A&F(US:ANF)2025-12-05 21:39Financial Performance - Net sales for the thirteen weeks ended November 1, 2025, were $1,290,619, representing a 7% increase compared to $1,208,966 for the same period in 2024 [102]. - Comparable sales for the thirteen weeks increased by 3%, while the thirty-nine weeks saw a 4% increase compared to the previous year [104]. - Operating income for the thirteen weeks was $155,021, with an operating income margin of 12.0%, down from 14.8% in the prior year [102]. - Net income attributable to A&F for the thirteen weeks was $112,995, resulting in a net income per share of $2.36, compared to $2.50 in the same period last year [102]. - Net income for the thirteen weeks ended November 1, 2025, was $115,100, which is 8.9% of net sales, down from $133,864 or 11.1% for the same period in 2024 [151]. - Adjusted non-GAAP net income attributable to Abercrombie & Fitch for the year-to-date period of Fiscal 2025 was $306,046, representing 8.5% of net sales [125]. - Adjusted non-GAAP net income per diluted share for the thirty-nine weeks ended November 1, 2025, was $6.24, down 12.5% from $7.13 in the prior year [126]. - EBITDA for the thirteen weeks ended November 1, 2025, was $193.6 million, representing 15.0% of net sales, compared to $218.8 million or 18.1% of net sales in the same period of 2024 [127]. - Adjusted EBITDA for the thirty-nine weeks ended November 1, 2025, was $539,204, accounting for 15.0% of net sales, compared to $601,366 or 17.9% for the same period in 2024 [151]. Store Operations - The Company opened 48 new stores, remodeled 24 stores, and closed 10 stores through the end of the third fiscal quarter, with a plan for approximately 40 net store openings in Fiscal 2025 [96]. - The Company is focused on driving sales growth through marketing and store investments while pursuing new geographies via franchise, wholesale, and licensing partnerships [88]. Expenses and Costs - The Company expects to incur approximately $90 million of net tariff expense, or 170 basis points as a percent of net sales, negatively impacting operating profit in Fiscal 2025 [91]. - Cost of sales for the thirteen weeks was $483,670, representing 37.5% of net sales, an increase of 260 basis points from the previous year [108]. - Selling expenses for the thirteen weeks were $420,990, accounting for 35.6% of net sales, an increase of 80 basis points year-over-year [111]. - General and administrative expenses for the thirteen weeks ended November 1, 2025, were $188,246, a decrease of $5 million compared to the same period in 2024, with a percentage of net sales decreasing by 60 basis points to 15.0% [114]. - For the year-to-date period of Fiscal 2025, general and administrative expenses decreased by $12 million compared to the previous year, with a percentage of net sales decreasing by 140 basis points to 15.1% [115]. Cash Flow and Liquidity - Cash and equivalents decreased to $605,783 as of November 1, 2025, from $772,727 as of February 1, 2025 [102]. - For the thirty-nine weeks, net cash provided by operating activities was $313,000, down from $402,756 in the previous year [102]. - The company had cash and cash equivalents of $605.8 million and total liquidity of approximately $1.1 billion, down from $772.7 million and $1.2 billion at the beginning of Fiscal 2025 [131]. - The company expects primary cash requirements over the next twelve months to focus on investments in the business, including inventory acquisition and marketing [129]. Regional Performance - The Americas region saw a net sales increase of 7% for the thirteen weeks, with comparable sales growth of 4% [106]. - Operating income for the Americas region decreased by $16 million, or 360 basis points as a percentage of region net sales, compared to the third quarter of Fiscal 2024 [120]. - Operating income for the EMEA region decreased by $22 million, or 460 basis points as a percentage of region net sales, compared to the year-to-date period of Fiscal 2024 [120]. - Hollister brand net sales increased by 16% for the thirteen weeks, while Abercrombie brand sales decreased by 2% [107]. Tax and Interest - The effective tax rate for the thirteen weeks ended November 1, 2025, was 28.5%, compared to 28.8% for the same period in 2024 [123]. - Interest income, net for the thirteen weeks ended November 1, 2025, decreased by $2.8 million compared to the same period in 2024, primarily due to a reduction in interest income from time deposits and money market accounts [121]. Strategic Initiatives - The Company anticipates implementing new merchandising and human capital management systems in the first half of Fiscal 2026 as part of its multi-year ERP system transformation [88]. - The Company is implementing mitigation strategies to address the impact of tariffs, including evaluating supply chain changes and negotiating with vendors [91]. - The Company has a disciplined investment philosophy aimed at maintaining a durable balance sheet and consistent free cash flow [99]. - The Company continues to monitor global events and assess their potential impacts on business operations [94]. - The enactment of the One Big Beautiful Bill Act did not have a material impact on the Company's consolidated financial statements [98]. Foreign Currency and Risk Management - The company uses foreign currency exchange forward contracts to mitigate risks associated with foreign currency transactions and forecasted transactions [157]. - A hypothetical 10% devaluation of the U.S. dollar against foreign currencies could decrease the fair values of foreign currency exchange forward contracts by approximately $17.5 million [158]. - The company eliminated interest rate risk by redeeming all outstanding 8.75% Senior Secured Notes on July 15, 2024 [155]. - The impact of foreign currency exchange rates on net sales was neutral for the thirteen weeks ended November 1, 2025, with no significant changes reported [149]. Share Repurchase - The company repurchased approximately 4.5 million shares of its Common Stock for about $350 million during the year-to-date period ended November 1, 2025, with $950 million remaining under the $1.3 billion share repurchase program [133].