Abercrombie & Fitch 2006 Annual Report Download - page 11

Store count and gross square footage by brand were as follows for the
fifty-three weeks ended February 3, 2007 and the fifty-two weeks ended
January 28, 2006, respectively:
Abercrombie
Store Activity & Fitch abercrombie Hollister RUEHL Total
January 29, 2006 361 164 318 8 851
New 8 19 70 7 104
Remodels/Conversions
(net activity) (2)
(1)
–5
(1)
(1)
(2)
2
Closed (7) (6) – – (13)
February 3, 2007 360 177 393 14 944
Gross Square Feet Abercrombie
(thousands) & Fitch abercrombie Hollister RUEHL Total
January 29, 2006 3,157 716 2,083 69 6,025
New 66 94 482 70 712
Remodels/Conversions
(net activity) 3
(1)
–39
(1)
(9)
(2)
33
Closed (55) (22) – – (77)
February 3, 2007 3,171 788 2,604 130 6,693
Average Store Size 8,808 4,452 6,626 9,286 7,090
(1)
Includes one Abercrombie & Fitch store and one Hollister store reopened after repair from hurricane damage.
(2)
Includes one RUEHL store temporarily closed due to fire damage.
Abercrombie
Store Activity & Fitch abercrombie Hollister RUEHL Total
January 30, 2005 357 171 256 4 788
New 15 5 57 4 81
Remodels/Conversions
(net activity) (1) (1) 6 – 4
Closed (10)
(3)
(11) (1)
(3)
– (22)
January 28, 2006 361 164 318 8 851
Gross Square Feet Abercrombie
(thousands) & Fitch abercrombie Hollister RUEHL Total
January 30, 2005 3,138 752 1,663 37 5,590
New 146 20 389 32 587
Remodels/Conversions
(net activity) (46) (4) 38 – (12)
Closed (81)
(3)
(52) (7)
(3)
– (140)
January 28, 2006 3,157 716 2,083 69 6,025
Average Store Size 8,745 4,366 6,550 8,625 7,080
(3)
Includes one Abercrombie & Fitch store and one Hollister store closed due to hurricane damage.
CAPITAL EXPENDITURES AND LESSOR CONSTRUCTION
ALLOWANCES
Capital expenditures totaled $403.5 million, $256.4
million and $185.1 million for Fiscal 2006, Fiscal 2005 and Fiscal
2004, respectively.
In Fiscal 2006 total capital expenditures were $403.5 million of
which $253.7 million was used for store related projects related to
store refresh, new construction, remodels and conversions, including
approximately $40 million related to the refresh of existing
Abercrombie & Fitch, abercrombie and Hollister stores. The remain-
ing $149.8 million was used for projects at the home office, including
the new DC, home office expansion, information technology invest-
ments and other projects.
In Fiscal 2005 total capital expenditures were $256.4 million of
which $204.7 million was used for store related projects, including
new store construction, remodels, conversions and other projects. The
remaining $51.7 million was used for projects at the home office,
including home office expansion, information technology invest-
ments, DC improvements and other projects.
In Fiscal 2004 total capital expenditures were $185.1 million of
which $169.7 million was used for store related projects, including new
store construction, remodels, conversions and other projects. The
remaining $15.4 million was used for projects at the home office,
including home office improvements, information technology
investments, DC improvements and other projects.
Lessor construction allowances are an integral part of the decision
making process for assessing the viability of new store leases. In
making the decision whether to invest in a store location, the Company
calculates the estimated future return on its investment based on the
cost of construction, less any construction allowances to be received
from the landlord. The Company received $49.4 million, $42.3 million
and $55.0 million in construction allowances during Fiscal 2006,
Fiscal 2005 and Fiscal 2004, respectively.
During Fiscal 2007, the Company anticipates capital expendi-
tures between $395 million and $405 million. Approximately $220
million of this amount is allocated to new store construction and full
store remodels. Approximately $60 million is expected to be allo-
cated to refresh existing stores. The store refresh will include new
floors, sound systems and fixture replacements at Abercrombie &
Fitch and abercrombie stores. In addition, the store refresh will
include the addition of video walls at existing Hollister stores and
fixtures to stores throughout the Hollister chain. The Company is
planning approximately $85 million in capital expenditures at the
home office related to new office buildings, information technology
investment and new direct-to-consumer distribution and logistics
systems. In March 2007, the Company decided to allocate approxi-
mately $35 million for the purchase of an airplane. With planned
expansion in Europe and Asia over the next several years, the
Company concluded that acquiring a plane is more beneficial than
continuing multiple fractional share ownership programs in meeting
the business travel needs of its Chief Executive Officer and senior man-
agement team.
