Abercrombie & Fitch (ANF) 21 Nov 232024 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Abercrombie & Fitch Third Quarter Fiscal Year 2023 Earnings Call. Today's conference is being recorded. [Operator Instructions] At this time, I would now like to turn the call over to Mo Gupta. Please go ahead.

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

Operating are today Chief Chief Chief which morning, is on at earnings me our under third Fran issued Financial Earlier our we the and available Lipesky, Joining release, Scott the call Horowitz, Investors quarter this and Executive Officer website on Officer. corporate.abercrombie.com Officer; section.

will are the discussed our is are harbor the differ keep our with to that XXXX filings uncertainties Securities materially we and that reports Please we call. safe an and to expectations in on statements statements the presentation. Also make to investor website Exchange provisions the forward-looking available are results Private assumptions and subject actual Reform on factors in and from the Securities These These subject mentioned and could certain risks Act mind of Commission. Litigation today. cause uncertainties and of

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

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

Finally, to references will Hollister, over brands Fran. brands to Hicks Fitch that, Gilly Hollister With Social and Tourist. include turn Kids and the Abercrombie and I & Abercrombie Abercrombie call references to includes

Mo. Thanks, Good joining all for thank you morning us. and

experience team excited customers' report our global goal a on delivering outstanding brand. voice to our to each are to our and We aligning third is quarter which needs testament results, of at product,

momentum in sales profitability. both on We acceleration continue growth to from QX, the sequential with build and

expectations. driving growth strong sales our above third line, the were quarter, trends top the On results throughout

selling and stores digital. and including across quarter, net the sales For both growth XX% with channels, all brands regions, direct increased

with margin compared expansion X,XXX the operating driven expense XXXX. higher on We bottom expansion third operating rate points operating basis leverage of was to a also basis margin, exceeded sales. The and points of gross an profit over expectations XX.X% on quarter XXX XX.X% by line

XXXX up were we results with the XX% of quarter. XXX sales operating margin net playbook. continue over period, year-to-date the as X.X% our powerful an our execute than on to year These to the customers For through last third better from points response show basis

I has our to grow, and pushing ourselves remaining staying close and boundaries our challenging team delivered, am what with so while customers impressed to agile.

enter we positioned continue strategically to are quarter, the momentum our fourth As brands we this regions poised win. with and to

a and brand achieved our are showing the aesthetic profitability year quarter, As evolved as environment. Hollister our significant and we've remains sales season team expectations brand XX% a nice operating XXXX, with growth our to assortment, of such, Hollister raising apparel and for disappointing the what company. I'm and comp XXXX a margin for for capping the and With reinvigorating we customer. portfolio back-to-school progress across our all dynamic further off strong growth a improved third quarter growth delivered Hollister is balance it with time proud in we we share showing resonating assortment as a experience. refreshed brands brands regions spent localize

lower in on of half the and business profit year. the healthier QX -- We and the a continue to improving lower with first freight from prioritize AUR rate a consistent promotions, driving gross lower higher costs

promotions. is enter opportunity the in better to holiday be us As our to the season, we compared last giving inventory peak with year, a place significantly strategic

improvement year. to lead business way nicely the last Turning growing the product drive bottoms sales all and wins. brand as showing balance The continue Hollister dresses helped to for to women's and tops,

quarter. the did of back-to-school quarter, all balance As we discussed we last the categories purposeful to which well select dresses, distortions with non-denim and top entered bottoms for of

bottoms, to second quarter all fleece to overall and for were we similar all, areas with in Importantly, non-denim evolved men's trend was customers focus be season, the to head to of ready holiday solid the them them used as learnings we'll into team as season. which holiday rebuilt The chase we meet sweaters have newness assortment. This the of an these performance for winners with assortment.

