Abercrombie & Fitch 2001 Annual Report Download - page 4

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Ab e rcr o mbie&Fitch
CHAIRMAN’S LE TT ER
Without a doubt, the state of the economy, particularly in the second half of 2001, presented our
business with extraordinary challenges. The retail environment was the toughest we have seen in
many years. Customers became very promotionally driven and it was extremely difficult for full
priced brands to generate sales increases. I am pleased that in this challenging environment we
were able to protect our brand and continue to improve our bottom line. We achieved record sales
and earnings in 2001 and have now had thirty-eight consecutive quarters of profit improvement.
Our operating profit margin of 20% of sales continues to be one of the highest in the industry.
We had a successful year in 2001 because we run our business very conservatively and employ
strong operational disciplines. We tightly control our inventory and expenses and I’m proud of
the productivity improvements our associates achieved last year in our stores, home office, distri-
bution center, and e-commerce operations. Most importantly, we never compromised the quality
standards of our brand. We remain totally focused on the highest quality in our merchandise, our
marketing, our stores, and our associates.
We are continuing to grow all three of our store concepts, Abercrombie & Fitch, abercrombie,
and our newest brand Hollister. In 2001 we opened a total of 138 stores and are targeting
another 130 openings for 2002. We continue to be pleased with the performance of Hollister
and are now aggressively rolling out this concept. After opening 29 Hollister stores in 2001 we
are planning another 60 for 2002. T hese openings will get this business to a size where it can
begin to contribute to the bottom line.
Our e-commerce business continues to grow very rapidly. In 2001, internet sales in our adult
Abercombie & Fitch business grew by over 60%. Additionally, we completed the first full year of
kids internet business and are very pleased with its progress.
In April of 2001, we moved into our new home office campus. We are excited to work in an
environment that represents our brand and lifestyle and allows us to attract and retain the
brightest and most talented people in the business.
Our new campus gave us the opportunity to host our first major charity event, the A&F
Challenge. Over 1,200 participants competed in running, biking, or in-line skating events and
we raised almost $200,000 for local charities. We expect the event to be even bigger in 2002.
We were also proud to support the relief efforts for the victims of the September 11th attacks.
Abercrombie & Fitch donated over $1.7 million to the families of New York firefighters and police
from the profits on the sale of our “Freedom” t-shirts, as well as, the savings we realized from not
publishing our Christmas magazine.
As we enter 2002, I have never been more confident about the future of our business. Our
organization and our brands are stronger than ever, and we have the management disciplines and
strategies in place to successfully manage through whatever environment we meet in the coming
year and beyond.
Michael S. Jeffries
Chairman and Chief Executive Officer
Ab e rcro mbi e &Fitch