Abercrombie & Fitch (ANF) 4 Mar 202019 Q4 Earnings call transcript

Good day, everyone. Welcome to the Abercrombie & Fitch’s Fourth Quarter and Year-End fiscal year 2019 Earnings Call. Today’s conference is being recorded. [Operator Instructions]

And now at this time, I’d like to turn the call over to Pam Quintiliano. ma’am. ahead, go Please

morning to Good XXXX fourth earnings call. and you. our welcome quarter Thank

on are under is Earlier the Executive today our our earnings me Joining call website available is section. Scott issued fourth on Chief also release, we on which Officer at Fran presentation. Lipesky, Financial investors morning, an Officer. corporate.abercrombie.com investor this website our quarter the and Chief Horowitz, available

expectations Safe call mind XXXX. in statements any provisions are Securities to subject Private results, that the the which today. These cause uncertainties include mentioned and of results the these and keep A risks detailed Please could commentary estimated made discussion the with and filings Litigation that Exchange to on coronavirus on in assumptions forward-looking the and contained our Harbor statements, Act the are Commission. uncertainties of is of we to subject Securities the on Reform actual of operating the factors impact company’s from differ forward-looking materially

we In financial during non-GAAP measures referring certain to call. be the will addition,

a reconciliation and release non-GAAP morning. to earlier GAAP included in details Additional the financial measures issued this adjusted are of

the to call will Fran. I that, With turn over

consecutive on note, comp for for the you us. morning and of and X% plus X% quarter comps. year everyone third a positive a Good thank comp year, growing while plus was We a ended delivering joining line XXXX strong top for our the which

going. at the keep momentum expect XXXX and initiatives Importantly, Investor to to we that we progress continue our laid out great transformation make against this Day

grew X%, by shopping devices and global four and gross DTC XXX associates approximately basis years, digits, we large we checkout. our square footprint two omnichannel capabilities occupancy and estate, key footage equipped as lowered and past handheld percent costs to store provided points. In double improve markets the across implemented flagships revenues a new of store Over real underperforming experiences, reduced closed XXX store sales by in omni, by digital with

our we reduced China development our Southeast Shanghai, weeks, exposure London must-win, in Asia. lead launched Hollister In In XXXX improved concept-to-customer categories, China. personalization, XX% lower from times our manufacturing XX% offices by to four the product introduced added calendar production and program cycle, product we customer in in XXXX in life loyalty and programs engagement, capacity our opened in evolved regional across and U.S. and loyalty in Abercrombie must-grow

our advance UN of outside finally, stated the efforts, continue with ESG most Global And Compact. we our notably in initiative, to our participation transformation

all still that confident we accomplished have there We about that are is while excited work ahead.

campus, on favorite our way, There will that “Always has but resilience. company is, everyone tirelessly on long-term always challenges Here knows while focused along forward.” driving of near-term goals my great our We shown some are the results. one be sayings

has Recently, We those presented to to challenge. affected. sympathies the a new all of would who coronavirus like deepest express our are

and the priority top Our and partners is of our vendor customers. associates, safety health

We seems daily, monitoring situation, are to changing the be hourly. if closely which not

important as near-term Asia created recent provide view the detail growth Scott further has of long-term on headwind, longer impact continue we coronavirus. Europe a to this term, While the drivers. and will estimate

between Now industry. anticipated season the six across let Christmas We competitive given to levels results. Thanksgiving our inventory retail shopping very quarter heightened me a fewer turn bankruptcies, and days fourth and

our our promotions inventories. we and quarter, carefully with managed the were the During strategic of cadence

Monday. through top over a the line delivered performance week this years. company U.S., for We its revenue five Friday record period we comp. in total history over the Tuesday Abercrombie of before strongest the registered achieved in We define Hollister during delivered our highest Thanksgiving company. In and which X% Cyber we basis, plus the had as a Black On week, a strong sales

and valleys. the our quarter. peaks a had anticipated introduced marketing products we messaging earlier season, and campaigns holiday the We to new throughout For started traffic the plan and manage

Our planning quarter outerwear and well in revenues off, intimates. as jeans as including bottoms, with fourth record paid

We adoption of new saw silhouette. women's also a our significant increased content elevated and improvement bottom by tops in driven fashion

U.S. plus comp Abercrombie X%, business the impact at were plus brand, late consecutive and Hollister our the X%. broad-based minus By XXth our outbreak. quarter adverse by to achievements a delivered of improvements posted sequentially a from minus positive region, delivered X% improved across International comp, and and coronavirus By channels comps international quarter X%. to regions a and APAC the

Recent Turning outperforming improvements retail responding outperforming U.S. improved We international, sequential to units. comps digital in unit guys and girls, saw conversion trends and customers the reported to with Hollister. stores. average traffic well continued outperforming comp and with

our call, on the we On emphasis girls and assortment playbook, our investments renewed our particularly items. focus top architecture, an on with fashion SKU proven last in side, breadth discussed on a

of For the quarter, able impact product. were girls the fourth to a we portion

and progress we As our inventory we architecture to through the see in half, assortment expect ongoing investment. improvement first

excited jeans. especially are girls opportunity in the about We

XXXX, our continued of see half fashion respond back the offerings. to we In to

While we of flow we've could increased to first in the to basics. fashion these we updated chase styles, continued keep In newness with more up for the quarter, mix demand. inventory further not and

as looking the is not and better performance straight-style collection our buying as potential beyond our tops a she jeans, bottoms. improvement for the While business, been comp high-rise complement composition the ahead. still laying scaling in we've we're ideal, to must-have fashion groundwork new has And experienced

