate and some operating expense leverage.
• Effective tax rate to be in the mid-to-high 20s, with the rate being sensitive to the jurisdictional mix and level of income.
• Capital expenditures of approximately $170 million.

For the second quarter of fiscal 2024, the company expects:

• Net sales growth to be up mid-teens compared to fiscal second quarter 2023 level of $935 million.
• Operating margin to be in the in the range of 13% to 14% compared to an operating margin of 9.6% in Q2 2023.
• Effective tax rate to be mid-20s, with the rate being sensitive to the jurisdictional mix and level of income.

Abercrombie & Fitch Co. (NYSE: ANF) is a leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids. Abercrombie & Fitch was born in 1892 and aims to make every day feel as exceptional as the start of a long weekend. abercrombie kids sees the world through kids’ eyes, where play is life and every day is an opportunity to be anything and better anything. Hollister believes in liberating the spirit of an endless summer inside everyone and making teens feel celebrated and comfortable in their own skin. Gilly Hicks, offering active lifestyle products, is designed to create happiness through movement.

The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers around the world to express their own individuality and style. Abercrombie & Fitch Co. operates approximately 750 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce sites www.abercrombie.com, www.abercrombiekids.com, www.hollisterco.com and www.gillyhicks.com