Abercrombie & Fitch (ANF) 6 Mar 242024 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Abercrombie & Fitch Fourth Quarter Fiscal Year 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mo Gupta, Vice President of Investor Relations. Please go ahead.

you. Thank welcome Quarter and Earnings our to morning, XXXX Fourth Call. Good

will call. on uncertainties Operating mind assumptions are the results and actual today uncertainties our Chief investor statements Chief Chief mentioned we which discussed Act Securities morning, is on at earnings me are on our under Safe and Harbor These factors fourth Fran cause and that issued reports our in XXXX Financial Earlier the keep make our we presentation. Please statements Litigation to the with and available Lipesky, today. Joining available These release, subject certain Scott differ the an Commission. call Provisions and Horowitz, are forward-looking of are Investors website Private risks Exchange quarter filings could Also to this subject we is materially and Executive to of Officer and and in the website from on the Officer. that expectations corporate.abercrombie.com, Officer; Reform Securities the section.

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

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

call include to references include references the to that, Fran. and Hollister With Abercrombie Hollister and Abercrombie Finally, over to Abercrombie brands turn I'll brands Fitch & Kids and Gilly Hicks.

and and fourth month operating early sales morning, high year joining January, Good our final leading a to Since quarter outlook. had of strong our the year, above of fourth full for our and thank end update we you results. margin discuss the business quarter in us

XXXX. years. and our top across operating was our And margin year XX.X%, our XXXX our for annual sales of level to profitability, highest billion, company. in defining in achieved history. regions We in best line saw sales we From resulting $X.XX XX XX.X% On an of start second up to finish, growth brands, a

achieving our experience to while new and investments These to growth associate members current customer these talented to strengthen brand increased Importantly, made and customer reach experiences in-store marketing loyalty, to and XX we new drive and into the company. critical the and improve included brands technology customers, and team acquisition financial drive to milestones, investments future. approximately today

[ XXXX who our model we defining years to hard worked our the also as a is ] company. operating a moment teams, for over have stand and evolve so what for

see globe we finish the are around offices no But from say accomplished. as line, Our and energy, tremendous have we I is ahead. with opportunity all regularly, there electric

certainly worth our While the the against we've our high decade growth this made own phase of our is and for to out journey. results stood are expectations progress celebrating. really team What me

growth Fitch In entry marked a & June XXXX, shared Always that into strategy era Forward Abercrombie the Co. for a we Plan, our focus

strong XXXX X%. an to are billion or $X.X our above billion results or and targets above $X.X sales margin Our at at of operating XXXX in financial

our We on profile, sustainability profitability are now our operating by success. of model the our setting demonstrating sights repeating and

to balance of and ability of discipline. XXXX, while brands, trajectory For growing global financial maintaining us, also pursuit our can into strong our regions longer-term we our building billion proof believe point growth a XXXX to new be continue of sales. ambition in across should opportunities, We $X

knowing One excited about having from associates aligned commonly playbook we a match and new experience bullet. intimately that that drive doing has There and been the a our is how on confidence needs. and get consistent. single product give some across growth Clearly, to to building voice question, the in point To at are are here, us the in I'll journey. to we We're given long-time silver It has XXXX day. every the followers. What both executing on and we their been has response this respond meticulously customer Our performance? of you our focused is be world, right thousands got rooted great path. no this to context

This of transformation expectations. years chain, our how our trust digital relates proud team and end-to-end is done. that creating refer easier said and evolving as of When experiences boundaries, than to the enhancing built much experience we exceed physical so and most our marketing customers' push work, to our within to we're assortment, our we the supply it

to a we our them, we stage, kids global that we the and in can Our points can customers has at past have where the we both to are year. and brands and focus the this on capturing retained see proof portfolio we've adults, brand we to our customer globe. responding, customers for increasing teens across millions From is added something more confidence

impressive off growth Recapping outsized further our and result broad-based quarter brands XX% in our We XXXX. the fourth The with grow the to we XXXX full led each growing XXXX, in our Hollister an levels. are in on see region, strong growth growth saw was from of regions Americas brands and Abercrombie at year. pleased

delivered with a some for macro year. the in In sales difficult growth EMEA, acceleration environment back the half we X% the and of year

saw customer we Germany, Our countries. to we and team results awareness those investments and both mainly distorted markets and have focus the positive highest in where the U.K.

great price strides team fine-tuning was foundation, that inventory, made important and product assortments, adjusting by and on customers to and distorting we'll localizing look build regional This for cadence. promotional Our forward. an moving is set there EMEA timing

year the finished XX% XXXX. we to APAC, In up

to in across build team customers continue our and were lifted region. we Shanghai, restrictions connected with We as the COVID

marketing grow a bring through to our approaching life is targeted strategies ways. and with mentality, to investments start-up team in locally brands relevant store business and the the different testing Our business

drive imagery was voice relentless to started a needs XXXX year Today, middle and meet a of brand a decisive of applaud brands. work because portfolio, today's the assortment, progress the great to XXXX. the team. brand brand reset I the business brand who we our at Hollister growing healthy Looking for of team in is of the our showed focus and