quarter a comp. quarter record On had outerwear driven sales all another Gilly jeans, the of which had Hicks, pants, record the revenue Hollister's of quarter, in by double-digit brand fourth sub-brand, guys and side, highest and we history. fourth intimate their revenue a quarter in new fourth had also

growth. invested prepare for additional of impressive have next the stage growth trajectory, and sustained headcount we As of in as a its we result

most the marketing, quarter, Twitch. YouTube, across Instagram, to Gen Tok, core throughout them, to our Spotify the For on meaningful focused Tik we are customer speaking platforms that Z including and

intent achieved year, double-digit lift the our and of in The series XX is Carpe which AwesomenessTV had purchase we For brand over views recommendation. affinity, million Challenge, YouTube and

authentically platforms, on teens. focused right our being In speaking also we're on to addition to the

we to teen calendar dedicated In raise March was Wellness with event, World health this introduced of issues. inaugural On X, Teen is partnership National which conjunction we and awareness in Day, the launched Mental Hollister created year, with initiative was to culminating Day designed At Project, the brands, comp global its in a confidence. Confidence teen XXXX since XXXX. in fourth X% plus quite best promote Abercrombie the comp year-round mental a the quarter,

voice adult kids aligned its more Over in the made target past with experience shifting offering and customers broad-based international. closely have the value. stores and strides adults needs higher relevant for two years, purpose to great a our teams were brand product, fashion Comps and as refining Improvement as basis kids in with on and sequential AUR positive was and growth. a online well traffic compelling domestic at of and

Curve and the washes fourth had dresses in and highlight recent continued target fabric over way. of that the helping quarter promotions were drive we mid-XXs Mom weekend anticipated a our elevated delivered and products. customers and Ankle outperform and As comps. to a another introduction momentum mid-top our outerwear comp we women's, with years, result, We as both collection. long of eight perfect launch from best all reduced of positive the new on to the with design, much Jeans the to events. provide fit, items Love expansion for continued although Women's Straight leading associated was our In comparable social men's,

in were men's place On stand all sweaters, pants, out. jeans side, the

of building consecutive positive seen franchise Our quarter Fierce fourth comps, throughout has momentum year. the

on storytelling which our holiday, consistent and we as the marketing sets, example Fierce is well focus to offered customizable as well that brand Fierce large-sized received. team's bottles of For both gift great were directly our ties a purpose.

the with Hours of built Over our In which that benefited Do the and year, softAF traffic we and Curve conversion. we Love, introduction on believe campaigns, XX

from Rapinoe positive our Fierce who continued the and fashionable, we age-appropriate your campaign, girls which the target share introduction their to personal products into parents Boys Family, quarter Kyle was and will which body Kuzma, embody overcoming fears. experience of results. includes Our obstacles. The and comfortable. with and most momentum their believe XXXX individuals contributed importantly, responding features first marketing athletes, has professional customer both Abercrombie Fierce that facing with and, momentum functional At the XX comp to kids, our and self-empowerment, continued soft positivity Megan

as continue important to we kids an ahead, Looking growth vehicle. view

our the brands. excited of future We’re about

into is lines environment a optimization is and customers gears and limited well to Shifting to we store responding channels component Global is inventory move the messaging. product have operating carryover network spring, The initiatives. critical dynamic is margin regional current, between shopping blurred. and to As plans. our our transformation expansion incredibly

they customers whenever, our for and however to there wherever be engage. to choose is goal Our

billion Our double-digit the digital range, in annual grew business exceeding in $X revenue.

most matter. experience. two-thirds seamless why However, We're transactions roughly shopping is which occur omnichannel best customers committed in store, the still and stores to providing our of

right locations approach. all" fits in For do be economics. stores, "one right right to size not the the the size a take need we They and

of We've and footprints a We've improve one-third stores, experience, our to reductions we combination health existing store the openings Domestically, fleet. as of continue half occurring through new roughly remodels With of XXXX strive in in closures. of been underpenetrated with been opening updating fleet our markets. international every selective new square in footage, the invest in key of our our stores. the partners, rolling and We fourth modernize, store base for up our majority is we our with in renewal a roughly of productivity negotiations basis to landlords two-year evolve store on quarter. and and view

flexibility to approximately of mall of of with balance stores with life in healthy about base gives XX% a and nimble our basis strong profitable take is previously opportunities. sheet, fleet advantage centers, the unavailable of four-wall us average This, U.S. and and XX% located Our years. on B three roughly be lease remaining an coupled to A

and our in announcement beneficial mutually able change announcement, Street, agree and close smaller-footprint repositioning of Fifth not local away. engaged The shopping we we to term commitment third is store Fifth & our our intimate sense to cater Abercrombie long-term to example addition and a our to were operate customers. call, Hollister a blocks majority fiscal announced one top-performing on more natural the to lease markets of does experiences great After near XXth to lease few Our expiration with due Fitch in Avenue closing our remained XXXX we short-term we stores. Hollister On will Abercrombie that flagships flagship location within and landlord Hollister a now Avenue the our to be the this. This that moving the a remains of in quarter extension. makes to Abercrombie which economics

global exited XX. We with entered XXXX XX with and flagships

Savile gross additional XX year, Copenhagen, square points flagships, in feet The feet, our impact additional New on SoHo stores base. three Fukuoka XXXX, London XXX,XXX points removing which we remaining will for are of XX basis Milan, fiscal and previously Hollister A&F XX of for an flagships margins collectively so operating XXXX. City, impact an announced in to fiscal omni-enabled the square the negative A&F a negative kick-out. story in spaces. XXX,XXX comp A&F a gross account Abercrombie rightsizing from and the During Kids closed footage had large-format including be Row York Abercrombie our to square of Flagships is more favor smaller, productive piece available In closure, rationalization important and

context, At combined year-end, XX% that square XX% years past the fleet gross format. updated rightsized XX% their kids over For feet of two roughly the and to formats. lower were than Abercrombie were stores an had older

