ANNUAL REPORT
2023
2023 ANNUAL REPORT
OUR BRANDS
Abercrombie & Fitch Co. is a global, digitally-led omnichannel retailer of apparel and accessories for men, women and kids. The
Company’s brands include Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister brands, which
includes Hollister and Gilly Hicks. The brands share a commitment to offering products of enduring quality and exceptional comfort that
allow consumers around the world to express their own individuality and style. Abercrombie & Fitch Co. operates approximately 765 stores
under these brands across the Americas, Europe, Asia and the Middle East, as well as the e-commerce sites.
ABERCROMBIE BRANDS
Abercrombie & Fitch believes that every day should feel as exceptional as the start of the long
weekend. Since 1892, the brand has been a specialty retailer of quality apparel, outerwear
and fragrance - designed to inspire our global customers to feel confident, be comfortable and
face their Fierce.
abercrombie kids is a global specialty retailer of quality, comfortable, made-to-play favorites.
abercrombie kids sees the world through kids’ eyes and believe kids should feel exceptional
every single day.
HOLLISTER BRANDS
The quintessential apparel brand of the global teen consumer, Hollister Co. creates clothes
made for capturing moments, creating memories and being unapologetically you.
At Gilly Hicks, we believe in energizing our minds, moods and bodies through movement every
day. That's why we offer active lifestyle products to help customers create happiness through
movement.
Abercrombie & Fitch Co.
##
2023 Annual Report
2023 ANNUAL REPORT
A NOTE FROM FRAN
TO OUR SHAREHOLDERS,
From start to finish, 2023 was a defining year for Abercrombie & Fitch Co. After a multi-year transformation to
evolve our company and what we stand for, we achieved top-line growth across regions, brands and channels, all
while staying true to our corporate purpose of being there for our customers, associates, and communities on their
journeys.
In June 2022, we shared our Always Forward Plan, a strategy that marked the entry into a growth-focused era. The
plan is underpinned by three key pillars—delivering focused brand growth, executing an enterprise-wide digital
revolution and operating with financial discipline.
Our strong 2023 results were at or above our Always Forward 2025 financial targets of $4.1 to $4.3 billion in sales
at an operating margin at or above 8%. The progress we’ve made against our own expectations is worth celebrating
and we are now setting our sights on demonstrating the sustainability of our operating model and profitability profile
by delivering sustainable, profitable growth. We believe we can continue our trajectory in 2024, growing across
regions and brands, staying on track to our longer-term ambition of $5 billion in global sales.
An important priority in achieving this ambition is delivering growth around the world. To better enable global
growth, in 2023, we reorganized our structure to manage the business on a geographic basis to best leverage the
knowledge and experience of our regional teams. We now drive the business through three reportable segments:
Americas; Europe, the Middle East and Africa (EMEA); and Asia-Pacific (APAC).
Recapping 2023 performance, we delivered broad-based growth across regions. The Americas led the way with an
impressive 18% increase from 2022. In EMEA, we delivered 4% sales growth for the year, driven by localization
efforts in the areas of assortments, inventory, product set timing and promotional cadence. In APAC, we finished the
year up 16% to 2022, as we continued to build our team in Shanghai and reconnected with customers as COVID
restrictions were lifted across the region.
Looking at our brand portfolio, for Abercrombie brands, 2023 was a year of exceptional, breakout growth, up 27% to
2022. It’s a new era for Abercrombie, and it’s incredible what the team has accomplished with a repositioned
brand, and evolved product, voice and experience for our target customer. For Hollister brands, it was a year of great
progress as we reset the assortment, brand imagery and brand voice to meet the needs of today’s teen. For the year,
Hollister brands grew 6%, a solid turnaround from down 9% in 2022.
For our ongoing digital revolution, we continued to invest across our associate and customer experiences. We added
talent, evolved ways of working, and made progress towards modernizing key technology platforms to ensure
seamless shopping experiences. We also improved the omni-channel shopping experience across the web, our
mobile apps and in stores.