Hollister For X% the a down good year, turnaround grew X%, XXXX. from brands in

consecutive year, QX. led Our of was women growth growth quarter double-digit third by throughout in its delivering the

the On and in up women's progress, continue we'll with quarters optimistic in we're we what men's catch to that to the we're come. see seeing side,

significant we While Hollister with health. Hollister often around in XX% digital both stores under Hollister's compared more gross outperformed allowed XXXX stores we recovery, have quarters to growth strong store. a Exiting to down saw even of tends we in cost more XXXX. XXXX, their because improved start profit selling of channels, and an the consumer improved was promotions we we as to in us sales foundation digitally, The brands significantly reduce growth [teen] chasing improve but achievement brand into in greatly XXXX. belt finishes year, throughout financial rate, of inventory clearance our to is which move Coupled the X in XXXX. with growth The AUR. now and journey freight

it longer brands, but Abercrombie was XXXX, a trend. of it's XX% of For exceptional year a much breakout part up growth, to

sales product, I with connecting with Abercrombie the reach it era CAGR, levels, we're to and partnerships for done through proud audiences. evolve engaging In including but this broadening impressive XXXX team innovative has brands Fitch new Abercrombie, XXXX said double-digit customers & and and and to times, this voice actively reposition Abercrombie years many up experience. collaborations new our XX% were X am of so Fiscal I've of an what consecutive growth. XX% growth

Two where recent events examples are great of going. we're

what become scale our a January, to has McLaren history. we their in this great in It to there store. of something partnered our with X Formula in an had was Racing, I celebration showcase was done First, Avenue Liberty wow. Fifth partnership, we important and not

We are coming of in February, in more deepen that successful and just Abercrombie participated a team Las couple planned through Super events has in help effort, brand media us These also a event customer even comprehensive activation Bowl Vegas. in the quarters. our the in connections a our culminating

to deliver or As a we've our Forward Always year, above first results XXXX a in achievement. been company, Plan at targets significant our financial able

of stakeholders also Beyond and growth owe sales profitability. our -- sales and consistency we and sustainability both benchmarks, these growth

have and see to our can geopolitical must instability, global we we acknowledge While we what potential control. we ability challenges macroeconomic proven from control

company and into to by to aim of for chapter our customers, focus, all across in variety new consumer We playbook to in XXXX. for sticking us heading our close environments is a win remaining our which this of

customers. build depth best have These categories, across attracting launches and and and with to Wedding been continuing our key guest, while extension with For Abercrombie growth are we're and their meeting positioning brands, customers, needs continue product our impressive base. global assortments XXXX, the to multiyear of Shop, of collections collections growing our customer compelling both in week. confident retaining this the an are which we like will trend, On on on that deliver we in dressed focused successful assortments newness

investments We to in relevant advocate, believe more and also media, customer way is authentic customers. we our an marketing, social best particularly position to expect the to our Abercrombie in increase

experience, on and of continue assortment plan Both chasing. We sales seeing are expect In we on believe signs world. and is of we expanding performing brands, opener men's. in have principles neighborhood net is in growth XXXX to investing momentum. of core loss women's in genders executing to aligned. be the well, in the XXXX, improvement recouped business a store concept while across initiatives filling key the a and in successful well shopping in we're The both portion our great Hollister testing our centers Finally, gaps and we the

With XXXX, half we the and expect marketing assortment that in into of to coming the along, we back XXXX. increased continue

deliver digital while also to to We the support continue in investing new journey. team's experiences, expect store to

the contributing on our been while product have transitioned a update Hicks, Hollister's assortment and for. offering results, growth shown Gilly lifestyle an As the promise great to active has XXXX, customer we asking results category an to in

Going forward, side. Hollister Hollister by on digital side selling we including stores, app primarily and intend Hollister go-to-market our led channels, strategy Gilly to and focus

Fitch as growth are higher as While we opportunities growth and a company, term. Hollister, a Hicks Gilly near prioritizing & category in we see return Abercrombie the for Hollister key

continue Gilly will of learning customer We to the and a freestanding potential. about assortment maintain couple stores

regions. half We've moved social and D'Amelio expansion and we've important Always our enjoyed Plan, APAC will and to Forward intend the partnership family and in growth the is our on our only them. part of greater EMEA offer emphasis very For to a with appreciate in brand develop tourists, XXXX we of XXXX. put the SKUs to products and the strategies social minimal digital opportunity with of back Global

inventory. local responsibilities and past the across the building year, we've progress made teams, and Over foundation product, significant our pricing resetting

offering In across EMEA, brand. we product expect evolved the to brands increase positioning each and for around brand to marketing drive awareness

APAC, marketing growth focused deliver Our across U.K. countries region. our focus Germany, In largest our and continue the China goal and in to push to the X will on is Japan.

