Abercrombie & Fitch (ANF)
Q4 2011 Earnings Call
February 16, 2011 8:30 am ET
Jonathan Ramsden - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Director
Eric Cerny - Manager of Investor Relations
Michael Jeffries - Chairman, Chief Executive Officer and Member of Executive Committee
Dana Telsey - Telsey Advisory Group
Lizabeth Dunn - FBR Capital Markets & Co.
Samantha Panella - Raymond James & Associates
Jeff Black - Citigroup Inc
Richard Jaffe - Stifel, Nicolaus & Co., Inc.
Robin Murchison - SunTrust Robinson Humphrey Capital Markets
Christine Chen - Needham & Company, LLC
Randal Konik - Jefferies & Company, Inc.
Stacy Pak - Prudential
Linda Tsai - MKM Partners LLC
Adrienne Tennant - Janney Montgomery Scott LLC
Eric Beder - Brean Murray, Carret & Co., LLC
Betty Chen - Wedbush Securities Inc.
Paul Lejuez - Credit Suisse
Michelle Tan - Goldman Sachs Group Inc.
Robert Samuels - JP Morgan
Marni Shapiro - The Retail Tracker
Jeffrey Klinefelter - Piper Jaffray Companies
Jennifer Black - Jennifer Black & Associates
Kimberly Greenberger - Morgan Stanley
Evren Kopelman - Wells Fargo Securities, LLC
Laura Champine - Cowen and Company, LLC
Lorraine Hutchinson - BofA Merrill Lynch
Edward Yruma - KeyBanc Capital Markets Inc.
Janet Kloppenburg - JJK Research
Previous Statements by ANF
» Abercrombie & Fitch CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Abercrombie & Fitch CEO Discusses Q2 2010 Results - Earnings Call Transcript
» Abercrombie & Fitch Co. F1Q10 (Qtr End 05/01/2010) Earnings Call Transcript
Thank you. Good morning, and welcome to our fourth quarter earnings call. Earlier this morning, we released our fourth quarter sales and earnings, income statement, balance sheet, store opening and closing summary, and an updated financial history. Please feel free to reference these materials available on our website.
Also available on our website is an investor presentation, which we will be referring to in our comments during this call. This call is being recorded, and the replay may be accessed through the internet at abercrombie.com under the Investors section.
Before we begin, I remind you that any forward-looking statements we may make today are subject to the Safe Harbor statement found in our SEC filings. Today's earnings call will be limited to one hour. We will begin the call with a few brief remarks from Mike, followed by a review of the financial performance for the quarter from Jonathan Ramsden. After our prepared comments, we will be available to take your questions for as long as time permits. Please limit yourself to one question, so that we can speak with as many callers as possible.
As a reminder, the after-tax operating results of Ruehl for 2009 and prior periods are now included in discontinued operations, and income statement and related comparisons to prior year, therefore, generally exclude Ruehl.
Before I turn the call over to Mike, I would like to remind everyone that we will be hosting an Investor Day on Tuesday, April 5, at our campus in New Albany, Ohio. Today we'll begin with registration at 9:00 and conclude by 2:30 p.m. You can find more information regarding the day as well as registration details by viewing our Investor Relations website. We look forward to your visit and hope that many of you will be able to attend. Now, to Mike.
Good morning, everyone. Thank you for joining us today. 2010 was a year in which we exceeded our objectives in terms of sales, operating income and earnings per share. We did this while continuing to invest for the future and to build our organization to capitalize on the huge opportunities we see ahead.
With regard to the top line, in 2010, we achieved Domestic same-store sales growth of 7% and total Domestic growth of 10% including Direct-to-Consumer. This was driven in part by a more aggressive promotional stance, but more important, as those of you who visit our stores know, by a compelling assortment and by stores that looked great. It is also worth noting that our Domestic business continued to get stronger throughout the year.
Our International business was up 79% for the year. We were off our initial goal of 30 international Hollister openings for the year, but the very strong volume of the stores we did open compensated for this. Across Europe, our business is extremely strong. Our U.K. Hollister stores comped well above the overall company rate in 2010. Our four German Hollister stores are running at more than double their initial projected volumes and the three Spanish stores are more than 50% higher.
Meanwhile, we have continued to gain momentum in Italy, with our three stores now running close to the U.K. in average store volume. Just over two years after we opened our first Hollister store in Europe, we now have a business that is annualizing at over $300 million.
Turning to A&F. While Tokyo has trended lower, our three major international flagship stores in London, Milan and Tokyo are now annualizing well above the $200 million we talked about a year ago.
In Direct-to-Consumer, we had total growth of 41% for the year, with strong growth in both our Domestic and International business. We added significant resources to our Direct-to-Consumer group during the year, improved the shopability of our sites and continue to add new country-specific sites. And the Gilly Hicks made very solid progress, posting comps of close to 40% for the year and initiating a new 5,000 square foot store in the U.S. as well as our first international opening in London in November.
Taking all of these things into account, while there are certainly challenges ahead, we feel very confident in the momentum of our business and the global power of our iconic brands.