complement marketing, particularly business digital in-store on are our with their abundance where expect to of social the We increased time. the teams channels, spending

for we're throughout for it's with key the early, brand. Although for to pleased the fourth And deliver point on brands path we progress Hollister's quarter. to the remain a growth XXXX,

with sales brands. team year-over-year. Wow, delivered the increase of an to XXth growth Abercrombie XX% quarter their consecutive Moving sales impressive

to with target we regions stores to audience, channels. units, acceleration. Similar continue QX, addition digital ways and genders, and saw resulting in to growth great find in both direct We our win growth consistency AUR, new in to balance in

the On the in quarter. assortment, and growth sales posted women's double-digit both men's

at and dresses. double-digit continued QX teams build consecutive marks with XXth quarter Looking our I've bottoms of franchises growth. been how to strong sales impressed women's the across on have tops,

of marked growth our consecutive QX growth, QX fifth at men's, come our strongly important in For path quarter milestones of an beginning XXXX. the we

our unique experiences. women's, the playbook are outerwear successful building central holiday. Abercrombie we compelling and in our pants. about jeans ways franchises lease newness for with assortments weather I'm as we approach genders into connect both collaborations driving find fleece while cold sweaters, its excited and and in and Following to customers brand continues across through to across

on in Harvard were to in and in traction Charleston in see in neighborhood our York, SoHo with Row Influencer locations stores, continue in customers collections platforms. On shopping quarter, engagement For Post Nicole new including example, X experience, thrilled current and and King media have Street with East our driven and the Designer we we Kathleen additional our Brickell Fashion particularly social an New and Harlems digital Baltimore. open in-person Benefield recent to Miami, Street

a our in-store seamless concert We experiences digital to will customer have in and drive to continue experience. use

has we customers Looking them forward quarter, and what to the XXXX, love at we're confident holiday start for season. continuing historic our to great brands Abercrombie fourth will had have this a November,

regional performance. to Moving

have compared in our on Europe. improved delivered operating content Germany, to growth local model, grew localization evolved grew provides have the rest progress APAC largest forced and cadence through XX%. as customer also XXXX, our support our seeing the APAC we our well. where which As comparable of in and markets, we increases. results and sales our our pricing our X second for regional We've teams made assortments, the contributing we key the seen greatly are positive EMEA updates outsized from region sales those marketing discussed the our similar moved EMEA, and quarter building regions. In seeing last On in and are XX% spend as QX. from also basis, APAC to XX% positive experience. Each team And a grew sales performance localized in quarter and a quarter, we prioritize better to Americas results teams U.K. EMEA teams efforts

this the of and you following nice past our we give customer leading ahead, Singles me are us sales to that can improved COVID important increase lost an holiday experience in product trends recoup volume continue the to right is and but we is years the As few and more on for pandemic. aspects the confidence the the the that in focused know, promotions work a retail team positioning, Day year. There region, tailored over

period. share ahead it of Before upcoming to volumes encouraging off Scott, a with compete and on still the an Fourth we're focus ready to I large I quarter thoughts to turn us. holiday start, few want is over and to the additional

drive align and in messaging brand, and our retention. investment set worked customer a With teams positioning place accelerating strong hard acquisition product Our have to and traffic holiday marketing promotional each successful us on the strategies are product for our across we to in to and brands. up brand highly quarter capitalize fourth for heavier

While to that, our the Scott. forward sales all important forward customer and showing through this with unrelenting our profitability. I'd growth the thank finish unwavering expect look of I'm like sharing brands have customer our growth so over customer to commitment relationships With that I'll and period you far, stayed hand execute to our of challenging We we playbook. and and environment so their and can and full all making we our year proud addition soon. on uncertain, to across associates if our to we macro strength regions, continuing have it focus we remains plan. holiday the focus in happen accomplishments what always momentum in XXXX and teams proven global achieved deliver for to

tightly. to profit Thanks, my congrats thanks Fran. third inventory our for I'll above continuing team manage delivering and while expectations, rate quarter. and gross a strong global margin sales, our with start adding drove to net operating We

driven billion quarter, spread total by and was regions. both and of activity. with XX% contributing. The with net to comps sales primarily total store up year were the Comparable last the sales $X.XXX stores XXX were up for digital between quarter point growth sales and net brands across new For basis XX%