We expect store key cities add in locations improve awareness. our strategically density brand to to and

key across across growth We've digital driving entered our on business. in focus global platforms. will we strength of position momentum XXXX with there, From a

We on I'm are in laser-focused rebuilding showing the strong over first on engaging quarter so to customers our teams hard global of building financial and up our our the proud start. is accomplished the work with and few what results. The years. is our foundation past a off strength

to fantastic stronger, $X progressing to XXXX, growth, to making year investments In to it delivered our sustainable, A our that out goes and brands key company aspiration. team And people, operations customers. such while a Scott. profitable that, is global hand a longer-term our sales goal and over make our billion I'll our heartfelt deliver for thanks to in with faster

for high teams and global good a I'll in my such at Thanks, thanks morning. Fran, executing our level add XXXX. to

Fran year color As we have start comparisons all with mindset XXXX we along performance. a by full done. fiscal operating not respective Unless covering clear brands the the I'll years on results rundown our outlook. XXXX we and XXXX. of model, of are noted, a growth provide some period. XXXX QX as of our quick enter then After to I'll company, transforming are said, our

up the from finish up For were outlook. stores delivered contributing. both month. a and reporting sales of the range to provided quarter week, sales to XX%, $X.XX in XX% a net a digital the billion, was our on reported QX, to early previous slightly saw up $XX million better-than-expected we for We This above XXrd due the basis. we benefit Comparable with January

basis, XX% and reported the and on growth reported countries, and where growth EMEA By a by led reported the comp marketing U.K. brand net a a X comparable up sales EMEA, basis. Japan. comp In across a largest was up XX% basis. owned we and China focusing our Germany, was sales efforts. operated consistent in of on and on a on basis. both region, increased XX% XX% Americas APAC was our and In basis on awareness the was XX% and markets are APAC,

X% we a basis, quarter. in with brands perspective, across XX% growth up X% on increased comparable brand XX%. the on saw rose sales Net sales brands Abercrombie basis. comp Hollister or a at From reported brands a

For the associated year-over-year the points costs. remaining gross gross XXX with rate the and across for the of raw with was Key higher basis contributing the XX.X% profit drivers material basis year, AURs freight points, XX.X% last XXX brands, versus profit change lower quarter, rate the year. were

charges the XXXX. million million, adjusted last Cotton relatively the expense, income, We was chase. levels. costs Product compared of is of asset position and in $XXX year were million brand impairment a of excluding XXXX year. other controlled AUR growth. in Inventory operating $X.X were to XXXX quarter $XXX with fourth expense key operating QX of tightly acceptance each excluded consistent enablers to operating and pretax down ended inventory X% the to

diluted Year-over-year driven we and XXrd digital in operating the quarter adjusted marketing XX.X%, spend, expense and expense income $X.XX, Operating double per compared by more X.X% to adjusted XX%, quarter. than and Tax operating $XXX slight total, was technology week. for margin million the to year. income higher $XX last margin last In the was the was was million, compensation, last year. incentive-based net leverage investments delivered of growth reporting compared rate Operating of year. $X.XX was income share

results of by $X.XX. full In year impairment basis. of charges, asset which results Full charges, we an by I'll asset Turning exclude $X approximately adjusted adversely impairment results impacted which million which excluded million to XXXX, $XX non-GAAP year on cover impacted adversely pretax results, pretax $X.XX.

For year, level up company. were highest sales XX% our in history sales of net the billion, $X.XX and the represented the second

Comparable were sales XX%. for the quarter up

reported growth the and a in brand, men's Americas. store For brands the XX% the and sales double-digit EMEA a approximately way in and net benefit openings. the Sales and regions the of benefit were growth week women's. XX% in growth By XX% comparable basis from up majority basis. a XXrd Americas, delivered saw with with Abercrombie for $XX year, we in APAC. from across the million XX% reporting of X% growth saw a slight We sales on led on We both growth coming

Hollister women's Growth to At compared profit costs. and sales saw half lower rate the delivered around the through was a of XXX and comp we source basis. growth raw freight from we led by X% the Gross XX.X%, and higher brands, XXXX. total X% and come business on improvement, XX.X% channel. basis Of in AURs half point material come around of the net was higher

other to incentive-based sales, Operating of expense, sales increase driven to investments. last XX.X% marketing, million or income, by was $X.X technology primarily was operating of digital Compared compared the or year, XXXX. billion $X.X compensation and excluding and XX.X% dollar in

added expense also We reporting saw sales increased and variable higher had XXrd week. from expenses with the

X.X% higher or strong operating to as Adjusted rate XX%. The XXXX. rate tax was $X.XX million by primarily was $XXX The compared Net a per driven sales $XXX gross of to share million the as well was profit year XX.X% on or operating of expense The $X.XX, growth. year. leverage income compared increase diluted sales, effective income sales was for in last

Moving liquidity $XXX and balance exited of total the approximately of year $X.X and cash sheet. equivalents We million billion. to cash with the

million. stores million technology on $XXX We spent maintenance. the capital of flow with on $XX and on expenditures, million cash operating had we spent and year, and the For spent remainder $XXX digital

year on feet. stores, senior ending new We million million rightsizes delivered we X $XXX market, par with experiences, ended year, including outstanding. the gross across year total the We store value new X $XX XXX of stores, open XX a XX repurchased square million XX secured and notes the the For of with remodels.

