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Net Income Per Share Is $0.79 (Including a Non-Recurring Charge Of $0.09 Per
Share) and $0.88 Excluding The Charge;
Company Increases Full Year Net Income Guidance;
Board Of Directors Declares Quarterly Dividend Of $0.175
NEW ALBANY, Ohio, Nov. 15 /PRNewswire-FirstCall/ -- Abercrombie & Fitch
Co. (NYSE: ANF) today reported unaudited results which reflected record third
quarter net income of $71.6 million and net income per share on a fully-
diluted basis of $0.79 for the third quarter ended October 29, 2005, including
the after-tax effect of a $0.09 per share non-recurring charge. Excluding the
charge, the Companys third quarter non-GAAP net income was $79.8 million, or
$0.88 per fully diluted share. Reconciliation to GAAP results of certain non-
GAAP measures contained in this release is set forth in the attached schedule.
Third Quarter Highlights
- Total Company net sales increased 35% to $704.9 million; comparable
store sales increased by 25%
- Abercrombie & Fitch net sales increased 13% to $342.7 million;
Abercrombie & Fitch comparable store sales increased by 16%
- abercrombie net sales increased 58% to $96.8 million; abercrombie
comparable store sales increased by 62%
- Hollister net sales increased 69% to $261.3 million; Hollister
comparable store sales increased by 27%
- Net income for the third quarter increased 79% to $71.6 million from
$39.9 million in fiscal 2004. Non-GAAP net income, excluding
non-recurring charges in both the third quarter of 2005 and 2004, was
$79.8 million in the third quarter of 2005, compared to $60.6 million
in the comparable period of 2004.
- Net income per share on a fully-diluted basis increased 88% to $0.79 in
the third quarter of 2005 from $0.42 in fiscal 2004. Non-GAAP net
income per share on a fully-diluted basis, excluding non-recurring
charges, was $0.88 in the third quarter of 2005 compared to $0.64 in
the prior-year period.
Mike Jeffries, Chief Executive Officer and Chairman of the Board of
Abercrombie & Fitch Co., said:
"We are pleased with our performance for the third quarter. These strong
results reflect the broad momentum and successful differentiation of our
brands, confirming our entire organizations dedication to building dominant
iconic brands. We are uniquely positioned as the top of mind premium provider
of sportswear with brands that appeal to a broad spectrum of customers in the
pre-teen through post-collegiate demographic. This is a position we have
worked hard to attain, and I can assure you, we will defend vigorously."
Third Quarter Financial Results
Net sales for the thirteen weeks ended October 29, 2005 increased 35% to
$704.9 million from $520.7 million for the thirteen weeks ended October 30,
2004. The main driver of growth was the total company comparable store sales
increase of 25%.
The gross margin rate for the quarter was 66.0%, up 140 basis points
compared to last year. The improvement in gross margin was due to improved
initial markup combined with a lower markdown rate versus last year.
Stores and Distribution expense, as a percentage of sales, decreased 30
basis points to 35.9% from 36.2%. The Company achieved leverage in store
related, direct-to-consumer and distribution expense categories partially
offset by increased staff and management in the Companys stores.
Marketing, General and Administrative expense, as a percentage of sales,
decreased 270 basis points to 13.9% from 16.6%. In the third quarter of 2005,
the Company recorded a non-recurring charge of $13.5 million related to an
executive severance agreement. In the third quarter of 2004, the Company
recorded a non-recurring charge of $32.9 million related to a legal
settlement. Excluding non-recurring charges in both periods, MG&A as a
percentage of sales, increased to 11.9% from 10.2% compared to last year. The
increase in rate is primarily attributed to increased home office payroll.
Net income for the quarter increased 79% to $71.6 million, or $0.79 per
share on a fully-diluted basis, from $39.9 million, or $0.42 per share on a
fully-diluted basis, for the third quarter of fiscal 2004.
Non-GAAP net income, excluding non-recurring charges, was $79.8 million,
or $0.88 per share on a fully-diluted basis in the third quarter of 2005,
compared to $60.6 million or $0.64 per share on a fully-diluted basis, in the
comparable period of 2004.
2005 Outlook
In August, the Company reaffirmed its guidance for the year of net income
per fully-diluted share to be in the range of $3.10 to $3.30, based on a sales
plan of approximately $2.7 billion for fiscal 2005, excluding a non-recurring
charge to be taken in the third quarter for an executive severance agreement.
Based on its year-to-date results, the Company now expects net income per
share on a fully-diluted basis, including the non-recurring third quarter
charge, to be in the range of $3.35 to $3.40. Excluding the non-recurring
charge, the Company now expects net income per share on a fully-diluted basis
to be in the range of $3.44 to $3.49.
