Abercrombie & Fitch 2015 Annual Report Download - page 4

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Table of Contents
4
FINANCIAL INFORMATION ABOUT SEGMENTS.
The Company determines its segments on the same basis that it uses to allocate resources and assess performance. All of the
Company’s operating segments sell a similar group of products — casual sportswear apparel, personal care products and accessories
for men, women and kids. During the first quarter of Fiscal 2015, the Company substantially completed its transition to a branded
organizational structure. In conjunction with the change, the Company determined its brand-based operating segments as of
January 30, 2016 to be Abercrombie, which includes the Company's Abercrombie & Fitch and abercrombie kids brands, and
Hollister. These operating segments have similar economic characteristics, class of consumers, products and production and
distribution methods, and have been aggregated into one reportable segment. Refer to Note 18, “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 operating segments and reportable segment.
STORE OPERATIONS.
At the end of Fiscal 2015, the Company operated 932 stores. The following table details the number of retail stores operated by
the Company at January 30, 2016:
Abercrombie(1) Hollister Total
U.S. 340 414 754
International 39 139 178
Total 379 553 932
(1) Includes Abercrombie & Fitch and abercrombie kids brands.
DIRECT-TO-CONSUMER AND OMNICHANNEL OPERATIONS .
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 $840.2 million for Fiscal 2015, representing 24% of total net sales. The Company
operates 42 websites, including both desktop and mobile versions. In addition, the websites are available in 10 languages, accept
29 currencies and ship to over 120 countries.
As our customers increasingly shop across multiple channels, we have developed, and continue to expand, our omnichannel
capabilities. These capabilities include "ship-from-store," "order-in-store," "reserve-in-store" and "in-store-pickup." The Company
continues to invest in these and other omnichannel initiatives in order to create a more seamless and convenient shopping experience.
MARKETING AND ADVERTISING.
The Company's customer engagement strategy includes the in-store and digital experience which are designed to reinforce the
lifestyle represented by each brand. The brands also have a strong base of globally diverse followers on key social platforms, such
as Facebook, Twitter, Instagram, Snapchat and Weibo. The brands engage with customers as well as key influencers such as
celebrities, bloggers and stylists to communicate fashion stories. In addition, the A&F and Hollister customer relationship
management programs provide a platform to develop direct relationships with more than 10 million marketable contacts in the
Company's database.
MERCHANDISE SUPPLIERS.
During Fiscal 2015, the Company sourced merchandise through approximately 150 vendors located throughout the world, primarily
in Asia and Central America. The Company did not source more than 10% of its merchandise from any single factory or supplier
during Fiscal 2015. The Company pursues a global sourcing strategy that includes relationships with vendors in 11 countries, as
well as the U.S. 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 supplier product quality standards.