sales an including and than to EMEA past. Better expected quarter, our grew response was comp basis, to drove seen in quarter growth expectations Abercrombie In to in As XX%, efforts the and have XX%. closed APAC at the Americas. genders, and square and while have in this By XX% at XX% another APAC. Abercrombie EMEA a grew year, basis, across XX% driven exceeded stores rate delivered distortions, comp Americas, outside Hollister last was was growth of On basis, by in brand's balanced brands brands sales EMEA basis, localization year. our Hollister are deliver growth good brand of Similar the per business year second women's grew acceleration the close in product the and in drops. On Abercrombie net a to inventory XX% productivity new a On this compared the more while grew our product growth and made brands. more regional in adjustments stores grew double pricing our foot timing we XX% will the APAC. recent a in the Hollister region, quarter regions, whole, and a On consistent balance and XX% we Americas, a great X%. a XX%

rate approximately saw levels Abercrombie inventory promotional basis by compared XXX factors. contribution by enabled profit. in driven up by to compared to was for from nicely The basis XXX rate higher lower The point XX.X% was points few profit to mix on the gross last of driven Moving improvement quarter XX.X%, key growth We the activity a year. to the gross and total XXXX. AUR lower business

XXX benefits benefit inventory lower Next, approximately of by year. we higher benefit These a write-downs points. of from of points saw of freight basis material XX we last compared basis costs points. offset approximately basis to And approximately XXX were a levels the saw raw

year last raw to cost of freight see levels. in shipping we the fourth quarter flipping the slight expect good and material cost at a on and continue brands. in continue times Inventory of XX% XXXX, XXXX. Touching benefit to at chase to we beginning supply was down We quarter, pressure to end the the across chain, performance

As we to expect year. we to look be to down inventories year-end, last

last increase investments was driven amazing this expense Our of operating no asset compared look inventory see was adjusted teams technology, respond holiday to and agility $XXX compensation we of have million other assortments. Taking and last and $X and pretax Total expenses. million million our operating excluding excited by into year. income, year inflation, decisions, are an exclusions digital We Year-over-year to expense, impairment job done excluded a in charges higher had our incentive-based marketing. our building $XXX operating customers at to year.

in the year. income we diluted sales last were and delivered percent XX.X% million exceeded year of inventory million driven billion. of an adjusted balance strong Operating $XXX With compared earnings sales the XX.X% share of Strong sales better-than-expected net income primarily of of sheet. $X.XX of last expectation, but year, quarter nice Net of million last this $X continue steady were with strengthen income income as compared sales. and strong a our expenses cash to the or share was quarter $XXX management by in leverage -- we Marketing growth, per approximately than ended flow-through sales. was to to with to the compared expense operating liquidity $XX operating XX.X% year. income per we quarter, last $X.XX We representing of year. Operating dollars adjusted expect the higher

with of During million a outstanding. of we primary at means the with will the repurchases and ended and excess continue cash business we few investments the drove performance, to secured quarter value to business. par flow. Consistent senior on share share for our debt $XXX senior operating our put focus price ability work pending in million notes million notes and quarter, secured million repurchased of $XX $XX total $XXX of cash We past as years, the to increase to

first approximately the the cash XXXX. to stores. Shifting the million. of We $XXX flow XXX we million quarter thoughts third our months for X capital $XXX For of of XXXX, with ended approximately and of had expenditures rest operating

the the are As mentioned, majority the we to the start opportunity volume had and of we to and have yet ahead an is quarter, encouraging as excited come. about

to For the to quarter compared expect net fourth of be double $X.X quarter of up XXXX digits in sales XXXX, we level billion. fiscal low fourth

we reminder, to which million we add XXX this year, the will sales of reporting basis a $XX week contribution growth quarter. As or this have XXrd points expect