XXXX, In in of XX% These been sales single-digit year. was high have formats also versus remodels the year-end, during total, experiences control in format. In with newer a our updated addition provided to in has year to fleet with customers roughly the roughly compared with we delivered stores. active. its previous Hollister Abercrombie, XX% consistently lift ending new At of the as XX% our base XX

including Gilly Abercrombie we For planning XX experiences, XX will Hollisters, side-by-sides. which include XXXX, and carve-outs kids some for XX and are and of new another Hicks

store XXXX, percent out a we square points. of our XXX sales of early reduced basis base occupancy and by about X% roughly taken Since gross of the have as footage

is flagship plan to the primarily store continue low by and closures. through Our square rightsizes in occupancy gross single-digit to reducing lower annually, Abercrombie footage range

April long-term targets we've optimization bring progress closer global our at to store our Investor achieving We are Day. XXXX introduced made the the us network with pleased against initiatives,

our the adjusted At margin our goal transformation X.X%. doubling time, initiative. levels XXXX out operating This of path of from on laid to relies the execution we that non-GAAP successful

including two basis in external some protests our past have key XX impact FX brings we had of in margin a X. currency basis, greatest has impact great Europe target constant by China and the the factors, markets on progress at operating points. and the X.X% dollar, across the to estimated X% coronavirus. before this On factoring have strong also Asia. impacted made Over years, unanticipated tariffs been a but

managing on are line meeting slightly challenges different our and remaining X.X% initially than these through margin a We albeit ultimately by expected. time surpassing operating focused target on

And our future year product, results, updated fourth in foundation quarter responding voice our omnichannel based to place. is growth customers brand full for The experience. and on are and

Looking investments comp and growth markets; have efforts strategic teams and improved path Asia, clear we growth, margin we will in lower square data analytics reductions store ongoing and analytics customer-facing in that our further ongoing data in efforts. U.S. our AUC, slightly assortment tools, and AUR through market expected these and through confident gross footage including operating improve to with coupled architecture higher which, and occupancy goals, size benefiting reflecting sales and ahead, markdown fund from penetration on from expense ongoing total leverage in Europe and sourcing sales including: a expansion are achieve local growth increased optimization;

focused what to control results I'm turn the well we we can detail in to cannot. on mitigating for more And recent always, to discuss our that, and call over outlook remain XXXX. controlling with as we going As our what Scott as

primarily fourth impacts of last on year Fran. a sales Starting reported changes X% $X mainland We of last with Comp adverse from to quarter. FX Thanks, net currency related sales in plus $X.X constant approximately X% million year. versus X% Total basis. due rose had billion from million to at and the plus in closures coronavirus. $X and the store came China in

plus digital X% and loyalty Abercrombie a and growth. continue year. positive versus minus Our versus plus X% is drive support minus X% year marketing comp investments cross-channel and last X% last posted Hollister to ongoing traffic

Gross significant sales our performance comps, consecutive International top X% still to By points versus a the at minus minus points XXth negative. served adverse store included with rate higher and Europe in points. tariff, higher which FX profit coming and plus on of China year. XX year basis last Overall, remained minus QX declined X% digital Asia, up both in offset X% basis in XX XX last last comp plus achieved registered improvement This while XX.X% with X% from by offset XX.X% a and of year. that's impact AUR U.S. of to the traffic, its negative geography, in positive quarter and basis changes AUC. sequential X%

million marketing. of XX was operating $X up Operating in year year million our of from million from from last partially and expense of an I'll payroll reflecting net the excluding $XXX recap adjusted adverse million. to year reduction and other of a pretax the rest by sales related as compared higher year-over-year related digital basis. results the as for increased as points volume expenses. operating store leveraged last compared store million This this FX of to compared were sales costs $X a compared China due to was to to offset charges last and non-GAAP $X our last quarter results impacts Excluded basis year, on income asset consulting income approximately fourth X% expense year Operating was percent quarter and year. flagship impairments. tariffs to Operating primarily $XXX

for effective by income adjusted The impacting was rate to last quarter year approximately diluted the XX%. with compared per was tax results share FX $X.XX $X.XX year-over-year adversely $X.XX. Net

a up sales up basis compared and $X.X and certain to of store flagship on operating to X% to full reported last related X% charges our XXXX $XX currency matters excluded $XX year. store of year, billion, excluded million approximately pretax year asset related impairment. the asset to charges For compares legal This flagship a Net results we're constant from on approximately basis were last impairments. million