The Company now expects total capital expenditures for fiscal 2005 to be
between $270 million and $280 million. The majority of the expenditures are
related to new store construction, remodels, and home office investments.
These amounts do not reflect construction allowances which are recorded on the
balance sheet as a deferred credit as opposed to a reduction in capital
spending.
Other Developments
By fiscal year-end, the Company plans to operate 360 Abercrombie & Fitch
stores, 163 abercrombie stores, 318 Hollister stores, and eight RUEHL stores.
During the third quarter of fiscal 2005, the Company repurchased 1.3
million shares of Class A Common Stock as part of its stock repurchase
program.
The Company recently opened its 34,000 gross square foot flagship
Abercrombie & Fitch store, located on the corner of 5th Avenue and 56th Street
in New York.
The Company recently opened a RUEHL accessories store at 370 Bleecker
Street in New Yorks West Village.
The Company plans to open its first international locations in Canada in
late fiscal 2005 and expects to open its first European location in London in
early 2007.
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
December 20, 2005 to shareholders of record at the close of business on
November 29, 2005.
The Company operated 354 Abercrombie & Fitch stores, 163 abercrombie
stores, 297 Hollister stores, and six RUEHL stores at the end of the third
quarter 2005. The Company operates e-commerce websites at http://www.abercrombie.com,
http://www.abercrombiekids.com, and http://www.hollisterco.com.
Today at 4:30 PM, Eastern Time, the Company will conduct a conference
call. Management will discuss the Companys performance, its plans for the
future and will accept questions from participants. To listen to the live
conference call, dial (800) 811-0667 or internationally at (913) 981-4901. To
listen via the internet, go to http://www.abercrombie.com, select the Investor
Relations page and click on Calendar of Events. Replays of the call will be
available shortly after its completion. The audio replay can be accessed for
two weeks following the reporting date by calling (888) 203-1112 or
internationally at (719) 457-0820 followed by the conference ID number
9447177; or for 12 months by visiting the Companys website at
http://www.abercrombie.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
A&F cautions that any forward-looking statements (as such term is defined
in the Private Securities Litigation Reform Act of 1995) contained in this
Press Release, A&Fs Form 10-K or made by management of A&F involve risks and
uncertainties and are subject to change based on various important factors,
many of which may be beyond the Companys control. Words such as "estimate,"
"project," "plan," "believe," "expect," "anticipate," "intend," and similar
expressions may identify forward-looking statements. The following factors,
in addition to those included in the disclosure under the heading "FORWARD-
LOOKING STATEMENTS AND RISK FACTORS" in "ITEM 1. BUSINESS" of A&Fs Annual
Report on Form 10-K for the fiscal year ended January 29, 2005, in some cases
have affected and in the future could affect the Companys financial
performance and could cause actual results for the 2005 fiscal year and beyond
to differ materially from those expressed or implied in any of the forward-
looking statements included in this Press Release or otherwise made by
management: changes in consumer spending patterns and consumer preferences;
the effects of political and economic events and conditions domestically and
in foreign jurisdictions in which the Company operates, including, but not
limited to, acts of terrorism or war; the impact of competition and pricing;
changes in weather patterns; postal rate increases and changes; paper and
printing costs; market price of key raw materials; ability to source product
from its global supplier base; political stability; currency and exchange
risks and changes in existing or potential duties, tariffs or quotas;
availability of suitable store locations at appropriate terms; ability to
develop new merchandise; and ability to hire, train and retain associates, and
the outcome of pending litigation. Future economic and industry trends that
could potentially impact revenue and profitability are difficult to predict.
Therefore, there can be no assurance that the forward-looking statements
included in this Press Release will prove to be accurate. In light of the
significant uncertainties in the forward-looking statements included herein,
the inclusion of such information should not be regarded as a representation
by the Company, or any other person, that the objectives of the Company will
be achieved. The forward-looking statements herein are based on information
presently available to the management of the Company. Except as may be
required by applicable law, the Company assumes no obligation to publicly
update or revise its forward-looking statements even if experience or future
changes make it clear that any projected results expressed or implied therein
will not be realized.
Abercrombie & Fitch Co.