We closed also XX stores.

square Compared with digital productivity key of XXXX growth store in drivers footage foot store count XXXX. was and improved are per move XX%, our gross occupancy down significant store the to around improved This our coupled down was in down ending into as profile, up was we XXXX, XX% XX%. was channel, profitability XX%, while productivity square

momentum that regions giving executing brands we strong in perspective, geopolitical From are we those well our the back year the landscape. On XXXX, tracking across the and entered controlled of a investments control. within are half a areas and balance sheet, we XXXX, in marketing closely confidence inventory with macro us

For and XXrd includes a the brands. full full approximately impact in week year, across of of expected the X% in regions we from adverse expect in net X%, sales to $X.XX net growth growth the XXXX. billion range with loss of the $XX reporting year million from This XXXX,

year, first of in second stemming rate growth While higher first to the of due be expect the week. half the XXrd the we from and expect half, calendar both partially the will we growth shifts in

the XX%. expect We around margin year full operating

terms profit cotton we drivers, gross assuming growth, modest entered from past improvement In strong full raw few Consistent expect other we and growth AUR years. with lower rate of minimal practice, costs. the material after year the year past

we discussed impacts now On than on to freight, we more expected those we be trickling offset the XXXX, -- benefits from minor benefits but had into remaining Sea. by Red expect

years. We a will situation playbook we've continue supply over XXXX, in the built chain leveraging react the to as read evolves strong and

at operating expecting are sales much midpoint of leverage or we For deleverage. our outlook, not expense the

upgrade, will which technology continue to continues investment forward, our drive our including merchandising We into plan retail ERP XXXX.

which in of pre-pandemic the regional rate, to tax we forecasting levels elevated high to expected the based For XXs, mid- mix are the a remains rate on income.

of capital expect allocation, capital million. For approximately $XXX expenditures we

and and and $XX to million stores million $XX be around expect on We digital on maintenance. around spent technology

remodels. On XX to including sizes around new XX new expect deliver experiences, XX stores, or right we and stores

through outpacing cash and market business with continue of to closures. $XXX including remaining pending openers conditions. the and store debt putting On in repurchases November anticipated liquidity, share share our authorization, $XXX XXXX, to XX around approximately net 'XX. be store million to Entering repurchase expect XX we have excess expect on million openings, also we work, established We new

We with buy shares from anticipated expect the excess back share-based dilution to shareholders. cash balance returning and compensation the year during of of objectives the offsetting to

further debt also through secured outstanding conditions expect pay down to pricing We and repurchases of market allow. senior where notes

we a regions up shift growth quarter digits, $XXX and to start across the net low calendar week by brands. the first strong including XXXX of supported This sales XXrd level For million, from a double first the the QX be to quarter. of the slight from and benefit XXXX, to assumed expect is

operating be of of X.X% adjusted the to to margin QX XX%, expect range We to operating in margin X% XXXX. compared in

price year-over-year to be rate anticipated by We rate, the than also profit around income XX%, benefits compensation. the discrete expect the the driven gross improvement. improvement to primarily lower vesting of income dates. to to which actual primarily a And federal rate stock federal is vesting The company's on share-based related statutory the rate tax due company's sensitive tax tax is

To Always finish up, our XXXX Forward through we are Plan. about halfway

delivering we we a plan focused have delivered growing June business are Abercrombie and As brand to launched in outsized On in XXXX, Hollister. look we we XXXX, progress profitable planned, focusing have of growth, brands as the stabilizing each pillar. growth. across sustainable, Since made on we while growth in healthy

towards of have talent, modernizing digital working revolution, our made evolved For technology we key platforms. added ways progress and

plan support areas growth. have financial reduced execute for operator, investments and forward look like against discipline, we that, use to are accelerate cash sales XXXX. We in With levels continuing outperformance flow, greatly we further to in to targeted For marketing questions. this ready debt improved to

comes Group. [Operator of with Telsey from Telsey line question Instructions] Dana Advisory First the

continuing XXXX. progress see couple questions. nice show improvement. Congratulations to look terrific in on to and to the continues of forward of A path Hollister year a

the markers Hollister women's, what's product that what your You've And you for are side? the you're year in by success Fran, seeing that side? on are this on mentioned what seeing for it's men's outlook the led