The Company intends to add approximately 750,000 to 800,000
gross square feet of stores during Fiscal 2007, which will represent an
increase of approximately 11% to 12% over Fiscal 2006. The Company
anticipates the increase during Fiscal 2007 primarily due to the addi-
tion of approximately 67 new Hollister stores, 27 abercrombie stores,
six Abercrombie & Fitch stores and ten RUEHL stores. Additionally,
the Company plans to introduce its next concept with the opening of
approximately three stores in January 2008 and approximately four
additional stores by March 2008.
During Fiscal 2007, the Company expects the average construc-
tion cost per square foot, net of construction allowances, for new
Hollister stores to increase from last year’s actual cost of approximately
Abercrombie &Fitch
21
Abercrombie &Fitch
tions, significant corporate changes including mergers and acquisi-
tions with third parties, investments, restricted payments (including
dividends and stock repurchases) and transactions with affiliates. The
Amended Credit Agreement will mature on December 15, 2009.
Trade letters of credit totaling approximately $48.8 million and $40.6
million were outstanding under the Amended Credit Agreement on
February 3, 2007 and January 28, 2006, respectively. No borrowings
were outstanding under the Amended Credit Agreement on February
3, 2007 or on January 28, 2006.
Standby letters of credit totaling approximately $4.9 million and
$4.5 million were outstanding on February 3, 2007 and January 28,
2006. The standby letters of credit are set to expire primarily during
the fourth quarter of Fiscal 2007. The beneficiary, a merchandise sup-
plier, has the right to draw upon the standby letters of credit if the
Company authorizes or files a voluntary petition in bankruptcy. To
date, the beneficiary has not drawn upon the standby letters of credit.
OFF-BALANCE SHEET ARRANGEMENTS The Company does
not have any off-balance sheet arrangements or debt obligations.
CONTRACTUAL OBLIGATIONS As of February 3, 2007, the
Company’s contractual obligations were as follows:
Payments due by period (thousands)
Contractual Less than More than
Obligations Total 1 year 1-3 years 3-5 years 5 years
Operating
Lease $1,671,681 $215,499 $422,500 $373,454 $660,228
Obligations
Purchase
Obligations $ 216,899 $216,899 – – –
Other
Obligations $ 77,332 $ 66,449 $ 10,883 – –
Totals $1,965,912 $498,847 $433,383 $373,454 $660,228
Operating lease obligations consist primarily of future minimum
lease commitments related to store operating leases (See Note 7 of the
Notes to Consolidated Financial Statements). Operating lease obliga-
tions do not include common area maintenance (“CAM”), insurance
or tax payments for which the Company is also obligated. Total expense
related to CAM, insurance and taxes was $107.4 million in Fiscal 2006.
The purchase obligations category represents purchase orders for mer-
chandise to be delivered during Spring 2007 and commitments for fabric
to be used during the next season. Other obligations primarily represent
preventive maintenance contracts for Fiscal 2007 and letters of credit
outstanding as of February 3, 2007 (See Note 11 of the Notes to
Consolidated Financial Statements). The Company expects to fund all
of these obligations with cash provided from operations.
STORES AND GROSS SQUARE FEET Store count and gross
square footage by brand were as follows for the fourteen weeks ended
February 3, 2007 and the thirteen weeks ended January 28, 2006,
respectively:
20
Abercrombie
Store Activity & Fitch abercrombie Hollister RUEHL Total
October 28, 2006 358 171 372 11 912
New 3 8 21 4 36
Remodels/Conversions
(net activity) 1 – – (1)
(1)
–
Closed (2) (2) – – (4)
February 3, 2007 360 177 393 14 944
Gross Square Feet Abercrombie
(thousands) & Fitch abercrombie Hollister RUEHL Total
October 28, 2006 3,138 753 2,450 100 6,441
New 29 41 152 39 261
Remodels/Conversions
(net activity) 19 – 2 (9)
(1)
12
Closed (15) (6) – – (21)
February 3, 2007 3,171 788 2,604 130 6,693
Average Store Size 8,808 4,452 6,626 9,286 7,090
(1)
Includes one RUEHL store temporarily closed due to fire damage.
Abercrombie
Store Activity & Fitch abercrombie Hollister RUEHL Total
October 30, 2005 354 163 297 6 820
New 6 2 17 2 27
Remodels/Conversions
(net activity) 1 – 4 – 5
Closed – (1) – – (1)
January 28, 2006 361 164 318 8 851
Gross Square Feet Abercrombie
(thousands) & Fitch abercrombie Hollister RUEHL Total
October 30, 2005 3,077 713 1,941 58 5,789
New 76 8 112 11 207
Remodels/Conversions
(net activity) 4 – 30 – 34
Closed – (5) – – (5)
January 28, 2006 3,157 716 2,083 69 6,025
Average Store Size 8,745 4,366 6,550 8,625 7,080