Condensed Consolidated Statements of Income
(Unaudited)
Thirteen Weeks Ended October 29, 2005 and
Thirteen Weeks Ended October 30, 2004
(in thousands except per share data)
ACTUAL ACTUAL
% of % of
2005 Sales 2004 Sales
Net Sales $704,918 100.0% $520,724 100.0%
Cost of Goods Sold 239,832 34.0% 184,107 35.4%
Gross Profit 465,086 66.0% 336,617 64.6%
Total Stores and Distribution Expense 252,947 35.9% 188,381 36.2%
Total Marketing, General and
Administrative Expense 97,644 13.9% 86,273 16.6%
Other Operating Income, Net (1,379) -0.2% (15) 0.0%
Operating Income 115,874 16.4% 61,978 11.9%
Interest Income, Net (1,516) -0.2% (1,574) -0.3%
Income Before Income Taxes 117,390 16.7% 63,552 12.2%
Income Tax Expense 45,790 6.5% 23,641 4.5%
Effective Rate 39.0% 37.2%
Net Income $71,600 10.2% $39,911 7.7%
Net Income Per Share:
Basic $0.81 $0.43
Fully-Diluted $0.79 $0.42
Weighted Average Shares Outstanding
Basic 87,862 93,449
Fully-Diluted 90,458 95,351
Abercrombie & Fitch Co.
Condensed Consolidated Statements of Income
(Unaudited)
Thirty-nine Weeks Ended October 29, 2005 and Thirty-nine
Weeks Ended October 30, 2004
(in thousands except per share data)
ACTUAL ACTUAL
% of % of
2005 Sales 2004 Sales
Net Sales $1,823,319 100.0% $1,333,999 100.0%
Cost of Goods Sold 611,321 33.5% 448,542 33.6%
Gross Profit 1,211,998 66.5% 885,457 66.4%
Total Stores and Distribution
Expense 707,267 38.8% 514,411 38.6%
Total Marketing, General and
Administrative Expense 232,674 12.8% 193,760 14.5%
Other Operating Income, Net (3,193) -0.2% (174) 0.0%
Operating Income 275,250 15.1% 177,460 13.3%
Interest Income, Net (4,296) -0.2% (3,919) -0.3%
Income Before Income Taxes 279,546 15.3% 181,379 13.6%
Income Tax Expense 110,186 6.0% 69,263 5.2%
Effective Rate 39.4% 38.2%
Net Income $169,360 9.3% $112,116 8.4%
Net Income Per Share:
Basic $1.95 $1.19
Fully-Diluted $1.87 $1.16
Weighted Average Shares Outstanding
Basic 87,002 94,490
Fully-Diluted 90,422 96,522
Abercrombie & Fitch Co.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
ASSETS October 29, 2005 January 29, 2005
Current Assets
Cash and Cash Equivalents $67,443 $350,368
Marketable Securities 210,393 -
Receivables 29,633 26,127
Inventories 415,621 211,198
Store Supplies 40,800 36,536
Deferred Income Taxes 34,696 31,246
Other Current Assets 34,357 28,048
Total Current Assets 832,943 683,523
Property and Equipment, Net 798,391 687,011
Other Assets 8,478 8,413
TOTAL ASSETS $1,639,812 $1,378,947
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Accounts Payable and Outstanding
Checks $167,721 $137,337
Accrued Expenses 234,529 194,729
Deferred Lease Credits 31,504 31,135
Income Taxes Payable 56,935 55,587
Total Current Liabilities 490,689 418,788
Long-Term Liabilities
Debt - -
Deferred Income Taxes 32,329 42,188
Deferred Lease Credits 192,407 177,923
Other Liabilities 88,333 70,722
313,069 290,833
Total Shareholders Equity 836,054 669,326
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $1,639,812 $1,378,947
Abercrombie & Fitch Co.
Non-GAAP Reconciliation
(Unaudited)
Thirteen Weeks Ended October 29, 2005 and
Thirteen Weeks Ended October 30, 2004
(in thousands except per share data)
ACTUAL ACTUAL
% of % of
2005 Sales 2004 Sales
Marketing, General and Administrative
Expense, as reported 97,644 13.9% 86,273 16.6%
Non-Recurring Charge (13,462) -1.9% (32,900) -6.3%
Non-GAAP Marketing, General and
Administrative Expense 84,182 11.9% 53,373 10.2%
Operating Income, as reported 115,874 16.4% 61,978 11.9%
Non-Recurring Charge 13,462 1.9% 32,900 6.3%
Non-GAAP Operating Income 129,336 18.3% 94,878 18.2%
Net Income, as reported 71,600 10.2% 39,911 7.7%
Non-Recurring Charge (tax
effected at 39% and 37%,
respectively) 8,212 1.2% 20,661 4.0%
Non-GAAP Net Income 79,812 11.3% 60,572 11.6%
Net Income Per Share:
Fully-Diluted, as reported $0.79 $0.42
Non-Recurring Charge $0.09 $0.22
Non-GAAP Fully-Diluted $0.88 $0.64
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