Abercrombie & Fitch 2008 Annual Report Download - page 30

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Table of Contents
CURRENT TRENDS AND OUTLOOK
The fourth quarter retail environment proved to be the most challenging in the Company’s recent
history. Global economic turmoil resulted in a swift and steep decline in consumer spending and a mall
landscape dominated by promotional activity. The Company reacted by managing its expenses, utilizing a
season ending clearance event to clear through seasonal inventory and reducing capital expenditures by
scaling back on domestic expansion, all of which allowed the Company to end the year with a strong cash
position. Most importantly, the Company executed its strategy in a way that enabled it to protect its
brands.
The Company expects that the difficult selling environment will persist throughout 2009. Therefore,
the Company will continue to focus on managing the business in a seasoned, disciplined and controlled
manner.
As always, the Company’s first priority is long-term shareholder value which requires a commitment
to protecting brand equity. While the Company will take clearance markdowns as a natural rhythm of the
business, the cornerstone of the Company’s long-term successful business model is to drive sales with
high quality, trend right fashion and an exceptional in-store environment.
The Company will continue to rigorously review all operating expenses in order to achieve expense
reductions and a more flexible cost base. These efforts will be ongoing in 2009 and beyond and will be
responsive to overall sales trends.
The Company continues to be encouraged with the results of its international expansion. The
Abercrombie & Fitch London flagship continues to perform well and there has been a strong initial
reaction to the Hollister mall-based stores opened in the U.K. Store growth for 2009 will be focused on
international opportunities as the Company moves forward with plans to bring its brands to the rest of the
world.
In managing the business in 2009, the Company is taking a conservative view of market conditions.
The Company will continue to focus on its long-term objectives while seeking to maintain flexibility to
respond to market conditions.
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Source: ABERCROMBIE & FITCH CO /DE/, 10-K, March 27, 2009 Powered by Morningstar® Document Research℠