We are foreign brands. regions and growth And currency. a minimal assuming from expect across we impact

higher higher AURs. be in to the of range rate XX% last year, an profit the For freight by X.X% driven XX% operating margin, adjusted with gross compared expect operating lower of we to on primarily and increase a to costs margin

in higher incentive marketing. see we expect saw well QX For expense operating compensation similar as as with we increased themes and as technology expense, to

to rate For quarter for growth in year Embedding full from year, net in of the XX%. quarter. outlook an the 'XX our the sales outlook and approximately third $X.X to fourth the around the XX% XX% of tax, our expectations due to outperformance fourth we outlook our is effective XX% of for full previous up of billion. This updated growth of around expect quarter is level

we and stores, right XX and new approximately XX remodels XX For stores, combined closures. sizes now expect

be For from to the XX% operating to our of the X%. outlook previous in margin, range expect year, we up X% around for

year. points materials expect the freight continue raw basis net XXX We from approximately full to for a benefit and of

working. in higher pleased the an our rate are to we compared CapEx effective continue progress giving the we of expect that $XXX regions tax continued across to million. To to profitability expectation low- levels to mid-XXs is expected of previous low-XXs us due confidence and with finish and approximately playbook our up, We brands, expect

and operator, great progress we path we plan. better speed, While forward we omnichannel are enable are and are always strategic a forward our of laser-focused delivering holiday, part long-term agility in that, on will our ready seamless confident customer as experience that questions. are on making for investments With a

line the Group. Telsey question first our of Telsey Instructions] [Operator with from Advisory And Dana coming

the comps, very any and Hollister. How nice quarter the difference in results. for How the stores the And between you Nice you in and improvement what you're thinking is see they of women's, on categories performing third see in terms the online and physical to when were note. men's, Congratulations promotions? did unpack the plans to how about fourth?

morning. Good Dana. Thanks,

So mean see women's specifically [ second up consecutive the led Hollister. by ] I to it our quarter again. XX was really exciting growth, of

What things, of just -- both very worked non-denim a bottoms denim, non-denim note, the love there, to Categories an the the in Women's So are for opportunities and happen but lot bottoms, of too, Hollister. lot guys still exciting expansion to our the category. They lots actually our business. in happening assortment. Abercrombie, girls a is of other like way we a and leading which balanced we've led it in specifically us, that way girls bottoms had for saw

are very hinder that inventories can the I'm quarter inventories with fresh and clean. promotions. really we Our fourth excited

those to most quarter the prepared As what's make closely it selling. the always certainly you based on know, during we're with the fourth is work year. focusing fourth promotional that quarter quarter to We promotions compete, We're and the working, teams is but our of working. not agile own What's very internal the sure specifically.

for year see. the coming which Yes. in think And some back. which quarter. versus great balance Hollister, good on scale, about the the online store We business remodels really quarter, Picking see to global total We've is a stores towards that and the the little very to up a new tilted across stores, company traffic rightsizes, done and is that's store exciting. good opened have very, some throughout the

Just one last item.

framework? a hitting the is in future? XX% of how XX% that the think do this you're margin in the purview XX% you year, Given the operating Or to

out at to the the We're exciting outlook Yes. year X%, started We the put there talk as to business now. XXXX Thanks, out and we're the XX% throughout Dana. X% has looking today. about going to very a there not Very, year, at year. improved XX% for

very focused out talked delivering number year in amazing Excited putting are but holiday, be an there X% that longer about last super get a on term. at we XX% to We to to that exciting XXXX, here quickly. XX%

And our with from next Tarlowe Jefferies. coming question the of line Corey

Great.

that you quarter. So that your and you quarter season? Fran, was some products the in driven Abercrombie some the the versus what to surprised the with as items into things geographies upcoming at really What seen about see fourth that were plan? it across really relates you working you that original upside and worked this resonated the and growth really impressive customers for think you've as quarter that And are that holiday

So, hi, Corey.