Gross flat marketing. X% flagship related flagship $XX Operating XX.X%, from due related last higher operating changes year was mostly increased X% investments from basis year. XX volume net points Comp basis in points to by expense and higher profit well basis primarily rate and XX plus to impact offset from charges, our are up X% sales SoHo and points. with down million as XX rose tariffs in AUR Results other of adverse plus year, as Hollister sales of last excluding expenses versus from last income AUC. digital include China exit FX

charges benefits XX year These This occupancy decreased costs deleverage for a Operating points. from FX, was to year. primarily reflecting $XX driven store by and with XX%. down Year-over-year from exit basis changes operating compared Other $XX reduced diluted in share increases expense were was flagship FX. $X.XX $X.XX year adverse exit compensation from expense. resulted partially basis $X.XX offset rate Net FX. this tax store $XX contributed deleverage. million year-over-year XX store an year $X.XX decline $XXX in operating changes last and in of effective flagship income and and The million of million the charges year by the consulting of this income was of from income points million, last per impact

cash sheet. to flow the Turning and balance

stockholders Our $XXX compared $XXX year fourth a share and flow expenditures, million million last full We year, million million capital and year $XXX this to to million key driver year. fund performance last of through of with our approximately million compared cash helps operating repurchases, $XX ended of quarter returns repayments. was of $XXX $XXX dividends of which debt to cash in $XXX million

in to quarter expectation last our call better outstanding XXXX. Gross X% single million year. Total third were borrowings low-to-mid digits. down $XXX about to the on than was compared This quarter inventories discussed million $XXX ended the compared

well position must-win and overall investments categories. must-grow balanced strategic the our was in entering inventory quarter with Our across brands

to inventory, the digits resulting supply up potential quarter with from expect excluding disruptions We low-single coronavirus. first end the chain

outlook. XXXX fiscal our to on Moving

and across as the to impact on the assess significant of potential coronavirus consumer year, to global industry there supply we our uncertainty attempt the global chain. the full the look we As is

today. that estimated year our in year, operations a outlook the the first full half based the are into We account takes available impact providing on of the information on

Given to this change. the the fluid is subject situation, nature of

evaluating travel outlook, considered availability raw our and we and material When including congestion. freight closures, consumer several store production demand, factors delays,

our XX% closures that Hong and half and demand, region. Regarding travel XXXX know roughly administrative and the from APAC of revenues mainland and special China from the about consumer that of fiscal store in derived Kong we region were

we store hours of regions. begun other temporary have reduced to in store see Outside closures APAC, and

closed. not stores We locations have also in even weakening trends tourist-heavy our experienced have when

XX% XX% total into On the approximately the were China U.S. China in sourced supply of in receipts receipts sourced and and XXXX chain in side were merchandise our of the total imported

XXXX We in expect XX% these low-teens roughly to percentages reduce to respectively. the and

In these have All of and factories addition fabric not seen to China. our most mills now operational. are Today, disruptions. meaningful factories, are mills delivery in we

Although cause running which with may costs. freight delays, short-term increased

We with that to contact we all try in and options disappoint to evaluating do are continue close not customers. to be ensure our partners our

of FX. expect For Gross low-single coronavirus. and half points XX impact to million impact to expense and $XXX adjusted impact XXXX basis of FX be in first – points. a an fiscal from sales the profit of net low-XXs rate the adverse or basis the XX rate X% approximately a the including to basis other to Operating from reflecting sales impacts the XX.X% coronavirus to coronavirus upper-XXs adverse flat sorry, year XXXX the related $XX from Comp tax I'm of year million approximate point and of down including to we the changes million. approximately XXX adverse to $X.XX estimated from including digits $XX down our to to $XX in adverse basis expenditures to and be coronavirus, be a basis expense flat operating points be XX effective impact excluding for to basis the approximately XX up million points the XX the point capital billion, impact from operating the income mid rate

a the adverse XX we last adverse XXX China a point from coronavirus. digits approximate FX. basis XX.X% quarter, related expect an in points the from to to be net to basis impact impact in to and reflecting rate be impact first profit basis the the including Comp the FX be last from in and $XX rates impact from down adverse down coronavirus and coronavirus Gross including down of point changes digits to million $X tariffs anticipated combined sales points basis the adverse basis points. XXX mid-single compared XXX to approximately $XX sales For million impact million XXX mid-single to from year’s year, the

an A XX operating of investor pages upper-XXs. in and other effective income excluding from walk XXXX XX is operating presentation. earnings $XXX expense adjusted of flat-to-up our to expense rate and available Operating expectations of our be post-coronavirus X% and on pre- detailed tax million the

With back over that, I will turn the Fran. call to

our would this for partners and moment I Before just this store global support team your global thank to like for a and our hard during to uncertainty. of of take Q&A, work period all year your help to

we for ready Operator, are questions.

take [Operator Citi. our Instructions] first from with question We'll Lejuez Paul

Hi. the of far just your competitive market, so closings Do store U.S. think around sort any of guys. market in than share store the as F XXXX? impact XXXX a high near-term within seeing Curious, whether provide you're landscape the Thanks, you opportunity that stores. some F had what has as anymore in closings, a level in – competitor

the the are Maybe right come are about moving and then what a are SG&A? wrong bit in in direction. maybe just takes which puts moving talk could on big you through the And direction, buckets, some which Scott, little of the SG&A

a could there? you color little If Thanks. give

I'll chime kick then can Sure, it in. off, and Fran

into in quarter. knew X%, the Abercrombie and through competitive. with it quarter, delivering positive landscape going quarter, coming it how at is. had to we we the higher and a how the peaks that very will last that's fourth out. the lower to the happy comp competitive plus with get think We a mark troughs about were year. always We mentioned As the get Fran We played compared performed It nice had were was now, a plan plan. we a

a and our business. something closures, said driver store on that of was Specifically we that not looked at it's

store remodel us maybe is opportunities more in the an to One estate gives perspective the mall to that or available about rightsize didn't gives closures the real maybe opportunity It from things get a space before. a it store. have of industry into us good

