Abercrombie & Fitch 2010 Annual Report Download - page 7

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Table of Contents
Merchandise Suppliers.
During Fiscal 2010, the Company purchased merchandise from approximately 191 vendors located throughout the world;
primarily in Asia and Central and South America. The Company did not source more than 5% of its merchandise from any single
factory or supplier during Fiscal 2010. The Company pursues a global sourcing strategy that includes relationships with vendors in 27
countries as well as the United States (the "U.S."). The Company's foreign purchases of merchandise are negotiated and settled in
U.S. dollars.
All product sources, including independent manufacturers and suppliers, must achieve and maintain the Company's high quality
standards, which are an integral part of the Company's identity. The Company has established supplier product quality standards to
ensure the high quality of fabrics and other materials used in the Company's products. The Company utilizes both home office and
field employees to help monitor compliance with the Company's product quality standards.
Distribution and Merchandise Inventory.
In Fiscal 2010, a majority of the Company's merchandise and related materials were shipped to the Company's two distribution
centers ("DCs") in New Albany, Ohio where they were received and inspected. The Company is in the process of consolidating the
operations of its two DCs in New Albany into one, with an expected completion in mid-2012. The Company also uses a third-party
DC in the Netherlands for the distribution of merchandise to stores located in Europe and Asia. The Company utilizes one contract
carrier to ship merchandise and related materials to its North American stores and all direct-to-consumer customers, and a separate
contract carrier for its European and Asian stores. The Company also plans to open an additional third-party DC to support Asian
operations in Fiscal 2011.
The Company strives to maintain sufficient quantities of inventory in its retail stores and DCs to offer customers a full selection
of current merchandise. The Company attempts to balance in-stock levels and inventory turnover, and to take markdowns when
required to keep merchandise fresh and current with fashion trends.
Information Systems.
The Company's management information systems consist of a full range of retail, financial and merchandising systems. The
systems include applications related to point-of-sale, direct-to-consumer, inventory management, supply chain, planning, sourcing,
merchandising and financial reporting. The Company continues to invest in technology to upgrade core systems to make the Company
scalable, efficient and more accurate, including in support of its international expansion.
Seasonal Business.
The retail apparel market has two principal selling seasons: the Spring season which includes the first and second fiscal quarters
("Spring"); and the Fall season which includes the third and fourth fiscal quarters ("Fall"). As is typical in the apparel industry, the
Company experiences its greatest sales activity during the Fall season due to the Back-to-School (August) and Holiday (November
and December) selling periods.
Trademarks.
The Abercrombie & Fitch®, abercrombie®, Hollister Co.®, Gilly Hicks®, Gilly Hicks Sydney® and the "Moose," "Seagull," and
"Koala" trademarks have been registered with the U.S. Patent and Trademark Office
4