of to super for just exciting finished about they've excited have brands brand, XXth regions, to our We across of the So balanced able and the is I what's keep that what big the What's saw terrific growth Super team proud is balance just it's been channels, quarter company. consecutive really could of such going. Abercrombie the accomplish. brand, the a win genders, the actually growth. for

really really, So accomplished that to have terrific. was

addressable I'm that lot quarter. and already product for market is for test and built the we've loving. And as our have there to agility, known and for It's experience. a fourth this We've they've And to the playbook are react year, aligning on lastly, well with voice focused this in business you able that learn consumer excited product, our been doing is that We really run assortment. most that's really the of and speed a the team really delivering about expanded consumer. excitingly, we what we got Abercrombie. and know, and

to us these with opportunity shop the from customer well have XX we're so as that seeing XX expanded categories. And to as

So of things exciting happening. lots

Great. we've a That's in in on highest you quite margin quarter, And XX%. then, Scott, seen that the while. to the saw gross the close

impressive quite So as well.

As you sustainable there and as that the way look gross get just to about the a look what and we what sense think out drivers come takes ahead? the construct, and puts is margin within perhaps to think as qualitatively, ahead, going is any about of we just for forward that may of

AURs. what of Yes, inventory, the lean had strong and we in have great really delivering what if lot Hollister about a years through question. in that back really the products the of AUR. have done. Last that, And the this with is And the year, you we've as something that's we fell QX. last gotten sustainability But great couple we've little a off pretty inventory always talked of And great of a step and say is each we've over business Chase. is is we brands abruptly chance

kind what of of year in cotton normalizing, So to is the really you're seeing business Fran explained. that freight getting back getting really tailwind another strong AURs and the Abercrombie coming and this and a just end great

margin at great and the this will we hard sustainable. inventory working And be and levels pieces to be want product, that. We're in that. the we that control can feel So confident we

line with next JPMorgan. Boss our And the coming Matthew question of from

And congrats nice quarter. on another

if the you a to what exiting with Fran, pricing? we the chase then holiday? quarter, Abercrombie you XX% then, inventories product speak and versus repositioned applying demand at And into back, the elements speak how just step this Meaning, Scott, pricing? in And assortment So ability Hollister of you you down have competitive to could brand maintain the brand, take to to continued the momentum today? turnaround are could

really exciting. it's So a,

And out value us age to reaching you and for are t-shirt outerwear of our like on with And mix point. and lifestyle expand it, a and a the So has that we're The consecutive we've the afforded the promotions that quarter there reduced really us gone of offering. seeing as opportunity brand, brand to from for fashion the jeans happening. the obviously the categories responding the we demographic we've as we a well brand. put price lot of her there's our is made as of that respond over on categories growth the progress both XXth consumer And a based less to watch probably evolution based and lot is years, because dresses. A&F journey

do what So and as plus consumer to their the we Hollister? playbooks say, plus I'd that AUR voice like work here. apply play is actually equals and experience We pay to to willing on products for goods. How

seeing We So a girls. thing A&F. we went nice in men's, had We're with started for women's. to playbook then same We in progress Hollister.

Now success geographically, And guy's across we're international seeing working all business. on into rolling We're that regions then continue and roll as of right? our to now we'll playbook out the well.

and throughout we We lot we've the doing have the to we're run year. ability digits, been outlook able merchandising millions chased started inventory a millions our now On XX% and inventory side, a Huge takes teams it as into this been year. X% this all and of way work. year talking a units the come with hard to low thanks business to of of the teams, for sales we've and to chase, to sourcing. It's process, we've into just year. year, the it planning to and chase kind about our But lot single of XX% put X%, that the hard up

to had go We'll it. next in upside We'll get bring we'll be And so I'm and there's faster. confident in ability. here in QX, our if so, that the inventory turn

of Our next the with Shapiro coming DeSalTracker. Marni from question line

little holiday bit difficult what a if assortment a about they're the just are want? And about it is side? customer strong? picky thoughts I X neighborhood just Abercrombie? not you Can for as because harder the they quick to been of I in guys it sell improvement figure year and great you guess, And what out talk stores talk Has the really to luck the on there. are a these to Hollister, into success so growth back for with dipping so and Or forget, How trying this store smaller then also thinking little bit you of things. just next could about weekend. best

first store the growth. Let's question start with on

with That today. So plan our have on and it's journey neighborhood our selling was SoHo to just our been in able many We're but done is continuing it's store, been is to and actually are stores where could we we've you we, as not exciting a years have stores. years probably these up ago, that now know, and the something for open coming on York growth local nice come Flatiron seeing in. so a actually walking coming in. in to it They're -- them, week, New see this customer We're last in. exciting

