Abercrombie & Fitch Co Class A ANF
Abercrombie & Fitch (A&F) is an American retailer that focuses on upscale casual wear for young consumers, and is headquartered in New Albany, Ohio, a suburb of Columbus. It has over 300 locations in the United States, and is expanding internationally. The company operates two offshoot brands: Abercrombie Kids and Hollister Co., in addition to two brands, Ruehl No.925 and Gilly Hicks, that closed in early 2010 and 2015.
Past years growth (Fiscal year ends in January)
- Revenue in 2013 was 4.5 billion USD
- Revenue in 2014 was 4.1 billion USD- 9% decrease compared to the year before
- Revenue in 2015 was 3.74 billion USD - 9% decrease compared to the year before
- Revenue in 2016 was 3.51 billion USD - 6% decrease compared to the year before
Future estimated growth
- Revenue for the current fiscal year (Fiscal year ends in January 2017) should be around 3.15 - 3.3 billion USD - 5% to 10% decrease compared to the year before
- Revenue for the next fiscal year (Fiscal year ends in January 2018) should be around 3.3 billion USD - equal compared to the year before
- Revenue for the 2019 fiscal year could be around 3.46 billion USD - 5% increase compared to the year before
The Abercrombie & Fitch brand is believed to have reached its maximum growth potential in the American market. International expansion began in 2005, with the long-term goal of opening flagships for A&F (and eventually all its brands), in high-profile locations worldwide "at a deliberate pace". After initially opening at a deliberately slow pace, the company began to accelerate international expansion for its namesake and its Hollister Co. brand in 2012.
The first non-U.S. Abercrombie & Fitch stores opened in Toronto and Edmonton in 2005, and then expanded to other major cities in Canada. The company first entered the European market in 2007 with the opening of its flagship London store at 7 Burlington Gardens, Savile Row. Since then, the company has opened stores in Milan, Copenhagen, Paris, Madrid, Brussels and other major cities in Europe, including six stores in Germany. The company opened its first Asian A&F flagship store in Tokyo in 2009, followed by Fukuoka, Singapore, Hong Kong and Seoul. The company would primarily focus on the Chinese and Japanese markets where luxury consumption is high. The company has also entered a franchise agreement with Grupo AXO to open retail stores in Mexico by 2015.
Abercrombie & Fitch has 745 stores in the United States and 185 stores across Canada, Europe, Asia and the Middle East (Q3 2016). The Company sells casual sportswear apparel, including knit tops and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, and outerwear; personal care products; and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids and Hollister brands.
- represents 45% of total revenues
- represents 55% of total revenues
- United States represents 65% of total revenues
- Europe represents 22% of total revenues
- Other divisions represent 13% of total revenues
For the third quarter of Fiscal 2016, net sales decreased 6% compared to the third quarter of Fiscal 2015, primarily attributable to a 6% decrease in comparable sales, driven by the Abercrombie brand. For the year-to-date period of Fiscal 2016, net sales decreased 5% compared to the year-to-date period of Fiscal 2015, primarily attributable to a 5% decrease in comparable sales, mainly driven by the Abercrombie brand.
For the third quarter of Fiscal 2016, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales increased by approximately 160 basis points compared to the third quarter of Fiscal 2015, primarily due to the adverse effects from changes in foreign currency exchange rates of approximately 60 basis points and the net impact of lower average unit retail partially offset by lower average unit cost. For the year-to-date period of Fiscal 2016, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales decreased by approximately 10 basis points compared to the year-to-date period of Fiscal 2015, which included a $21.7 million net inventory write-down. Excluding the $21.7 million net inventory write-down, year-to-date Fiscal 2016 adjusted non-GAAP cost of sales, exclusive of depreciation and amortization, as a percentage of net sales increased by approximately 80 basis points as compared to the year-to-date period of Fiscal 2015, primarily due to the adverse effects from changes in foreign currency exchange rates of approximately 80 basis points and the net impact of higher average unit cost substantially offset by higher average unit retail.
Shares of retailer Abercrombie & Fitch fell to a 52-week low of $11.52 in the very first trading session of 2017. One of the major factors working against the company is its significant international presence, exposing it to various foreign currency risks. The company also suffers due to the slow traffic trends seen in its flagship and tourist location stores, which was seen in the third quarter as well. Given this trend, the company has resorted to closing down a number of its stores. For FY 2016 (ended January 2017), the company expects to close 50 stores in the US through natural lease expirations. ANF also stated that approximately 50% of its 745 stores in the US are up for renewal over the next 18 months, giving the management the opportunity to continue with the store reductions.
The Company's results for the third quarter of Fiscal 2016 reflect improvement in Hollister from last quarter that was more than offset by a decline in A&F performance, as flagship and tourist locations continued to be a major headwind, particularly in international markets. In addition, gross margin was pressured, as an A&F assortment weighted toward seasonal categories underperformed, resulting in greater than expected promotional activity. In Hollister, comparable sales improved throughout the quarter and company expects the comparable sales trend to further improve in the fourth quarter. For the A&F brand, they began to articulate a redefined identity during the quarter. While they anticipate the A&F business will remain challenging through the balance of the fiscal year, they continue to evolve the brand through significant changes in product, customer experience and marketing.
The company will release its next earnings report at the beginning of March 2017. Analysts expect A&F's earnings per share to be $0.78. During the same quarter in 2016, the company reported earnings per share of $1.08, indicating a 30% drop year over year.