ABERCROMBIE & FITCH CO /DE/ Q1 FY2025 earnings call

• Fran Horowitz noted first quarter results exceeded expectations, with net sales of $1.1 billion, up 8%. • Hollister led with 22% net sales growth and 23% comparable sales growth, marking eighth consecutive quarter of growth. • Abercrombie Brands faced challenges due to winter carryover inventory and softer spring categories but team is acting quickly with agile model. • Global supply chain and sourcing teams working on efficiency through strategic changes. • Plan to add around 100 new store experiences, including 60 new stores and 40 remodels.

For the first quarter, Hollister delivered record net sales growth of 22% with comparable sales up 23%, contributing significantly. Abercrombie Brands saw a 4% net sales decline with comparable sales down 10% due to winter carryover inventory and softer spring categories. Hollister's growth was balanced across genders and categories, with strength in fleece, jeans, and skirts. Abercrombie faced AUR decline from carryover inventory.

• Full-year net sales expected to grow 3%-6% on top of record 2024, with balanced growth across regions. • Full-year operating margin expected 12.5%-13.5%. • EPS expected $9.50-$10.50. • Second quarter 2025 net sales expected up 3%-5% to $1.13 billion, operating margin 12%-13%. • Expect around $400 million in share repurchases subject to conditions. • Capital expenditures around $200 million, with 100 new store experiences.

• Evolving trade environment and tariffs posing risks to margins. • Carryover inventory levels and freight costs impacting gross margin. • Competitive pressures in the retail space could affect brand performance.

Q: How do you see the outlook for Abercrombie on men's and women's and Hollister's growth drivers?

A: Fran Horowitz mentioned Abercrombie expects inflection in back half with flexible model, Hollister's growth driven by culturally relevant initiatives like The Grad Shop.

Q: Talk about real estate plans, closures, and remodels?

A: Robert Ball said plan to deliver around 100 new store experiences, 60 new stores, 40 remodels, net store openers with 60 new stores outpacing closures.

Q: Progression of traffic and inventory at Abercrombie?

A: Fran Horowitz said traffic was strong, Robert Ball noted worked through carryover inventory, still some but below 2023 levels.

Q: Breakdown of Q1 gross margin and inventory?

A: Robert Ball said freight and carryover contributed to gross margin decline, inventory up 21% with units up 6%.

Q: Growth in Europe and Asia?

A: Robert Ball and Scott Lipesky mentioned strong growth in UK, Germany, and balanced growth across regions.