A&F(US:ANF)2025-06-06 21:11Financial Performance - Net sales for the thirteen weeks ended May 3, 2025, were $1,097,311, representing a 7.5% increase compared to $1,020,730 for the same period in 2024[97]. - Comparable sales increased by 4% for the first quarter of Fiscal 2025, compared to a 21% increase in the first quarter of Fiscal 2024[97]. - Operating income decreased to $101,533, down from $129,849 in the prior year, with an operating income margin of 9.3% compared to 12.7%[97]. - Net income attributable to Abercrombie & Fitch was $80,413, a decrease from $113,850, resulting in a net income per share of $1.59 compared to $2.14[97]. - EBITDA for the thirteen weeks ended May 3, 2025, was $140.1 million, representing 12.8% of net sales, compared to $167.5 million or 16.4% of net sales for the same period in 2024, a decrease of 16.3%[111]. - The company reported net income of $81,739 for the thirteen weeks ended May 3, 2025, which is 7.4% of net sales, down from $115,078 or 11.3% in 2024[138]. Expenses and Costs - Cost of sales as a percentage of net sales increased by approximately 440 basis points to 38.0% due to higher freight costs[101]. - Selling expenses increased by $40 million, representing 36.4% of net sales, up from 35.3% in the prior year[103]. - General and administrative expenses decreased by $15 million, accounting for 15.9% of net sales, down from 18.6%[104]. - The effective tax rate increased to 24.5% from 14.7% due to jurisdictional mix and lower pre-tax income levels[108]. Cash Flow and Liquidity - Cash and equivalents decreased to $510,563 from $772,727 as of February 1, 2025[97]. - The company had cash and cash equivalents of $510.6 million as of May 3, 2025, down from $772.7 million at the beginning of Fiscal 2025, reflecting a decrease of 34%[116]. - Total liquidity as of May 3, 2025, was approximately $0.9 billion, compared to $1.2 billion at the beginning of Fiscal 2025, indicating a reduction of 25%[116]. - Net cash used for operating activities was $(4.0) million for the thirteen weeks ended May 3, 2025, compared to $95.0 million provided by operating activities in the same period last year[124]. Strategic Initiatives - The Company plans to open approximately 60 new stores and close about 20 stores, resulting in approximately 40 net store openings during Fiscal 2025[92]. - The Company has delivered new store experiences and remodeled nine stores while closing three stores through the end of the first fiscal quarter[92]. - The Company aims to maintain a durable balance sheet and consistent free cash flow profile while balancing macroeconomic impacts and efficiency efforts[94]. - The Company continues to progress on its multi-year enterprise resource planning (ERP) transformation and cloud migration journey[85]. - The Company has introduced the Always Forward Plan, which focuses on executing growth plans and accelerating a digital revolution[82]. - The company expects to prioritize investments in business operations, including inventory acquisition and technology, over the next twelve months[114]. Macroeconomic Factors - The Company anticipates that current macroeconomic conditions, including inflation and geopolitical tensions, will continue to impact consumer spending and operating results[87]. - The Company is utilizing an agile inventory model and pricing strategies to support customer demand throughout the year[94]. - The Company is building a playbook of mitigation strategies to address uncertainties regarding tariffs and trade policies[87]. Shareholder Actions - The company repurchased approximately 2.6 million shares of its Common Stock for about $200 million during the year-to-date period ended May 3, 2025, with $1.1 billion remaining under the $1.3 billion share repurchase program approved in March 2025[118]. Foreign Currency Exposure - The company has exposure to foreign currency exchange rate fluctuations, which could impact reported revenues and expenses as international operations increase[143]. - A hypothetical 10% devaluation of the U.S. dollar could decrease the fair values of foreign currency exchange forward contracts by approximately $21.0 million[145]. - The company utilizes foreign currency exchange forward contracts to mitigate risks associated with foreign currency transactions and forecasted transactions[144].