We operated with financial discipline, greatly improving cash flow, reducing debt levels, and using sales
outperformance to accelerate investments in targeted areas, like marketing, to support further growth. We are
entering 2024 with a strong balance sheet, controlled inventory and the ability to continue executing against our
Always Forward plan.
Finally, as we continued to invest in our people and our communities, we were once again recognized as a Best
Workplace in Retail by Great Place to Work and Fortune, and we received a perfect score on the Human Rights
Campaign’s 2023-2024 Corporate Equality Index for the seventeenth year in a row.
Our offices around the globe are electric with energy from all we have accomplished, and I want to thank our
associates and partners who helped deliver such a fantastic year. As evidenced by our strong 2023 results, we are
confident we are on the right path, and we see tremendous opportunity for our brands in 2024 and beyond.
ALWAYS FORWARD,
Fran Horowitz, Chief Executive Officer
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 A&F cautions that any forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) contained herein involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the company’s control. Words
such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “should,” "are confident," “will,” “could,” “outlook,” or the negative versions of those words or other comparable words
and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we assume no obligation to publicly update or revise our forward-looking statements. The
factors disclosed in “ITEM 1A. RISK FACTORS” of A&F’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024, in some cases have affected, and in the future could affect, the company’s
financial performance and could cause actual results for the 2024 fiscal year and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this 2023
Annual Report.
Abercrombie & Fitch Co.
3
2023 Annual Report
2023 ANNUAL REPORT
FISCAL 2023 REVIEW
NET SALES BY REGION (1)
AMERICAS (3)
EMEA (4)
APAC (5)
TOTAL COMPANY
NET SALES BY BRAND
ABERCROMBIE (6)
HOLLISTER (7)
TOTAL COMPANY
2023
$3.46B
$0.69B
$0.14B
$4.28B
2023
$2.20B
$2.08B
$4.28B
2022
$2.92B
$0.66B
$0.12B
$3.70B
2022
$1.73B
$1.96B
$3.70B
NET INCOME PER DILUTED SHARE ATTRIBUTABLE TO A&F CO.
GAAP
NON-GAAP
GAAP
Δ %
18%
4%
16%
16%
GAAP
Δ %
27%
6%
16%
Comparable
Sales Δ % (2)
13%
7%
26%
13%
Comparable
Sales Δ % (2)
23%
4%
13%
2023
$6.22
$6.28
2022
$0.05
$0.25
MAINTAINED STRONG LIQUIDITY POSITION WHILE REDUCING LONG-TERM BORROWINGS
LIQUIDITY
PURCHASES OF OUTSTANDING SENIOR SECURED NOTES (PAR AMOUNT)
2023
$1.2B
$77M
2022
$0.9B
$8M
ALWAYS FORWARD PLAN
EXECUTE FOCUSED
ACCELERATE AN ENTERPRISE-WIDE
OPERATE WITH
GROWTH
PLANS
DIGITAL
REVOLUTION
FINANCIAL
DISCIPLINE
This review includes reference to certain adjusted non-GAAP financial measures. Additional details about non-GAAP financial measures and a
reconciliation of GAAP to adjusted non-GAAP financial measures are included in the “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of A&F’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024. Non-
GAAP financial measures should be used as a supplement to, and not as an alternative to, the company’s GAAP financial results, and may not be
calculated in the same manner as similar measures presented by other companies.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Net sales by segment are presented by attributing revenues to an individual country on the basis of the segment that fulfills the order.
Comparable sales are calculated on a constant currency basis.
The Americas segment includes the results of operations in North America and South America.
The EMEA segment includes the results of operations in Europe, the Middle East and Africa.
The APAC segment includes the results of operations in the Asia-Pacific region, including Asia and Oceania.
Abercrombie includes Abercrombie & Fitch and abercrombie kids.
Hollister includes Hollister and Gilly Hicks.
Abercrombie & Fitch Co.
4
2023 Annual Report
2023 ANNUAL REPORT
OUR STAKEHOLDERS
As our corporate purpose states, we are “here for you on the journey to being and becoming who you are.” At Abercrombie &
Fitch Co., we are focused on creating a sense of belonging and community across our brands. We work to ensure that our
customers and associates feel respected and represented and we know when we embrace diversity in all forms, we can build a
stronger sense of community across every aspect of our business. We believe that the attraction, retention, and management of
qualified talent representing diverse backgrounds, experiences, and skill sets, and fostering a diverse, equitable and inclusive
work environment is integral to our success in advancing our strategies and key business priorities.