So seeing that come real of we perspective. inventory a on estate like some from

SG&A We'll mix to We're inflation shift in some we that we've and side, at theme. next we one On from a at And come some similar really, freight takes been puts We're few of payroll some us invest of year-after-year. about We're see benefits seeing see as people. and little of occupancy the and funding outlook, significantly over we at past into digital to the continue as years. from a full it's the come but in marketing. working invest that also the to the digital of on in It's year, look freight. We'll is reductions. going year, store something to going think that transportation. on continue also inflation to bit kind look from a the going our

funding little impact. initiatives. going had in a couple to that's years good at the will of ramp also transformation continuing a last a XXXX. stabilize be look bit We're here We our So to that in

to what funding that that's some we those of investments have internally. So some of kind of the takes us and SG&A

the our quarter. anticipating extremely very wrap and go we're aligned up just – it customer team. were Scott in ready They of our We to We're [indiscernible] compete. experience results. and voice product, our responded, proud to of did and Just proud a competitive their the said. what We sorry,

the curious last planning over several weeks just here, changed or up. expense the inventory a at I'm follow And to as all coronavirus. if result of planning has Thanks.

are thing. to whole impact ones the this one try one really guys of You estimate the of – first from the to

changes expense planning as But inventory buys, curious result that. made if actually So we appreciate to you've a I'm it. of already

here. Our That the basis actually XX/X understand chain our year to inventory COVID. we existed and on continue to post conversation the We every team always that's partners a a inventory, changed. global means variable. inventory as week that piece with through our on base little supply are thanks week. been for our quarter. a during sourcing a planning changed at suppliers in process hasn't that ramping will is that trigger our look where of process the A they huge up and hasn't year, expense more what We with here. after we've our It's CNY a and focus We to that flows and have weekly go into that expense

Paul, to XXXX, was the mean effectively, globally And to and credit that year. same a year. a helped that through of we complicated the I Yes. this expect lot team manage very us do

Great. Thank you.

you. Thank

And Dana Group. Telsey Telsey your Advisory from next comes question with

morning Good everyone.

different might and Hollister? you you. from U.S. puts see a quarter, you of third the business, takes Thank think same and that have last the in compared obviously, international the international about saw the with business what Abercrombie the quarter? As and to What did bit been certainly and or improvement from Hollister the were you domestically Abercrombie and

Hey, Good Fran. Dana. it’s morning,

we results saw were saw also we similar. – were what The So essentially internationally. domestically, very

which topic, start was Outerwear, product strong with we of overall. Very, women's. We We had opportunities. those core and addressing quarter a in time. last ones quarter. on I business. a denim In Hollister, business, very through perspective, year. strong as discussed well A&F. were Domestically that with drove I same had Very We U.S. opportunities progress for big in brand. wins. and and in We brand. set Guys a strong, the we the seeing key in those. for record exciting another two the we of the wins a in that as We're assortment. fashion So which very men's girls say at would call Hollister we're discussed some product fourth proud both had from quite And nice think few We top, again, had denim where similar a thing. records internationally, ICR. for

nice saw customer been and And in quickly which really the up we quarter women's out big work of that wins, denim industry can business, can and Abercrombie on we're tops must-haves particularly improvement from seeing We to and and winners girls. because core the new across landed. that we're as denim. got significant those the with in we're into good shape girl's for fashion, really the tough, as in sequential going our some inventories. some girls a start Let's seeing on has on shift we We've we're catching as second in we just quickly as

Scott? So

Yes. little on a in bit the international. I'll add

in we've protests, and throughout that we little the that trend is after markets some a our disruption APAC single-digit in in So the that our fourth been Europe year, pre-coronavirus, about comps What in on in and we negative bit also. nice talking kind improvement that of did trend, the Brexit did drop some back see key see to of down like low settle macro QX. got of the quarter

a more stable environment little again, Europe, So pre-coronavirus. in

you. Thank

Next the with from question JPMorgan. of Matthew Boss line comes

Thanks for taking I my to wanted Zaccone the is comps today. to question. outlook. Great. for Matt better Steve This understand Maybe start,

So we about within your prior the of driving outside lines, at the comps performance the outlook about in of how think plan? same Analyst positive the we concepts commentary versus you the the flat what's two Day should talked virus change impact, about that Along trends guidance? growth comp approximately to think those

of Yes, to put XXXX. as kind kick Steve. one out ended approximately flat comps; I XXXX, the about this it's we in of we there want off, the think where up

bit It's given it. results living to hard flat plus as of to our thinking today. about are break do call think you we're to year really our part out we going of as about of We've coronavirus We're right the I'm full it's business. We table one that. But kind little a which year, for the around it outlook.

a are global business. We

impact. you operate level each what of our impact as give of tried them world, We lower we to do around we we've Europe seeing some XX travel, that's lower be What to a And of the think is baseline with going see travel. is global outlook APAC, U.S. in that's and is to countries and that globally.

up do the we're to through set year. we right how now go the into that's the And outlook So control quarter. as controllable trying what is the we

margin through progress for points adverse it one a basis the and gross you full seems the talk for AUR like Can your year? year impact Yes, about for Then as and AUC a is on understood. like gross that. we more Excluding margin. FX, Thanks increase. guidance bit the expectations of coronavirus just XX

and So that just AUR AUC for guide? expectation within what's the

through For came fronts. saw nice are increasingly on performance on strong the and performance in AUR XXXX, QX upside. the we AUC We optimistic AUR, on XXXX;

feel Going into AUC we XXXX, opportunities like on we have the cost on side.

we up fundamentals back bit cost little been we've those a the talking keep of AUR pick that that some side us So to as get can of about the like and breadth we year through putting uncontrollable. some stable AUC. coronavirus assortment FX the on benefits with We give to and going some SKU aside the in architecture. and the Again, feel on that's

outside year factors. of gross optimistic So into those margin coming expansion the for

Thanks very much.

