Abercrombie Fitch Stylista

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.

Abercrombie Fitch Logo

Abercrombie & Fitch was charged with racial discrimination. And the once venerable clothier, which outfitted everyone from Teddy Roosevelt to JFK, has undergone a makeover. Here’s his original report:

The image of Abercrombie & Fitch is now party-loving jocks and barenaked ladies living fantasy lives.

But all that fair hair and skin has made it a juicy target. It’s being taken to court, accused of racial discrimination in their hiring. Does Abercrombie’s all-American look exclude some Americans?

“All-American doesn’t mean all-white,” says Jennifer Lu, a student at University of California, Irvine, and a former salesperson at a Costa Mesa, Calif., store. Lu and several other young people say they couldn’t get a job, or were fired because their look was not consistent with the store’s look.

What exactly is the Abercrombie & Fitch look?

“It’s dominated by Caucasian, football-looking, blonde-hair, blue-eyed males; skinny, tall,” says Lu. “You don’t see any African-Americans, Asian-Americans, and that’s the image that they’re portraying and that they’re looking for.”

Liu says she was fired after corporate officials visited the store, and, according to her, didn’t like what they saw: “A corporate official had pointed to an Abercrombie poster and told our management at our store, ‘You need to have more staff that looks like this.’ And it was a white Caucasian male on that poster.”

Anthony Ocampo says blacks, Asians and Latinos were sometimes hired by Abercrombie, but weren’t given the opportunity to work in sales. “The greeters and the people that worked in the in-season clothing, most of them white, if not all of them, were white,” says Ocampo. “The people that worked in the stock room, where nobody sees them, were mostly Asian-American, Filipino, Mexican, Latino.”

The lawsuit alleges that Abercrombie hires a disproportionately white sales force, favors white employees for the best positions, and discourages minorities from even applying for jobs. But lawyer and conservative talk show host Larry Elder says too often cases like these end up in court.

“Abercrombie & Fitch ought to have the right to set their own policies, for good or for ill. Look, there’s a restaurant called Hooters. Hooters requires you to have certain kinds of physical accoutrements,” says Elder. “Will that do? And I think people understand that. Should they have a right to hire waitresses because they want to attract a certain kind of clientele who want to ogle at the waitresses? I think so.”

But the young people who are suing say all that’s irrelevant. They say companies like Abercrombie need to be reminded what being American is all about.

“All-American, their all-American image, does not mean all-white. That’s not right. That’s not legal,” says Lu.

“An all-American look is every shade,” asks Safer.

“Yes, absolutely,” says Lu.