Abercrombie News |Abercrombie And Fitch UK

06 Mar

Topics In Abercrombie’s Earnings Conference Call In February 2012

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Revenue Targets

Randy Konik – Jefferies: If we back out the near-term for a second, I think you need some really good points around the long-term story here. If you think about the April 5th analyst meeting and we thought about the $7 billion roughly of revenue targets over the long-term, you talked about the Hollister stores or some of the Abercrombie sale stores and the volumes are annualizing above that that pro forma of that run rate you kind of targeted at the analyst meeting. So do you still feel – about nine months later still feel very good about that $7 billion target? If anything has changed around that both from a top line margin standpoint, what would it be?

Jonathan E. Ramsden – EVP and CFO: Randy, fundamentally, we still feel good about it. The updated roadmap we reviewed with the Board yesterday came in a little lower than that but that was almost entirely attributable to more U.S. store closures which is accretive to the bottom line. So, in terms of the international components of that in the direct-to-consumer components, they’re absolutely on track.

Profit Margins

Janet Kloppenburg – JJK Research: Jonathan and Mike, I am looking at Page 8 of the packet you provided us today, where we see the U.S. margin down about 350 basis points. What I’m wondering about if you could help us understand how that looked through the first nine months of the year? How much erosion there was in the fourth quarter? Just a magnitude of the improvement you expect in the U.S. business in fiscal ’12?

Michael S. Jeffries – Chairman and CEO: I’ll let Jonathan answer that question. I think Page 8 is a very interesting page and maybe the international stores is more interesting than the U.S., but let’s let Jonathan answer that.

Abercrombie & Fitch

Janet Kloppenburg – JJK Research: Well, it is and it shows the value of that growth strategy, Michael, but I think we have a lot of U.S. stores closing as we go forward. So, I’m just wondering how we should be thinking about the margin in the U.S. business?

Jonathan E. Ramsden – EVP and CFO: Sure, Janet, yeah, it is the U.S. totally affected the fourth quarter. As we said in the prepared comments, it was more pronouncement than you see for the full year. But a lot of that was that – we would have to get the AURs up as we probably would in the fourth quarter to offset some of that mix effect in AUC and then we got this big markdown reserve effect at the end of the quarter which particularly impacts those U.S. stores. We’ve talked about planning for flat same-store sales. Going forward we’ve talked about having averaging and cost be down for the year next year. We’re being conservative on AUR. So, we’re not expecting a dramatic improvement in U.S. store margins, but we would expect some in 2012 and then we expect international and direct to continue delivering very high incremental margins (refer) this chart.

Michael S. Jeffries – Chairman and CEO: We think those are conservative assumptions flat to AUR and flat sales.

Jonathan E. Ramsden – EVP and CFO: Does that answer your question Janet.

Janet Kloppenburg – JJK Research: I think, I’m just wondering about the store closings in the United States, because you gave us that your 250 top stores in the U.S. had much higher margins than the store – than the entire store base. So, as we close more stores, I just thought there may be a natural lift that we should be thinking about in the U.S.

Jonathan E. Ramsden – EVP and CFO: Yeah, we’ll continue to get it. We said $0.10 to $0.15 from the closures and other charges we took in Q4, and then we’ll continue as we close more stores in future years to get a few cents per year as we close those stores. That excludes the transfer and it also excludes our belief that by closing more of these lower tier underperforming stores, we will be able to lift up the entire brand, particularly A&F and there is an intangible unquantifiable benefit of that that didn’t baked into that analysis at this point.

Janet Kloppenburg – JJK Research: Should we be thinking that the international margins could move higher in fiscal ’12?

Jonathan E. Ramsden – EVP and CFO: I think we’ll be very pleased to continue getting the margins we are getting currently.

01 Mar

Abercrombie & Fitch Is Still A Valued Brand Name

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Abercrombie & Fitch stated that it expected its Q4 earnings to disappoint as holiday sales of its merchandise narrowed profit margins in February, 2012. The stock fell nearly 11% as the earnings fell short of analyst estimates. Same store sales remained relatively unchanged from a year ago, as sales declined across many US store locations. The company also stated that same store sales would also remain flat in 2012. “Results were extremely weak and the guidance points to a lack of any near-term prospects for a turnaround,” said Edward Yruma, a Keybanc Capital analyst in an interview with Bloomberg.

Abercrombie has struggled recently with increased competition, as retailers such as Express, Ralph Lauren, and Aerospatiale have offered clothing targeted at teens and young adults at similar or better price points, a key issue among young men and women who are dealing with the highest unemployment rates they have faced in decades. As a result, the retailer has struggled to increase prices in American stores, something they have done in European markets.

However, this price increase has not result in substantial international revenue growth, as the company reported negative comp numbers in its Japanese, European, and Canadian flagship stores. The company has also seen poor sales of winter outerwear, as many American cities have reported warmer weather and less snow than usual. Narrowing margins were also adversely affected by record cotton prices, as Abercrombie’s cost of goods rose to 56%.

Abercrombie & Fitch has long been an aspiration brand that many teens wanted to own in an expansionary economy. However, the brand’s classic American style has been diluted over the past few years, as teens look to add a degree of exclusivity and uniqueness to their style, shunning the brand’s adherence to traditional values.

Abercrombie will have to adapt to a more demanding consumer and move away from its roots if it wants to continue to drive growth. Consumers want more for their money, and no longer desire the frivolities that Abercrombie stores once offered. They simply want stylish clothes at affordable prices, and Abercrombie will need a strategy to offer it without diluting their valued brand name.

23 Feb

Abercrombie & Fitch Shares Given New Price Target By Analyst At UBS AG

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Abercrombie & Fitch

Equities research analysts at UBS AG (NYSE: UBS) upped their price target on shares of Abercrombie & Fitch (NYSE: ANF) from $44.00 to $49.00 in a research note issued to investors on Tuesday. They currently have a “neutral” rating on the company’s shares.

Separately, analysts at Deutsche Bank (NYSE: DB) raised their price target on shares of Abercrombie & Fitch to $51.00 in a research note to investors on Friday. Analysts at Nomura (NYSE: NMR) reiterated a “neutral” rating on shares of Abercrombie & Fitch in a research note to investors on Thursday, February 16th. Also, analysts at FBR Capital (NASDAQ: FBCM) raised their price target on shares of Abercrombie & Fitch from $50.00 to $55.00 in a research note to investors on Thursday, February 16th. They now have an “outperform” rating on the stock.

Abercrombie & Fitch Co. (A&F), through its subsidiaries, a specialty retailer that operates stores and direct-to-consumer operations selling casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products, and accessories for men, women and kids under the Abercrombie & Fitch, Abercrombie kids, and Hollister brands. In addition, the Company operates stores and direct-to-consumer operations offering bras, underwear, personal care products, and sleepwear and at-home products for women under the Gilly Hicks brand. As of January 29, 2011, A&F operated 1,069 stores in North America, Europe and Japan. Its brands include Abercrombie & Fitch, Abercrombie kids, Hollister and Gilly Hicks.

Abercrombie and Fitch traded up 0.06% on Tuesday, hitting $48.51. Abercrombie & Fitch has a 1-year low of $40.25 and a 1-year high of $78.25. The stock has a 50-day moving average of $45.64 and a 200-day moving average of $56.40. The company has a market cap of $4.154 billion and a price-to-earnings ratio of 33.90.