Abercrombie & Fitch 2011 Annual Report Download - page 6

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Merchandise is similarly displayed, regardless of location, to ensure a consistent in-store experience.
Store managers receive detailed plans designating fixture and merchandise placement to ensure coordinated
execution of the Company-wide merchandising strategy. In addition, standardization of each brand’s store
design and merchandise presentation enables the Company to open new stores efficiently.
At the end of Fiscal 2011, the Company operated 1,045 stores. The following table details the number
of retail stores operated by the Company at January 28, 2012:
Fiscal 2011
Abercrombie &
Fitch
abercrombie
kids Hollister Gilly Hicks Total
U.S. ................................ 280 154 494 18 946
International .......................... 14 5 77 3 99
Total ................................ 294 159 571 21 1,045
D
IRECT
-
TO
-C
ONSUMER
B
USINESS
.
The Company operates websites for each brand, both domestically and internationally. The websites
reinforce each particular brand’s lifestyle, and are designed to complement the in-store experience.
Aggregate total net sales through direct-to-consumer operations, including shipping and handling revenue,
were $552.6 million for Fiscal 2011, representing 13.3% of total net sales. The Company believes its
direct-to-consumer operations have broadened its market and brand recognition worldwide.
M
ARKETING AND
A
DVERTISING
.
The Company considers the in-store experience to be its primary marketing vehicle. The Company’s
marketing strategy emphasizes the senses to reinforce the aspirational lifestyle represented by each brand.
The Company’s flagship stores represent the pinnacle of the Company’s in-store branding efforts. The
Company also engages its customers through the internet, social media and mobile commerce in ways that
reinforce the aspirational lifestyle of the brands. Flagship stores and social media both attract a substantial
number of international consumers and have significantly contributed to the worldwide status of the
Company’s iconic brands.
M
ERCHANDISE
S
UPPLIERS
.
During Fiscal 2011, the Company sourced merchandise through approximately 170 vendors located
throughout the world; primarily in Asia and Central and South America. The Company did not source more
than 10% of its merchandise from any single factory or supplier during Fiscal 2011. The Company pursues
a global sourcing strategy that includes relationships with vendors in 16 countries as well as the United
States. The Company’s foreign sourcing of merchandise is 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.
Before the Company begins production with any factory, the factory must first go through a rigorous
quality assurance inspection to ensure it meets Company standards. This includes factories that are
subcontractors to the factories and vendors with whom the Company works. All business partners are
3