We I have mentioned internationally on several possibly the and time an on. going as U.S. as patients opportunity, goes throughout of these

We for I the what with haven't is of declared for will to last opener net a that can we've total but stores that couple so. years expectation XX, the be tell continue you store that, been

Now and about trying things. testing and for open be new excited more Hollister, to

guys. So Hollister in just improvement, A&F are would been non-tenant Hollister we and though, she the nice bottoms for she did on mean have bring us did turn hope like first in very I for seeing she -- strong. that

our sweaters business, fleece Our business.

improvements, our out see that expectation category seeing continue see expect it to to to continue push -- we're is growth. that So and and to continue

you grow that best side-by-side? part which is the Gilly would vehicle, you And really your Great. business? consider personal or store the Hicks of Or would like

Yes.

active personal in seeing for growth line really So IPB, your faster it. we're nice Abercrombie,

down Aventura. in would for I our call Avenue some, up one opened guess up store, I example, in Fifth expenditure -- like just we have them opened We

to know to product, appetite We're this to again, us, what and and a Marni, it. are for is we going learn the you continue understand culture. on we're So push test going

Morgan from our coming And Stanley. question line next of Alex Straton the from

Great.

have kind keep back was where So do this in before? devolving holster change it inflection? put or brand what to the from place view you a of as to you processes And

Straton. lots exciting see growth. to Yes, within consecutive We're seeing quarters the of It's X opportunity of brand.

nice it, we the out know, have consumer As responding really with that we've a you certainly is new marketing come repositioned and to.

that and that is our our where working, close a to customer product, our our our And stay we continue is expectation assortment to We to see experience. have focus playbook on architecture, voice, growth.

down a for Abercrombie, been is And is just the great talking, also nicely Hollister, last brand Yes. in that like place inventory year the chasing. we've

been plus trying to and Hollister, So having winners then part of been and that we're into broadening have X, globally, chase things new of the those having assortment as able we're and that that plus driver XX. that's

we're about forward going clean excited inventory. with so And

line And our the next with question UBS. of Mauricio Serna coming from

each then Should growth And Great. XQ that. thinking still I similar just you that higher see the stand particularly the lastly, Abercrombie because we being you has I front. want to yet, like I decline about Hollister? maybe brand? could a in understand on terms trend understand moderate guidance well you international the like but across more like inventory assume thinking which kind not then we of I guess remember guidance. or inventory talk a fiscal brand I by want I'm we just XXXX, very levels. like where to outperforming you're levels mean, just a where brand? 'XX, decline could that know had on giving or you brand maybe on about expect business perspective? And talked cost of just Like when opportunities about the on in about prepandemic year elaborate Hollister quantify growth interested below then our just could maybe raw And material have for recapture tailwind about that you you I

All to Good right. from hear you. Mauricio. Hi,

QX the with start guidance. Let's

trend, forward. stuck that of Hollister were down, acceleration yes, it the would brand moving Inventory down carryforward expect excited see very the is much be. some in more We've about nice and what is year inventory outperforming side, and really the through seen been as Hollister. is. the inventory down. We regions. where with trends year, year Hollister by last brand and now throughout Hollister be with optimistic Good to a APAC to we've is in We we we do growth similar regions there Europe across it adding is QX. but trends So is year-end to and where that QX than chasing can the year. want and throughout in the obviously, A&F expectation see continued clean Abercrombie growth last Abercrombie on

we're you bit throughout On become detail we've we a What and raw little raw as into a in year get into see the going materials, to said freight it, then holding. We'll not 'XX. year is 'XX next the talk of noted materials in tailwind there 'XX. QX rolling about benefit