And going of And Also, that a impact, about talked how should the margin how an see Gilly impact, mentioned you impact? forward? more do think terms timing about other Red you when any the Hicks there Scott, that that of you impact growth of of updates Sea having progressing? in as vehicle AURs we

an amazing the about on exciting team. very here year Abercrombie. start at To Yes, question Dana. your and first Thanks, proud of Hollister, with

opportunities. world. As what to they in dug you uncover really know, owned figure out greater And and in were us coming pieces out to by macro the happening what really some was able they of were XXXX, product

women's So the as for XXXX, to by and categories. across that's growth led, mentioned, you all returning business,

to lots continue in shoots throughout there's to We to Denim business. some green progress categories diversify see our strong the selling. able very a are in progress and see of seeing We expectation the And this Bottoms guides. are They've is that Bottoms of out been year. and

the nice of Gilly, Regarding to thing excited discussed of learning year. Gilly, exciting are the again, we Gilly many had us been is journey a that It's growth of the times. growth a Hollister. about for it's we've contributing And

So active we that and that's been brand pivot customer's able to to brand, lifestyle-focused to respond an really per to. feedback, have being continuing they're what

carry stores So actually in excited The continue all and freestanding but mentioned, it's test some see do we're around to have stores we the the to it remain, what side-by-side well will as as we contributing. learn, to world. we'll

Okay. Dana, me the chime let for last here X. in

of the an read A the that months. is first, impact, to couple Red us. over on to teams, supply area. Obviously, sourcing past of European lot team, evolving shipping for chain planning situation about this we the think and rapidly. the mostly for the is our huge thanks market react So impact goes through team, a Sea, When

reacting, the to the they and get right whenever -- best changing here modes at seen Our teams price. Obviously, we've seen read been the to this. have at do product you've need time

shipping the different of rates kind as transpired. around elevate A lane. this world, seen has by little You've

costs. more into little on total, some to of we flow That benefits back I'd thing, the had than that the into freight Sea. of We year. year, will a about be as rolling Red those in QX offset say the be half talked shipping for bit through. the think by kind shipping start higher So there we will some seeing friction are on more costs

for a year. the total freight, year happening this in there lot So not

The was AUR. second piece

past So years X, the here amazing consistent AURs, with over progress we've our year. X on last made

the here year and the having time, the AURs, your inventory sitting our the great acceptance. in is We but product we'll exiting at really say to raise place what outset margins hold controlling all ways strong a goal see your of best those XXXX, happens. Our and it today AURs is to

So we're things, to continue the those we going on to work as year. X throughout go

the Our next from question of comes Tarlowe Jefferies. Corey with line

Fran, as record sales I the success Abercrombie has amazing. of of short now the brand the of Abercrombie nothing think been fiscal segment. the year, this of And approached company has levels now at

you the years, think drive over Abercrombie what trajectory. vectors as leverage seems several think are promising So the about business at you worked the next growth XX continuing Forward for Always to the because then of about do XX since context within Plan? within think you'll Plan, to that of how And be Forward that you put it growth do months, last what's an how the you likely the about increasingly Always forth to

revenue X% then And to And low then to of in guidance quarter. expecting that moment? the just from year with that you're up at the tracking up Is digits where do outlook, be full on double first revenue quarter? growth X% how first Scott, double that low the mentioned you the you're the bridge you in digits

in mean, see to regions you. first Yes, channels. as across the all, for brands, Good growth brand. Corey. an company, I year amazing was of thank the morning. And increase seen absolutely right, it the incredible. well A&F for and XX% All as years your family with in And brands, we happening. for have It's that at and A&F, a point, XXXX, to a with just X of XX% CAGR digits A&F double been

that that is behind reason working. is playbook The our

adult, expand really particularly. been addressable able We have for Abercrombie the to market

and a it's company, So a lifestyle truly T-shirt longer it is no brand. jeans

So the XXs a through market perspective. category the and all early the late from gone we've offerings from broadened has the XXs addressable to easily

we This to things address active is about of Shop, staying important many we the learned week, for. like our customer launching occasions close another and bit YPB, Dressed from that wedding we information brand, where how we're today, So which Guests. this talk can our exciting journey is and how Wedding them Best

coming the and categories. our see what consumer continue is the to for is So expectation from looking grow us those all these team to and to understand continuing ideas of helping

frankly, as on finish growth. we we're sustainable, XXXX, focused And just line. there's there's So profitable said, no --

Okay.

the outlook. On

year. let's of the with start So kind breaking up

So do expect there. the today, get quarter. yes, That's and a in comes really both the our this shift of here on We'll We first nuance start halves. higher calendar a had start rate the be little XXrd Corey, first here to visibility, in down half. quarter, strong expect the we to growth growth sitting to week into start to here digits. outlook nice the We'll bit help of double we low baked quarter up from

to be aggressive back to how here aggressive and landscape reason with this and super world this And be fast on the here year. March changing is just finding it hard a in half the of geopolitical changes sitting so super quickly,

running business So basis. we're this seasonal a more on

We the the of product start reactions to great on are running spring business, had laser-focused have spring.

the those for spring plans Our teams are chasing we're inventory for fall. the and building

with JPMorgan. question line Boss Matthew next from the of Our comes

great quarter. another on Congrats

Thanks, Matt.

