Abercrombie & Fitch 2009 Annual Report Download - page 6

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manufacturers of the Company’s products are located. The Company has also registered, or has applied to
register, certain other trademarks in the U.S. and around the world. The Company believes that its products are
identified by its trademarks and, therefore, its trademarks are of significant value. Each registered trademark
has a duration of ten to 20 years, depending on the date it was registered and the country in which it is
registered, and is subject to an infinite number of renewals for a like period upon continued use and
appropriate application. The Company intends to continue using its core trademarks and to renew each of its
registered trademarks that remain in use.
Financial Information about Segments.
The Company determines its operating segments on the same basis that it uses to evaluate performance
internally. The operating segments identified by the Company are Abercrombie & Fitch, abercrombie kids,
Hollister and Gilly Hicks. The operating segments have been aggregated and are reported as one reportable
segment because they have similar economic characteristics and meet the required aggregation criteria. The
Company believes its operating segments may be aggregated for financial reporting purposes because they
are similar in each of the following areas: class of consumer, economic characteristics, nature of products,
nature of production processes, and distribution methods. Refer to Note 1, “Basis of Presentation” of Notes to
Consolidated Financial Statements for further discussion, including the break-out of geographic information
for net sales and long-lived assets.
Other Information.
Additional information about the Company’s business, including its revenues and profits for the last
three fiscal years and gross square footage of stores, is set forth under “ITEM 7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of
this Annual Report on Form 10-K.
COMPETITION.
The sale of apparel and personal care products through brick-and-mortar stores and direct-to-consumer
channels is a highly competitive business with numerous participants, including individual and chain fashion
specialty stores, as well as regional and national department stores. As the Company continues expanding
internationally, it also faces competition in European, Asian and other international markets from established
regional and national chains, as well as specialty stores. Brand recognition, fashion, price, service, store
location, selection and quality are the principal competitive factors in retail store and direct-to-consumer
sales.
The competitive challenges facing the Company include anticipating and quickly responding to
changing fashion trends; and maintaining the aspirational positioning of its brands so it can sustain its
premium pricing position. Furthermore, the Company faces additional competitive challenges as many
retailers continue promotional activities as a result of economic conditions. In response to these conditions,
the Company has increased its promotional activity while continuing to focus on preserving the value of its
brands.
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