Kate we'll go next, to RBC And Fitzsimons with Markets. Capital

Can some for Steve's optimism as for are year? category, you I appreciate those question. you. are we're outlook, Yes. by XXXX you the can into Hi, first channel? those the to half you certainly my pieces whether initiatives it Just Thank looking region these brand, at in driving headwinds Scott, looking year sequential guess there the on just taking on confined the think of drive a think more per that assuming guess Thank be question morning. lot coronavirus, so what or building nice good you gains, should back but When as the of are to guide. upon pretty gains? there. speak improvements with revenue I we full moving deck half

Correct.

this thinking year, for we're we first As the with hand. half we a set at information the up today the on have basis outlook about

full sales. the we can do grow think Looking at we year,

$XX the is that a comp net to including We're sales benefit outlook, spread of between million coronavirus, $XX to and starting some Our of from see X%. sales. impact flat adverse to million

more through of we get we rightsizes As remodels, get some through stores. our

continue We stores a open global to basis. on

Opened XX stores year. last

year XX Going this to our more open expectation. is

our year. of That's way here net is assume every optimistic would the geo trend that couple every see year. brands quarter positive spread years. go the of versus basis, outlook comp. trends with channel the last throughout we're from for kind to sales challenge we we perspective, both outperforming thinking been a on brands, that U.S. that into we continue So the same We positive don't – brands, would When our to about in be goal there by an a stores. digital outlook but that we'll And From the will we think our our of a assume international. give outperform

of been comp of from the net of the some has spread. of years So and sales last a and what same lot couple happening over the forward benefit seeing looking to

the underscore and of mean blocks we have the in good lot we've through transformation business. built place just – year. in building as done Yes. I fundamentals, good We've I we move a would

That’s Great. helpful.

question Mark Altschwager next the your And Baird. from with comes Right. line All of

for wanted question. morning, Good estate on real I taking touch side. thanks the my to

opportunities favorable has like more [indiscernible] your some You competitors. taking on comments environment based from the sounds talked of and advantage and turned about your it some leasing

rightsizes about next been update that the pace been with you two constraint in to availability potential on So mind, you're know the over the a a of had could thinking has us just the one for A&F years? there. I how –

it the – XXXX XXXX. your outlook, slide in in versus you're your on think looks I like fewer actually planning

touch So for could the just acceleration? if that potential and you on

I’ll little let more details. into get a Scott of bit the

get even of bit I'll open we yes, a them. the specifically with global little very able of are let Avenue And to our at with Scott opportunity as one have some my come we're we stores. that negotiating more to another few were pace more ahead. formal the mentioned pleased in going year agreeable landlords. Fifth also that's through know, comments in into we just on for that outcome. able our constructive up a for investing with because of came that detail retailers And the were you to conversations – So with I We we're keep about ourselves. mutually A&F

Yes. Thinking about the new experiences in that XXXX. we'll had deliver. We XX

for rightsizes bit what's total The new XX there each year-over-year. it little Our remodels very is a around consistent. of expectation year The stores in really is swinging around and so XX availability XXXX.

this XX to opportunities excited we're more have rightsizing So year.

As we've more talked landlords out or large store in in partnerships the move past, these are a hard our into to order to our come carve by space need to space. up smaller because our from of we

at bit Hollister that a fleet a as slowing chunk of through pretty pace good We've we that this the slow really year gotten another the little is so after delivering side, we but to about year, excited through remodel expect bit. year. the little down a go On in XX

a Scott, And inventory of flow Could specifically A just you. thinking you for planning you're modeling year? on the you're how about how any on pieces. XXXX? detail cash Thank moving just follow-up. And through just quick free speak lot

Start with inventory.

that, keep on So right it we try around to sales.

into a basis. quarter, X% coming constant and the currency basis, on currency total are a So in this year up X%, were up we for QX on up X% basis, bit constant down a sales were a on

So feel good inventory about planning. our

million free our our through business its down share dropped We the did normal capital both flow, allocation we million And it Our of $XX $XXX goes XXXX. debt. down returned cash Investing repurchases. to buybacks from the there, walk. bit in buybacks little or of a also about We in debt dividends. and shareholders

shareholders to and the the the cash strong So excited we to liquidity to deleverage continue that to and return organization. use have sheet balance

Thanks for all detail. the

Alright.

line of from B. Anderson with FBR. Riley comes next the Susan Your question

thoughts my we But few the taking over taking margin next to thinking three out for there? the are and the years, kind Thanks year this morning. to was due a years question. about just I next you your that operating curious maybe opportunity your good how get back step goal as Thanks. out longer-term looking look Hi, of on coronavirus. the

Okay.