So the post larger could the seeing just with term, elaborate on calls, some Fran, on recent near seems early spring opportunity? opportunity. and assortments in to holiday about honed really you first of maybe the release far our so continued picture, momentum then in the X you've It global think you're global best the how and like questions. quarter? here what And in in

operating just for about playbook quick this above America, change of from here. you to us North through maybe year consider? to the any investments think to there flow offsetting in growth margin come if any best So One one it see as outside help Is just were sales in for plan? Scott. Or

Yes.

acceleration And obviously on newness and is of because some was the we're with year. quarter, floor proud of something team is getting a big be It that I'm vocabulary as you chasing that. so newness nice part some to that's So put business consumer to their kind did we're it as that super and do very very first result and and the respond able in the fact spring to the new January. continues results in lean, fourth early does we January. of a well full into assortments inventory do and of we the excited really that our our for to for transitioning ability really up holding see prove the the having drives our can

our used word. You

to expectation, yes, And regions international both is happy as as in seen will well. fact been and So our recently, to that we're all teams our our visiting playbook come start well as are that it regions very the exciting to and globally. see to was return into very exciting spent those those growth exporting very the actually We've through. confident that working Shanghai, actually we was able to to with and building It here, years our both I've recruit teams, That this of have London. working there in that it's been the offices. we're playbook we've see work talent year.

the outperformance, last grab we if Matt, be would would it similar right, XXXX. sales one. Yes, I'll operating flow-through, margin the on All see to

be in put like at plan XXXX, marketing more we is investment but play in would Any similar. we set may this flow-through relatively outperformance did point. Our

Tracker. comes of Retail next Marni Our The -- with from the question Shapiro line

and the on question year. and housekeeping have Congrats I great picture. quarter one bigger one

a Hollister concepts for I'm you're has into store housekeeping. sizes store Abercrombie little in stores about thinking the opening, smaller, getting on Of you're are the been the or bit And what you just the specifically? Just curious size leaning 'XX. so

Abercrombie I'm that? been could you into like across curious bringing in talk what for it are And about new do able and like digital, Is to attract lapsed brands you then, your Fran, if the looks the through Have customers looks what it that shoppers. brands. you ability just to 'XX.

one this kick I'll Marni, off.

be So we'll towards the and in up in Those Abercrombie new be Americas. Abercrombie, on new with around that be tilted we're that's they'll stores, obviously, we'll Hollisters, the seeing. XX experiences the trend tilted towards XXXX. be so but and that tilted still will opening XXXX, stores the We'll bring still in, opening XX% towards globally, from there

here on depends brand, you by into X,XXX, neighborhood different We're It and can brand, X,XXX get. the environment. square for what the store that think sizes deal It of XXXX, Abercrombie. we're Hollister you liking retail feet depends getting can when And kind talking kind you what for we're now sizes the of there. find about

somewhere we're that X,XXX. And between we're square in X,XXX kind in range. malls, square feet to seeing of those stores So X,XXX or X,XXX foot

get very of So to them XXXX. those and hope more happy we spaces, with in

Great.

regarding And question customers. attracting other regarding your

to and that our brand, to bring the addressable they're attracting customers. millions we as which then A in us. fact YPB, exciting. excited the actually some through age would come and categories expanded things in site this about, as been us we're as see well. that yes, digital file check And both of the back really incredibly is that being we customers they well market has new customers discovering customers attachments So new well as have really and and It's added stores. be they see just are the shoppers. new products the Those are helping as coming realize other the to many year, well great as as on example done We've out to other

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

great a quarter. on Congrats

Just me. X for

retailer? that relates you average First part Has historical much about then that it still over just just how way? turning And holding remind sit few do on the what's was now And last why that digital back? line? always higher think it Is a does years? Hollister. it's to if me A&F, banner turnaround the the been so, penetration. so Can than profitability? of to Or time as Where it And levels? you undershooting the it maybe

reverse. age answer start Abercrombie. is The really with in consumer that questions We'll digital gone after. the a of result We'll cohort actually those we've

So a a coming the store, A&F what pop-in return. up exchange millennial and to we is or that's whether a up consumer online, or convenience of to pick they love their online call really purchase make the a pick store in an to shopper,

penetration time their their as team certainly changed the The purchase well there. for with phone significantly journey to them starts very over several social that friends grown Hollister as on in but and their has spend mall brand years the significantly. digital have complete so we it's their The past

question. Hollister the grab I'll Alex,

one. roller in we're here input the spike So profitability coaster past worst then Hollister But been that in terms Hollister. brand. costs the COVID it's number the outsized had the few over in happy with mean And a impact I of of the an cotton, with on years, through freight. of terms of

