A&F(US:ANF)2025-05-28 13:30Financial Data and Key Metrics Changes - The company reported record net sales of $1,100,000,000 for Q1 2025, representing an 8% increase compared to the previous year, exceeding the expected range of 4% to 6% [6][14] - Operating margin was 9.3%, with earnings per share of $1.59, both above the previously provided ranges [6][14] - The company returned $200,000,000 to shareholders through share repurchases, totaling 5% of shares outstanding as of the beginning of the year [6][18] Business Line Data and Key Metrics Changes - Hollister brand achieved a 22% net sales growth, with comparable sales up 23%, marking the eighth consecutive quarter of growth [7][15] - Abercrombie Brands experienced a 4% net sales decline, with comparable sales down 10%, primarily due to a decline in average unit retail (AUR) as the company worked through winter carryover inventory [9][15] Market Data and Key Metrics Changes - The Americas region saw a 7% growth, while EMEA grew by 12% and APAC by 5% [7][14] - Strong comparable sales were reported across all regions, with the Americas up 4%, EMEA up 6%, and APAC up 2% [14] Company Strategy and Development Direction - The company aims to add around 100 new physical experiences in 2025, including 60 new stores and 40 remodels, while maintaining a focus on global growth [13][21] - The management emphasized the importance of agility in inventory management and marketing investments to align product offerings with customer demand [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sequential improvement in sales for Abercrombie Brands in the second half of the year, driven by positive customer responses to new product categories [10][41] - The company anticipates a full-year net sales growth of 3% to 6%, with operating margin expected to be in the range of 12.5% to 13.5% [20][21] Other Important Information - The company is not planning broad-based ticket price increases despite anticipated tariff impacts, focusing instead on maintaining product quality and aligning inventory with customer value perception [11][19] - The tax rate for the quarter was in line with expectations at 25%, with net income per diluted share above outlook at $1.59 compared to $2.14 last year [17] Q&A Session Summary Question: Outlook for Hollister and Abercrombie - Management highlighted the strong performance of Hollister and discussed the flexibility of Abercrombie's model to respond to customer trends, expecting an inflection in the back half of the year [30][41] Question: Full Year Profit Outlook - The management explained the reduction in profit expectations primarily due to tariffs, while maintaining confidence in the sales growth outlook based on strong balance sheet and planned investments [38][39] Question: Traffic and Inventory Levels - Positive traffic was reported for both Abercrombie and Hollister, with management indicating that carryover inventory levels are normalized compared to previous years [45][46] Question: Promotions and Growth Expectations - Management discussed expectations for promotions, indicating that AUR pressure would continue in the near term but would improve in the back half of the year [94][96] Question: Growth in Europe and Asia - The company remains optimistic about growth in EMEA and APAC, particularly in the UK and Germany, where strong performance was noted [99][100] Question: Improvement for Abercrombie - Management acknowledged the challenges faced in Q1 but expressed confidence in the brand's ability to adapt and respond to emerging trends, expecting improvement in the second half [102][106]