In 2023, we offered our robust, inclusion and diversity learning and development opportunities to our associates. We also
strengthened our ongoing partnerships with organizations that help us have a positive impact on the communities in which we
do business.
Finally, we continued to build shareholder value as we met or exceeded our 2025 Always Forward Plan net sales and operating
margin targets.
OUR ENVIRONMENT
We strive to create a positive impact on our global community by advancing sustainability efforts in our home offices, stores
network and supply chain through our social and environmental sustainability programs, some of which have been in place for
over 20 years.
We are a participant in the United Nations Global Compact (UNGC), the world’s largest corporate citizenship and sustainability
initiative and established targets which align with the United Nation’s Sustainable Development Goals.
Following the completion of our first Environmental, Social, and Governance (ESG) materiality assessment, which helped us
identify ESG topics most impactful to our long-term value creation and most important to our stakeholders, we refreshed our
sustainability goals and added new ESG goals related to other social and governance priorities. These goals, along with the results
of our ESG materiality assessment, were published on our updated corporate website.
OUR SUPPLY CHAIN
Outside of our global store network and global home offices, we are invested in improving our supply chain processes by
partnering with vendors, suppliers, manufacturers, contractors, subcontractors and their agents (collectively, “Vendors”). Our
Vendors are expected to operate in compliance with the laws of their respective countries and all other applicable laws, rules,
and regulations, and have committed to follow the standards set forth in our Vendor Code of Conduct. Our Vendor Code of
Conduct details our dedication to employing leading practices in human rights, labor rights, environmental responsibility and
workplace safety.
2023 HIGHLIGHTS
• Continued to train third-party factory workers on anti-human trafficking, gender equality, and health and safety, and work rights
and responsibilities.
• Donated more than $8M to charitable causes, with the help of our associates, vendor partners and customers.
• Volunteered more than 22,000 hours as our global associates remained committed to our communities.
• Named one of Fortune’s Best Workplaces in Retail and remained a Great Place to Work-Certified™ organization.
• Received a perfect score on the Human Rights Campaign’s 2023-2024 Corporate Equality Index for the seventeenth year in a
row, with the designation as a one of the Best Places to Work for LGBTQ+ Equality.
• Expanded our Associate Resource Groups (ARGs), to five groups: BIPOC & Allies, Pride & Allies, Families/Caregivers & Allies,
Women & Allies, and ABLE & Allies. Through collaboration and action, these initiatives support our associates’ personal and
collective allyship journeys, improving awareness, deepening connection and understanding.
Abercrombie & Fitch Co.
5
2023 Annual Report
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 3, 2024
or
For the transition period from to
Commission file number 001-12107
Abercrombie & Fitch Co.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
6301 Fitch Path
New Albany
Ohio
(Address of principal executive offices)
31-1469076
(I.R.S. Employer Identification No.)
43054
(Zip Code)
Registrant’s telephone number, including area code: (614) 283-6500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Class A Common Stock, $0.01 Par Value
Trading Symbol(s)
Name of each exchange on which registered
ANF
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes ¨ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Non-accelerated filer
x
¨
Accelerated filer
Smaller reporting company
Emerging growth company
¨
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting
firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes x No
Aggregate market value of the registrant’s Class A Common Stock (the only outstanding common equity of the registrant) held by non-affiliates of
the registrant (for this purpose, executive officers and directors of the registrant are considered affiliates) as of July 29, 2023: $1,942,935,806.
Number of shares outstanding of the registrant’s common stock as of April 1, 2024: 51,027,429 shares of Class A Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant’s definitive proxy statement for the 2024 Annual Meeting of Stockholders, are incorporated by reference into Part III of
this Annual Report on Form 10-K. The registrant expects to file such definitive proxy statement with the Securities and Exchange Commission
within 120 days of its fiscal year ended February 3, 2024.