And come improve dramatically XXXX. through as so we've we've seen of Hollister the profitability here

like in good store the When come an fleet at you is basis, store on a place. look fleet operational brand, the

clearance Hollister, the place in the stepped really a are a stores in up is gross I'm sorry, to and We're the compared last #X, were selling also. less And lot we in whenever productivity XXXX. than good margins back, XXXX. year, Our business

just Hollister. a selling in cleaner it's there So environment

mentioned that. of we optimistic Our for profitability And forward. teams the We've go Hollister continue chasing. as to are

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

to mean same that sales And divergence more the are just shape in growth expect could we know I strong Or you in you're of brands? expectations guess on the mean, good kind year? it about should wanted about details coming growth. sales versus well relative And same expect I I brands? the outperform I growth? how then narrow this both with in to both you U.S. despite very Abercrombie hear pretty up inventory thinking your what the international ended this the growth mentioned between for maybe to Hollister. I as year year growth thing inventory,

in take actually, reverse going back, Mauricio, as we're to Yes, go well. going we're but to your

but start of we've with lot is a pleased be inventory that by place. So expectation spent regarding year And years differentiated And probably will brand. healthier stay not sales we lean. XXXX. week We changing is closer the And to and to are working our into going working. as head not chase. every to what's on when teams opportunity mantra we XXXX, to getting a a inventory, in bit a our continue it's to much that yes, the little into single our down But I'm work it with X% very obviously, going inventory. We're

grab X. other Hey the Mauricio, I'll

doesn't. So it's worried U.S. the it versus few Yes, at fine. past when And for seen the divergence business be about XX% that to brands growth we're going Abercrombie over point we're growing The We've until seen some brand. international at happens, outperform point. we've few and But There expect U.S. total. to a really the levels years. little Hollister over years. thing this the the past business, of could U.S. strong by bit Same just continue over growth. that obviously here growth in

to we're of we're and from Americas we'll can good we basis, the come growth, of see in is APAC part in but Fran growth continue our ability to a and confident investing earlier, And region. But to a and those on to foundation expect mentioned small the Obviously, our outsized we're as very majority grow regions. we're so the that in dollar optimistic our rate start APAC. Europe rebuilding business, growth teams in

helpful. Super it. Got

Just one quick follow-up.

in or the On like contribute the quarter. could additional how OpEx QX? fourth OpEx Any you way point growth did we the to on like parse out much out the

fourth million quarter. or was the so about for $XX Yes. It

in in that but go will little a will So there hurt away XXXX. QX, us bit that

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

I year? you've to learnings remind versus on the touch a are could a that 'XX tailwind Congrats feel just in on how AURs Kelly and gross taking you you're us at XQ, you to wanted And of progress then Hollister, are is lasts expansion Fran, great throughout where of up quarter. is just a the applying that product there? for from Paul. see And margin you much seen to benefit A&F And lower expecting about on Hollister expecting how secondly, XXXX? from you're much This costs? what that and talk

Kelly, kick I'll this one off.

margin here QX, we'll from margin margins mainly gross on be range that primary cotton last we benefit in see about Yes, year, gross gross operating a driver profit cost. So double the X.X% phenomenon that expansion. X% XX% expansion. to XXXX. about let's front half talked or should outlook, our start That's with in from rate

see So the it I'll point -- P&L, lower to product to we're finally next. Fran excited costs pick where seeing the through and the for come those get the

Yes.

sure has continue same the a which often, close that we So and to from year, brands. that our us. for of playbook product, huge we mean, we A&F, making in very I intending Those learnings been the as experience we particularly for use mode that this stay that keeping principles same the referenced lean the have aligning into win our each voice and And a is we are really inventory and Hollister staying our do corporate chase for And XXXX. to customer.

keep the and to see working. in test we so some marketing our and treat customer then and our open-to-buy, how able learn We treat that the and And our very our product can up the we we keep chase lastly, half, it add to all back continue what's similarly marketing we lined were to -- we responding. when had Hollister marketing, we open to and was

double the AURs, versus definitely versus off XXXX. or Hollister, of digits for path promotions piece, the terms we lower selling. clearance On about think clearance taken in We've up as last Hollister versus spending Abercrombie, XXXX, some lower

cleaner, scenario. in about brand was base all different and than kind an Abercrombie, it it's a XXXX. of think there. When The above healthier of really sales is So very you the XXXX

different a have So very we product mix.

marketing XXXX the the the to versus promotions With of we've and off the significant of brand, prior. product, able been and strength take a amount

very votes that those every with customer So are. their with happy like AURs say to wallet. where day We the

we'll great the going So consumer try continue deliver forward. quality to to for

