A&F(ANF) - 2026 Q4 - Annual Report

Store Operations - The Company operated 829 retail stores and 60 franchise stores as of January 31, 2026, with a total of 889 stores across the Americas, EMEA, and APAC regions[27] - In Fiscal 2025, the Company opened 62 new store locations, remodeled 47 locations, and closed 22 stores, indicating a focus on optimizing store presence[23] Sourcing and Supply Chain - Approximately 37% of merchandise receipts in Fiscal 2025 were sourced from vendors in Vietnam, while 26% were from Cambodia, highlighting the geographic distribution of sourcing[30] - The Company utilizes an agile inventory model to optimize inventory levels and respond quickly to customer demand trends[29] Financial Performance and Strategy - The Company expects to maintain double-digit operating margins and expand net income per diluted share as part of its financial discipline strategy[22] - The Company aims to deliver consistent global growth by investing in owned-and-operated channels and expanding into new markets through franchise and licensing partnerships[22] Digital Engagement - Over 89% of the Company's digital traffic in Fiscal 2025 was generated from mobile devices, emphasizing the importance of mobile engagement[21] - The Company continues to invest in its digital infrastructure, including a new merchandising ERP system that went live in March 2026[20] Customer Engagement - The loyalty programs, myAbercrombie and Hollister House Rewards, are designed to enhance customer engagement and drive repeat business through rewards and personalized offers[34] Workforce and Culture - The Company employed approximately 43,200 associates globally as of January 31, 2026, with about 36,600 being part-time associates[44] - The Company aims to create a culture of belonging and respect, with initiatives to ensure all associates feel represented and included[47] - The Company provides competitive compensation and benefits, including cash-based and equity-based incentive awards, to attract and retain key talent[47] - The Company has a focus on community involvement, offering a paid volunteer day each year for eligible volunteer work[47] - The Board of Directors oversees human capital matters, including compensation structure and human capital management strategies[46] - The Company has policies in place to create a work environment free from abuse, harassment, or discrimination[44] - The Company believes that the attraction, retention, and management of qualified talent are integral to its success[44] Financial Management and Risks - The Company maintains its cash equivalents in financial instruments, primarily time deposits and money market funds, with original maturities of three months or less[270] - The Company redeemed all of its outstanding 8.75% Senior Secured Notes on July 15, 2024, eliminating interest rate risk[272] - The Company has exposure to foreign currency exchange rate fluctuations due to international operations, which are translated into U.S. dollars for financial reporting[273] - A&F utilizes foreign currency exchange forward contracts to mitigate risks associated with foreign currency transactions and forecasted transactions[274] - A hypothetical 10% devaluation of the U.S. dollar could decrease the fair values of derivative instruments by approximately $13.9 million[275] - The Company does not engage in currency speculation with forward contracts, focusing instead on cash flow hedges for forecasted transactions[275] - The impact of foreign currency exchange rate fluctuations is expected to increase as international operations grow relative to domestic operations[273] - The fair value of outstanding foreign currency exchange forward contracts is recorded at the end of each fiscal period[274] - The Company has established a program to partially offset foreign currency exchange rate risks, which includes gains or losses on forward contracts[274] - For a detailed discussion of material risk factors, refer to "ITEM 1A. RISK FACTORS" in the Annual Report[276] - The Company’s financial statements are affected by the translation of foreign currencies into U.S. dollars at the end of the reporting period[273] Competitive Environment - The Company operates in a highly competitive retail environment, competing on product quality, brand messaging, and immersive shopping experiences[35]