I'll kick So off.

we three the on. three are key still the key about talk focused levers levers So that that we're

share line see would a domestically So clearly, outside perspective leverage continue through our these would have U.S. strategy. lever build optimization our two. and a number one. comp driven And opportunity we top to as expansion we from We net driving from then be operating expense estate global be opportunity that is number real primarily sales internationally, that three our market Gross margin of opportunities the with

add on the just to piece. international I'll

excited in and about our teams. our believe teams. business. super We something will It's long we in through that are we XXXX, talked invest in continue We term. to investing We're

and are So optimistic in key we of clearly There's long coronavirus Europe in for aspirations high and moving term. and driver for a to be term, going we business. key have markets us But noise international the the in there that's long with out Asia lot less.

year. white year. fill international piece in quarter comps. in year Fran The to the after our U.S. keep foundation mentioned The going of the is stronger the of of that positive then this. company brands of believe tenth consecutive getting We have and we after had are that We U.S. in, ton a we year space stronger can markets. getting

markets So going local build. and teams our we're in in these us long to term, optimistic to help lean

going things. about with forward? XXXX? on helpful. washes? That's then if you pants talk opportunity And see could side, you could you add Do just or And I maybe denim Great. a fits side just bit any if new on or significant the follow-up the see product opportunity within a do other of fashion see how Maybe you little Or still bottoms.

there's jean So a as continues happen genders. customers more little happening. in important. and are The many all more new the to both things to now And is straight continuing in something answer to excited a and is denim what's to We're responding her. bit which brands newer so about both high-rise yes. well, exciting The for get

both Our And men's has Curve been men's in brands. in Love well, denims as continues to grow strong.

So excited. super

had in As there's in short year, happening far in we volumes in of go, as things the skirts. and denim just lots but not volumes throughout

as So we're seeing some newness well. happening

on So seeing we're we're the that capitalizing all signs today.

luck Great. That’s this year. helpful. Good

you. Thank

Kanaga Bank. we will Tiffany Deutsche to go with Next

in areas deepest you conditions incorporated impacts What beyond supply and And in understand incremental impact. any today is worsening in you question. especially your all full a past coronavirus, level if taking is your you potential for whether of help particular view? year assume very Could sales regions for of you are or terms into from the the that disruption the what around folded moving little And challenges what in projections already us thank coronavirus helpful Thanks disruption we're chain to in better Europe? affected? factored with respect detail line in the time for

Okay.

All right. one. this after get me Let

how million million thinking is the So on half we impact. $XX up year, to set about $XX a the first based

seeing right million APAC the region way of have of we've broken day impact uncertainty mainland point. China no Again, quarter Hong a leaving on at Kong significant million at store this happening knows. a have we is what's now, to in out The in more the the some looked ton closures – one six- we seeing that month So one also. there. There's out $XX $XX this as from phenomenon we're business and

piece a of that's this is big the So APAC in what's happening region.

little guess restrictions happening As happen, on tourism European ourselves the what's get suffer we've I provision, the versus to we say, more given continue to a intense. as travel business more to would bit what's about going I some think and

I also think Europe we've travel more and from seen that more global of into and but out corporations. China

So continuing to I is think the slow. travel

the seeing east in there and stores, up that. that from So down U.S. impact and that continue. happened stores the coast, we in travel, we're reduced to for and impact west our a provision has we to have as think Same on we already expect those the about a an side,

supply the you pieces, lots I'll of on as chain. move moving said. So to

up running. chain, back supply getting it's the and With

that we're optimistic past amount delays. significant think I any of can get we

some right are now. delays We seeing

look travel DC. for back they're think or to consistent different two, others said our in European kind in have four I of transportation going week to options accelerate what the here with to pretty U.S. the that order We're on three, period.

optimistic we through can that. that So work

next comes Jefferies. of Janine your And line right. All question from the Stichter with

taking morning. Hicks. a little Thanks good about wanted Gilly questions. for I ask Hi, to my bit

that any Thank many how Just you looks you. business the the see us recent and on where currently can give little bit like what next year? more carve-outs of Another like you’re seeing where you and quarter have, you’ve mix investing in trends. on been you kind give update an opportunity you Can more sounds strong there. color side-by-sides and the a

off, course. into then the I’ll Scott detail let and of side-by-side, kick of get I’ll the

into Just real several seeing up several nice high were and and we able head on carve-outs XXXX. are we we really Gilly, acceptance year and this have for plans a quick, as open product level, to Janine, side-by-sides

is And product as have We some is we’ve exciting Hollister was piece separated them which of things just excited year that the and to new globally about the we’re of exciting numbers… consumer also Gilly, grow, separated of earlier business because for share yet quickly talked the the I teams, named intimate that the business. team coming happening. responding do So nicely to that we’ve fleece launches well in news but about. Scott and in some we can’t the later the up And some Gilly as new teams which team, piece that looking order today, for both new a up lead the both

XXXX, In sorry, additional seven. that opened an Yes. do I’m year. It’s this side-by-sides additional we – carve-outs or will to for XX Gilly, something we continue

the entrance carve-out the really having kind what’s box Gilly that box really special it helps that a improving for of Gilly more happening is side-by-side. that have in separate love We of brand. as special room, a the and for It isolate slated. for and productivity We or

excited as about on response customer. remain we’re the from through go track that XXXX. going so And It’s the we’re something we to

example a If up the chance in we that new great of to fourth to the of Plaza, it’s you Garden a side-by-side opened get State get quarter XXXX.

Okay. very you I’ll check it out. much. Thank

Thanks.