Next question comes Janet line with Associates. the from of Research JJK Kloppenburg

of you wondering the out Hollisters, wondering, Denim back. quarter, because what Congrats was a especially the being that were fabulous bottoms business, Fran, if coming I and said category call I was changing strong. the components you so on good sense year. is I

in us guys your outlook so I wondering on you So year, what you last update because can promotional was embedded promotional would guidance and an if give I that year-over-year hope continue? wondering less you there? you I'm seeing activity were And were for think much

that's should talked the on well? as for perhaps about first in margin the gross margin you Scott, And versus question. opportunity, Is my we half obvious second how higher think gross about half earnings the reasons, in And

product. the with start let's So,

bottom. actually about both been all talk and success brands genders. Bottoms we if across a So

business, biggest that just heavily the think reliant so of on certainly we're about XXXX out not diversifying so on Denim. I learning was Bottoms the coming our

there and utility women's the in and down. continue There's like mine in for It's wide are cleaning balance rise things a is here keeping or Bottoms go new and starting making Denim both bottoms, boys. The leg Denim. it working girls working. and With things the that working is the back sure exciting us. to non-denim real baggy the out said, certainly happening Believe up. which is key new and assortment that and for some is we in But not, now and men's to cargo

next X, I'll the Janet. move to

the to that So And year-over-year promo as we're AUR that the some at we go assuming prior ties throughout the of year, goal of going flat to start outlook, be year. and will year. as then every promotional pull that beginning year, back to mindset the be, as kind our of we assuming

vote to to a more if As will than bit last that said, little pay we the willing customer continue year. they're

some and promotions place, the benefit go very And if first pull as that the will sales, versus throughout mainly similar The the to hopefully, acceptance enable us, year. margin product point from yes, the we inventory there right half is gross in cotton. is off

the in So see you gross the first a margin than second expansion, little in more half. half there

next line of the from Our question Carden. Dylan comes

of exceeded remarks, you've hit but think kind XXXX the you've said your you've prepared curious on or I -- targets. Just here, this

net in improvement to the target benefits around original back the those. but here, of maybe going of kind sustained to if kind margin to the I'm think terms is maybe of long-term structural all, Hollister the the kind it. I the from combination growth the now And going file thoughts new some larger billion so recovery say international, could store sustaining And that is of Abercrombie, and customer about sort you're guess guess, closing it's in for as weight of recovery, What $X sure of any of then of you there right I XX%. sort a way of growth the level business?

targets, what have But it. thinking line $X up Well set and way done out key for that Plan XXXX, bottom XXXX, about Plan yes, think to sum Forward the does about about to sustainable, our our that's and top achieve consistent billion to Very of Always that we really when again. goal excited certainly was our our with we is Dylan, came And is Forward June it we line. what growth. Always right the is in do profitable,

global ago I we minute that of seen is this those both about finish perspective those go mentioned opportunities and a there no the a that and would building in say at conversation, regions. line, out positive this beginning having we're and the just so just regions particularly really from year, there's are there I just many teams as

super So excited our about exploring playbook.

XX%. On square XX%, we up kind single gave, the stats, footage productivity XX%, operating second the occupancy estate, footage much low in real of part on margins. per digits, mid-single to the called the had were down of maybe a when we you down those out XXXX, these digits base some long-term square in I healthier and in That's store sustainability, the than targets

variable along on expenses. with comes add now XX% is fact about You the digital that the penetration that company

analytics cleaner using in technologies. and never base have new marketing that And growing regions growing, we data at So a we the just have expense like a they before machine and are are that's company. that brands have

continue said, Fran like to margins, So that gives where can these are grow excitement they the and sustain to grow. us that we

do right XX%, being penetration that online -- anticipate the kind from here? level? of the there stable that that relatively Is is you around Is

it's Hollister XX% over years. the tracking is around at a XX% a been digital. digital. stable. around brand that's past couple -- they've like Those Abercrombie that's And feels brand of It those numbers is

business. it So we're a how that's will couple of way points but one another, maybe, or tick the hundred up basis running

demands making huge making huge all. and investments We're and investments customer in we're stores the also in it digital,

experience it all So progress made comes digital the but the happy the couple of when past we've also revolution we've made, improvements I'm with years. to customer through this operations the in product all super

to stores and you're kind of the feeling the sort in here? count, store store that penetration need least How at rate? of about you Hollister net are or open a the more size position. footage Hollister And fleet of a net Does close square

the fleet, markets, Hollister size probably In brand always of to the Happy with We're the the that around. cities. for Malls always an Hollister. move repositioning within doing opportunity around, stores more hotspots open we're move there's that.

globally. repositioning we're cities, brands base, an our we believe Hollister key the to do So but opportunity always grow within there's

get [indiscernible] International at Got And can prior this I XX-plus point? it. percent, back last to do think that you one.

would That goal. be the

regions year. all We in growth expect this

growing love to and see where growing the ends we'd up. be Americas, business, the penetration but we'll the also international So

like call portion. Fran the Q&A This remarks. turn completes closing for our to would back to Horowitz I over

to just provide the call the thank Thank for I updates joining to everyone, look Yes, in near we and you. you, forward want term. to continuing today,

And conference you call. your for today's this participation. Thank concludes

You may wonderful a now disconnect. have day. Everyone,