Abercrombie & Fitch 2011 Annual Report Download - page 7

contractually required to adhere to our vendor Code of Conduct, and all new factories go through an initial
social audit, which includes a factory walk-through to appraise the physical working conditions and health
and safety practices. Social audits on the factories are also performed once a year after the initial audit. The
Company strives to partner with suppliers who respect local laws and share our dedication to utilize best
practices in human rights, labor rights and workplace safety.
D ISTRIBUTION AND M ERCHANDISE I NVENTORY .
The Company’s merchandise is shipped to the Company’s distribution centers (“DCs”) where it is
received and inspected before being shipped to stores or direct-to-consumer customers. The Company uses
its two DCs in New Albany, Ohio to support its North American stores, and North American and Asian
direct-to-consumer customers. The Company is in the process of consolidating the operations of its two
DCs in New Albany, Ohio into one, with an expected completion date by the end of Fiscal 2012. The
Company uses a third-party DC in the Netherlands for the distribution of merchandise to stores and
direct-to-consumer customers located in Europe, and a third-party DC in Hong Kong for the distribution of
merchandise to stores located in Asia. The Company utilizes primarily one contract carrier to ship
merchandise and related materials to its North American stores and direct-to-consumer customers, and a
separate contract carrier for its European and Asian stores and direct-to-consumer customers.
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.
I NFORMATION S YSTEMS .
The Company’s management information systems consist of a full range of retail, merchandising and
financial 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 support of its international expansion.
S EASONAL B USINESS .
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, particularly in the U.S.
T RADEMARKS .
The Abercrombie & Fitch®, abercrombie®, Hollister®, Gilly Hicks®, “Moose” and “Seagull”
trademarks are registered with the U.S. Patent and Trademark Office and the registries of countries where
stores are located or likely to be located in the future. In addition, these trademarks are either registered, or
the Company has applications for registration pending, with the registries of many of the foreign countries
in which the 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
its products are identified by its trademarks and, therefore, its trademarks are of significant value. Each
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