Kimberly And next, Stanley. we’ll go with to Greenberger Morgan

I’m And feel to denim so you wondering to side women’s level of follow styles your stocks your if on wanted out. some Fran, be earlier evergreen you in much. might I And were some in on X.X% Thank in your kind the up light it Great. that denim currency with regard flow comments it we base a of constant X%, sounded like, selling when you’re the long-term you like-for-like comparison and you is then basis. like that at XXXX? investments And saying down target if reflecting look of margin making sort on see would there. planning on operating if

presented? the sort and so much. Thanks of that do in time So, we target? as your frame you like realistic is take originally long-term should that new operating is achievable feel And margin X%

the and break So, just let’s women’s denim, girls’. for clarity down on women’s

which you’re have from our evergreen customers referencing call what move I What to our Hollister. style. the fashion, on QR starting we So with seen we from is what is core outsized an imagine

not piece been to the much core the fashion transitioning The also amount are core second on more nice to up. doing fashion question. that catching we inventory. fashion those been the let the A&S did the and quarter. We’ve currently they the that just the part we quarter a working of have inventories transition for Women’s So third we’ve the demand but into for bringing through. specifically been that and business into your Scott since business, answer I’ll outpace as continues keep has in, into of transition fourth

beyond that. long have term, something X.X%, April talked Investor And us the operating, still like since It’s is been how we should feel that term. a about our XXXX based on be peers the our for On long we Day. target we

We have our do transformation and to optimization a lot our work from of store work.

X.X% but is to above that the we Specifically, to we point, get first believe, be long term, can that.

to meant XX, a little, XX the just months, the give so how guess, a past over around is has X.X% level impactful there. FX clarity the So I been set

helpful. that’s Okay, you. Thank

right. All

from Kloppenburg comes JJK Janet Next question Research. with

touch some than quarter. about was also, progress said morning, I on categories you quarter? think U.S. may talked on Fran, Good improving, in be fourth America could comps know maybe And European but of if performance I Europe but I you better North Hollister the that, in that focus were the positive expected the confirm can fourth in both I mistaken. you and Hollister, the you wanted everyone. the

So coronavirus, the us I look the The an progress idea could back new there. in give you lastly, spring. you made being you. merchandising Thank I U.S. good. if about excluding the team trends stores talk was if the how early And wondered quite could and of wondering here

Okay.

the Let’s with Hollister. on progress start

the for one, was a quarter the number record guys again. business So

progress business channels. domestically. gems highlighted, kind in The both Those I’ve of internationally. So and And and the girls progress and make which business in we’re progress categories, both those and domestically internationally across did progress of certain are progress denim. that made in making both in making strong guys two it seeing the was top

didn’t brand by comps. comps, regional the give On we

Yes, the Europe progress Thank ahead Okay. Go plan. with you. in okay. the

macro earlier. Fran I Brexit a being something macro just a talked specifically said in from bit on reiterate what across stabilization, in I’ll with Progress start the was brands. can I’ll some as talked that us we chime with Europe more the has little products. there ramping Seeing – is a by was Hollister bit We the and bit little to QX it a seemed impact about little really clarity U.K. impacted an of a in as counts business. that U.K. store in is help the Having up. bigger across

a products of seasonal was Europe our think stabilization got a as France Italy then a and bit Spain through QX, of the what about we aligned then for. the as some little got the is So I just and you seeing And the quarter. as customer think And that with more were in in helper. looking weather

across product improvement brands, that the some quarter-over-quarter of across So also. again, business and saw

The Retail Marni of line from right. And the Shapiro with All next comes Tracker. your question

Hey, look The stores fantastic. Congratulations. guys. really

the Or are was up up You’ve U.S. up, more invested marketing numbers one in in investments on the in high talked the up, area? spending think you in to I a about of up marketing. the in it what numbers as XXXX both same were you Are on in was investing And bit be little XXXX? top weighted international? the And XXXX. rate going is

made Marketing increase of in XXXX marketing. really be in nice off XXXX up a with XXXX. an back in step-up will We

will XXXX XXXX. in and continued in We continue

the little both side. teams dollars of Europe our – markets. spend to in to on We’ve and we’re in our some international of U.S. incremental efforts investing feed marketing excited rolling. marketing and get Asia this are And We localization – in to both in bit a XXXX been them building the

until team was very so I there you. have on to in being you just built tackle team It’s the in a is U.S. Got you’ve ground out marketing necessarily? the it. is done a not different – it Asia the here than going because

about And Marni, in launched Well, London offices they APAC, and Shanghai, regional – team and been because year, their will global currently right and that’s transition we’re own those then EMEA responsible respectively. with moment campaigns. that in we the this They’ve at we’re how the in the the here for we’re we’ve teams. building talked the local U.S. individual be building working

you guys that businesses, me Fantastic. those can looks? And far just as remind as how where you and stand Tmall and

has is a business building of it’s more building the into merchandising and business Tmall talent we’re good, what digital biggest and coronavirus excited put better for in we had by that the China. and some Tmall versus strategy been recently, assortment Tmall the an really for the in really impacted our piece The office Shanghai marketing we past. been about and

So we that think We’ve it’s the had for huge company. forward to the opportunity growth looking long-term place in future. accelerating this nice for but a

Fantastic. Thanks, guys.

Thank you.

we’ll I Bank take of Right. from Buckley one America. mean David question more that with

large the kids momentum good key question. business. the there? year. the question another morning. for have been How guys. was quarter strong Kind my of Hi, sounds like And for category what of the it It Thanks a is taking drivers on now?

been nice really reception a for kids very quarter The product have did kids. has We to strong.

We Our category from is total. whole the brand be letting out. mantra resonating really play break the We report kids marketing is a kids Abercrombie life on on don’t perspective. and in

Great. Thank you.

looks we this It further have time. right. at no like questions All

So closing to turn or to I’d it remarks. any over Fran for like back additional

look our all updating continued to thank progress this we I say to for everybody, you you just morning, very call. next on forward want on our much, and

That for does thank conclude today’s again conference. their participation. everyone We