QX, traffic of region, stores. an So seeing talked of is the slow a We've and and yes, biggest an piece growth QX feel we're Hollister on really started was that we've brand. to more call. tough on lot focusing content, we've that putting there we'll localizing of recently, U.K. in play for a recovery seen then our we marketing, nice up. a that COVID X inventory, it's back this we're Germany, omnichannel last example coming to and and out year, been It on we seeing about nice done And countries our business marketing QX. us. We've see International, talk more dollars more lot efforts like by basis. pick COVID the a the pricing, have a opportunity. having our out. One opportunity lot response nice localization in about was

forward. the there of optimism going some outside we the So U.S. Hollister have for business

Paul the our question of And line Lejuez Citi. from next coming from

is for Paul. Kelly This on

deceleration XQ in XQ. curious, pretty the on to meaningful assumes Just your relative a guidance sales strengthening

helpful. brand And XQ what's then curious have any trends? just color I follow-up. comp you quarterly And color a on if could any And provide more be would So driving that. the by

Kelly, one. Yes. Sure. take I'll this Scott. it's

next days the wouldn't about guidance, game encouraging through say into tomorrow here. these and The really sitting matter, they're today grand the to small I the the an start talked very we're We don't but X Christmas. weeks XX QX starts So in scheme. quarter.

So reasonable outlook double-digit to low a great today. this the think that's about through as putting Inventory outlook. Happy into excited be we're sitting pressing quarter. marketing we another We up is how go fourth and here a is coming bets quarter. the place, our in

the to so. Our profitability opportunity has do us afforded

and on in going When talk outperform brands of the think brands, So growth last about few really across But to Hollister about about just quarter to Hollister the last we excited not regions. ahead or Abercrombie opportunity and us. weeks. for question, expect the the brands we're

Got it. And just X quick follow-ups.

A&F. strength in the you're on Just seeing

new next could categories customers the Just is just fold giving talk permission curious you of likely offer. some gives you you share cash, A&F And to fourth to the then And customer given more new significant maybe what the bring just and you comp you the on about comp thoughts the if at that the cash the you'll on that can confidence repos, quarter? any in year? generate

Okay. that I'll one. take

of add many couple So to categories, minutes we that never has Abercrombie really were as of a we things a sell lifestyle the mentioned that opportunity I so to able and new have brand, us afforded ago, to be just Non-denim expanded to past. and lot and happening our is bottoms a particular he very she continued business the one today in category. both women's. choose There's strong, one. fashion that men's in that mean And pant I is category. in

wear wearing a us. can that They many for different win and big for occasions, also that's

plus. the We're So up expanding exciting. way addressable as stores, in us, to buying early very XX which customer late varied teens market XXs seeing our super a far who's the is as all from

Best Guest As very talked good. franchises business far go, is little our as about also Dressed a bit YPB, just we

and licensing fleece business Our been strong. has very

what we offer for looking about learn them. that to So to continue to continue lots customer the and is

$XXX so to generation yes, flow of first piece, cash the year, X the On see flow million this cash through operating the months. cash great

quarter, We improved flow $XX high-yield those seeing there. We're lean. $XX obviously and business in. the come of cash is nice this has in and that inventory profitability bought put million to did We some million bonds As work.

put to exciting that cash So work. to

of Going at share debt story forward, look cash to repurchases, work. the we've years. talked the really couple ways going excess to our main same and to We're put past over it's about

the next Janet with JJK Inc. Kloppenburg from Associates, coming line Research And our question

the really thrilling benefits start about about look results talking think each what to merchandising on then should we for higher and to goods? Congratulations think for time the should want through just trends. going see On pick fiscal do Men, 'XX, when I'm freight not think better like the you that that Hollister cost starting we Couple then just Scott look fourth Scott, you in execution momentum back. as you and out, It's And opportunities forward given questions, to win. any AUC exciting appreciate. might this as up, quarter you going see for in come the Fran. about that but particular frame, we of about understand and to I sell consecutively when that. quarter we how about well, just through opportunity, the as And building

