Abercrombie & Fitch 2013 Annual Report Download - page 4

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4
FINANCIAL INFORMATION ABOUT SEGMENTS.
The Company determines its segments on the same basis that it uses to evaluate performance. All of the Company’s
segments sell a similar group of products — casual sportswear apparel, personal care products and accessories for men, women
and kids and bras, underwear and sleepwear for girls. The Company has three reportable segments: U.S. Stores, International
Stores and Direct-to-Consumer. Refer to Note 2, “SEGMENT REPORTING,” of the Notes to Consolidated Financial
Statements included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on
Form 10-K for further discussion of the Company’s reportable segments.
IN-STORE EXPERIENCE AND STORE OPERATIONS.
The Company views the customer’s in-store experience as the primary means of communicating the spirit of each brand.
The Company emphasizes the senses of sight, sound, smell, touch and energy by utilizing the visual presentation of
merchandise, in-store marketing, music, fragrances, rich fabrics and its sales associates to reinforce the aspirational lifestyles
represented by the brands.
The Company’s in-store marketing is designed to convey the principal elements and personality of each brand. The store
design, furniture, fixtures and music are all carefully planned and coordinated to create a shopping experience that reflects the
Abercrombie & Fitch, abercrombie kids, Hollister or Gilly Hicks lifestyle.
The Company’s sales associates and managers are a central element in creating the atmosphere of the stores. In addition
to serving customers, sales associates and managers reflect the casual, energetic and aspirational attitude of the brands.
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 2012, the Company operated 1,051 stores. The following table details the number of retail stores
operated by the Company at February 2, 2013:
Fiscal 2012 Abercrombie &
Fitch abercrombie
kids Hollister Gilly Hicks Total
U.S. 266 144 482 20 912
International 19 6 107 7 139
Total 285 150 589 27 1,051
DIRECT-TO-CONSUMER BUSINESS.
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. Total net sales through direct-to-consumer
operations, including shipping and handling revenue, were $700.7 million for Fiscal 2012, representing 16% of total net sales.
The Company believes its direct-to-consumer operations have broadened its market and brand recognition worldwide.
MARKETING AND ADVERTISING.
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, e-commerce and
digital marketing, inclusive of social media, attract a substantial number of international consumers and have significantly
contributed to the worldwide status of the Company’s iconic brands. In addition, the Company launched A&F and Hollister
club programs during the third quarter of Fiscal 2012 to further engage customers. Including email addresses and mobile phone
numbers, the Company's total customer relationship management database has over ten million contacts.
MERCHANDISE SUPPLIERS.
During Fiscal 2012, the Company sourced merchandise through approximately 155 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 2012. The Company pursues a global sourcing strategy that includes relationships
with vendors in 20 countries, as well as the United States. The Company’s foreign sourcing of merchandise is negotiated and
settled in U.S. Dollars.
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