Abercrombie & Fitch 1997 Annual Report Download - page 8

FINANCIAL SUMMARY The following summarized financial
data compares 1997 to the comparable periods for 1996 and 1995:
% Change
1997- 1996-
1997 1996 1995 1996 1995
Net sales (millions) $521.6 $335.4 $235.7 56% 42%
Increase in comparable store sales 21% 13% 5%
Retail sales increase attributable
to new and remodeled stores 34% 29% 37%
Retail sales per average
selling square foot $0,462 $0,373 $0,354 24% 5%
Retail sales per average store
(thousands) $3,653 $2,955 $2,823 24% 5%
Average store size at year end
(selling square feet) 7,910 7,921 7,920 0% 0%
Selling square feet at year end
(thousands) 1,234 1,006 792 23% 27%
Number of stores
Beginning of year 127 100 67
Opened 30 29 33
Closed (1) (2) –
End of year 156 127 100
NET SALES Fourth quarter 1997 net sales as compared to net
sales for the fourth quarter 1996 increased 52% to $212.1 million,
due to a 23% increase in comparable store sales and sales
attributable to new and remodeled stores. Comparable store sales
increases were strong in both the men’s and women’s businesses
as both were driven by a very strong knit business. Additionally,
fourth quarter 1997 net sales included results from the first
Holiday issue of the A&F Quarterly, a catalogue/magazine, which
accounted for 1.7% of total net sales.
Thirteen-week fourth quarter 1996 net sales as compared to
net sales for the fourteen-week fourth quarter 1995 increased
31% to $139.2 million, due to an 8% increase in comparable
store sales and sales attributable to new and remodeled stores.
Comparable store sales increases were strong in both the men’s
and women’s businesses. Sweaters were the best performing
category in each business.
Net sales for 1997 increased 56% to $521.6 million over the
same period in 1996. The sales increase was attributable to the
net addition of 29 stores and a 21% comparable store sales
increase. Comparable store sales increases were equally strong
in both men’s and women’s businesses and their performance
strength was broadly based across all major merchandise
categories. Net sales per selling square foot for the total
RESULTS OF OPERATIONS Net sales for the fourth quarter
were $212.1 million, an increase of 52% from $139.2 million
for the fourth quarter a year ago. Operating income was $59.1
million, up 67% compared to $35.3 million last year. Earnings per
diluted share were $.68, up 70%, from $.40 last year.
Net sales for the fiscal year ended January 31, 1998 increased
56% to $521.6 million from $335.4 million last year. Operating
income for the year increased 83% to $84.1 million from $46.0
million in 1996. Earnings per diluted share were $.94 compared
to $.48 on an adjusted basis a year ago, an increase of 96%.
The results of operations shown below are adjusted for both
the historical number of shares outstanding to reflect post-
initial public offering shares outstanding and interest expense to
reflect the Company’s ongoing capital structure and seasonal
borrowings. The following assumptions were used to derive the
adjusted amounts: 1) 51.05 million post-initial public offering
shares outstanding for the periods presented; prior to the initial
public offering on October 1, 1996, there were 43 million shares
outstanding; 2) interest expense on the Company’s seasonal
borrowings which were funded from The Limited’s intercom-
pany cash management system; prior to July 11, 1996, the
intercompany cash management account was noninterest bear-
ing; and 3) interest expense on the Company’s ongoing capital
structure which included interest expense on a $50 million
mirror note distributed to The Limited prior to the initial
public offering but excluded interest expense on the Company’s
$150 million credit agreement, entered into on July 2, 1996,
and repaid in the fourth quarter of 1996.
Year Ended Actual Adjusted Actual
January 31, February 1, February 1,
1998 1997 1997
Operating income $84,125 $45,993 $45,993
Interest expense, net 3,583 5,016 4,919
Income before income taxes 80,542 40,977 41,074
Provision for income taxes 32,220 16,400 16,400
Net income $48,322 $24,577 $24,674
Net income per share:
Basic $00 .95 $00 .48 $00 .54
Diluted $00 .94 $00 .48 $00 .54
Weighted average shares outstanding:
Basic 51,011 51,050 45,749
Diluted 51,478 51,050 45,760
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Abercrombie &Fitch Co.