Dan. guys. Thanks, Hollister We'll start with

that what's ability win and supply turned the see and girls growth we the which saw, led right? back is exciting for chain second The total by the exactly today the us. in good when is really in our of and the is to that same know, we business, though you as chase business. But entire business, pattern that it's So to A&F brand, the our quarter is the progress

So category chasing testing. category. guys, We're by those we're after We're opportunities. for learning. Hollister We're going

Those drive we in we and category bottoms So we and sweaters. there 'XX to fourth to head continue and category into quarter, going saw business. progress categories test put go and turn the that non-denim fleece to in as into we're expect continue out by

Yes.

On the -- call. bit side, a XXXX year. QX. hurt a freight benefit not about talk and then in going talked we into Jane, the think And then on turning big on coming like freight in just cotton materials, about way, I'm here a AUC piece, about we to tailwind little QX I see benefits raw cotton the and into that continue break tailwind we'll or a of we'll kind next to apart of a QX here but being more as so first half And Q said, XXXX.

William question of from coming Carden line Dylan with next the Blair. And our

X. have just I

the feel that brand, have The trying the to first just a expect particularly is A&F you you timeframe remodels sense how left get kind might many to of one on repositionings in of rollout?

Yes. one, On that Dylan.

We back to left. those on it those and We fleet, stores, we have more oversized with through that And the was a closures we've closed stores. we've of modernized Abercrombie a legacy lot newer, of A&F leaner, some really XXXX. in progress opportunities did and bunch markets back the made actually just come

good we've progress So made there.

future thing remodels, a where the we about stores way. street more some these X point, for in markets, have or in Abercrombie opening and not that a probably have path that a The this heading neighborhood really XX at in don't about new for Abercrombie and left. stores in is talked We've we about and yes, we there's stores to but Yes, new forward we're do, huge regard. are opportunity a So presence. nice

to the accounts incremental as to are those add fleet size opposed like and those total [indiscernible]? Will

incremental. about we're about When you year, would XX be talking think this closes. and opens Those XX

kind we're doing net So we'll also and be remodels of then flat. XX And rightsizes.

new is So at it experiences that's the really customer have the exciting. we like I XX year, to look way this and coming to

what you talk think to margin know kind power trying of, of this, with more attribute cost much in of How of Got underwrite I now? way some asset anything environment? help this sort relative it. target. volume a extent power to feel you're mean, not I longer-term to you you're low guess, of you're getting X% the like operating kind growth? I question comp of we're that model, the of Can it to the left kind the sort sort kind going to Scott, to to as of seeing [indiscernible] perhaps for... outperformance about count And of I us, earnings the do to double-digit that of kind earnings mean long to the but relation And about relates margin. and come of much with the to trying speak

XXXX in and range freight both gross I'll some to pretty gross talked then in getting getting side, XX% the getting to tail line, had then seeing end great this through some in solid back to that quickly we just 'XX, see to the we're back in those on line. we year, a fall here Investor costs quickly. in of XX%. way of Day, what that then things leverage this of on cost happen we've and going And bigger of then little expected go our there. And top about to the come growth the growth in back And and of sales we Really on talking whenever margin bottom margin that leverage a is line the the bit seen cotton.

So strong as just on it's we in growth business you've same seen this go the flow-through the a formula really year. forward.

about up budget growth, now, process is of growth. cost we to long-term some grow. goal the the year. We're going want XXXX. back We in and what and our that middle right next same business our -- to come So to that's thinking for want want We for be sustainable this set in we're for to of see

I'm closing showing the turn like queue to back would I And you. now questions any Fran over Thank remarks. call further to in Horowitz time. no at this the for

updates call I we today, Yes, joining to just want to look to forward you for thank everyone the providing soon. more and some

conference your does Ladies conclude our for participation. for and gentlemen, that today. you Thank

You now may disconnect.