Abercrombie & Fitch 2008 Annual Report Download - page 37

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Table of Contents
Operating Income
Operating income during the fourth quarter of Fiscal 2007 increased to $337.1 million from
$308.8 million for the comparable period in Fiscal 2006, an increase of 9.2%. The operating income rate
for the fourth quarter of Fiscal 2007 was 27.4% compared to 27.1% for the fourth quarter of Fiscal 2006.
Interest Income, Net and Income Taxes
Fourth quarter net interest income was $6.4 million in Fiscal 2007 compared to $4.7 million during
the comparable period in Fiscal 2006. The increase in net interest income was due to higher interest rates
and higher available investment balances during the fourth quarter of Fiscal 2007 when compared to the
fourth quarter of Fiscal 2006.
The effective tax rate for the fourth quarter of Fiscal 2007 was 36.9% as compared to 36.8% for the
Fiscal 2006 comparable period.
Net Income and Net Income per Share
Net income for the fourth quarter of Fiscal 2007 was $216.8 million versus $198.2 million for the
fourth quarter of Fiscal 2006, an increase of 9.4%. Net income per diluted weighted-average share
outstanding for the fourth quarter of Fiscal 2007 was $2.40, versus $2.14 for the Fiscal 2006 comparable
period, an increase of 12.2%.
FISCAL 2007 RESULTS
Net Sales
Net sales for Fiscal 2007 were $3.750 billion, an increase of 13.0% versus Fiscal 2006 net sales of
$3.318 billion. The net sales increase was attributed to the combination of the net addition of 91 stores and
a 50% increase in direct-to-consumer business (including shipping and handling revenue), partially offset
by a 1% comparable store sales decrease and a fifty-three week year in Fiscal 2006 versus a fifty-two
week year in Fiscal 2007.
For Fiscal 2007, comparable store sales by brand were as follows: Abercrombie & Fitch and
abercrombie comparable sales were flat; Hollister decreased 2%; and RUEHL decreased 9%. In addition,
the women’s, girls’ and bettys’ businesses continued to be more significant than the men’s, boys’ and
dudes’. During Fiscal 2007, women’s, girls and bettys represented at least 60% of the net sales for each of
their corresponding brands.
Direct-to-consumer merchandise net sales in Fiscal 2007 were $258.9 million, an increase of 49%
versus Fiscal 2006 net merchandise sales of $174.1 million. Shipping and handling revenue was
$39.1 million in Fiscal 2007 and $24.9 million in Fiscal 2006. The direct-to-consumer business, including
shipping and handling revenue, accounted for 8.0% of total net sales in Fiscal 2007 compared to 6.0% of
total net sales in Fiscal 2006. The increase was driven by store expansion, both domestically and
internationally, improved in-stock inventory availability, an improved targeted e-mail marketing strategy
and improved website functionality.
34
Source: ABERCROMBIE & FITCH CO /DE/, 10-K, March 27, 2009 Powered by Morningstar® Document Research℠