Table of Contents
Table of Contents
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
PART I
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Consolidated Statements of Operations and Comprehensive Income (Loss)
Consolidated Balance Sheets
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Index for Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
PART III
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
Item 15.
Exhibits and Financial Statement Schedules
Item 16.
Form 10-K Summary
PART IV
Index to Exhibits
Signatures
Abercrombie & Fitch Co.
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2023 Form 10-K
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Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report on Form 10-K may constitute forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change based on various
important factors, many of which may be beyond our control. Words such as “estimate,” “project,” “plan,” “believe,” “expect,”
“anticipate,” “intend,” “should,” “are confident,” “will,” “could”, “outlook,” or the negative versions of those words or other
comparable words and similar expressions may identify forward-looking statements. Future economic and industry trends that
could potentially impact revenue and profitability are difficult to predict. Therefore, there can be no assurance that the forward-
looking statements included in this Annual Report on Form 10-K will prove to be accurate. Factors that could cause results to
differ from those expressed in the forward-looking statements include, but are not limited to, the risks described or referenced in
“ITEM 1A. RISK FACTORS,” of this Annual Report on Form 10-K and otherwise in our reports and filings with the SEC, as well
as the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
risks related to changes in global economic and financial conditions, including inflation, and the resulting impact on
consumer spending generally and on our operating results, financial condition, and expense management, and our
ability to adequately mitigate the impact;
risks related to geopolitical conflict, armed conflict, the conflicts between Russia and Ukraine or Israel and Hamas and
the expansion of conflict in the surrounding areas, including the impact of such conflicts on international trade, supplier
delivery or increased freight costs, acts of terrorism, mass casualty events, social unrest, civil disturbance or
disobedience;
risks related to natural disasters and other unforeseen catastrophic events;
risks related to our failure to engage our customers, anticipate customer demand and changing fashion trends, and
manage our inventory;
risks related to our ability to successfully invest in and execute on our customer, digital and omnichannel initiatives;
risks related to the effects of seasonal fluctuations on our sales and our performance during the back-to-school and
holiday selling seasons;
risks related to fluctuations in foreign currency exchange rates;
risks related to fluctuations in our tax obligations and effective tax rate, including as a result of earnings and losses
generated from our global operations;
risks related to our ability to execute on, and maintain the success of, our strategic and growth initiatives, including
those outlined in our Always Forward Plan;
risks related to global operations, including changes in the economic or political conditions where we sell or source our
products or changes in import tariffs or trade restrictions;
risks and uncertainty related to adverse public health developments;
risks related to cybersecurity threats and privacy or data security breaches;
risks related to the potential loss or disruption of our information systems;
risks related to the continued validity of our trademarks and our ability to protect our intellectual property;
risks associated with climate change and other corporate responsibility issues;
risks related to reputational harm to the Company, its officers, and directors;
risks related to actual or threatened litigation; and
uncertainties related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing
legislation.
In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should
not be regarded as a representation by us, or any other person, that our objectives will be achieved. The forward-looking
statements included herein are based on information presently available to our management and speak only as of the date on
which such statements are made. Except as may be required by applicable law, we assume no obligation to publicly update or
revise our forward-looking statements, including any financial targets and estimates, whether as a result of new information,
future events, or otherwise. As used herein, “Abercrombie & Fitch Co.,” “the Company,” “we,” “us,” “our,” and similar terms
include Abercrombie & Fitch Co. and its subsidiaries, unless the context indicates otherwise.
Abercrombie & Fitch Co.
3
2023 Form 10-K
Table of Contents
PART I
Item 1. Business
GENERAL
Abercrombie & Fitch Co. (“A&F”), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and its
subsidiaries are referred to as the “Company”), is a global, digitally-led omnichannel retailer. The Company offers a broad
assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its
Company-owned stores and digital channels, as well as through various third-party arrangements.
During the second quarter of Fiscal 2023, to leverage the knowledge and experience of our regional teams to drive brand growth,
the Company reorganized its structure and now primarily manages its business on a geographic basis, consisting of three
reportable segments: Americas; Europe, the Middle East and Africa (EMEA); and Asia-Pacific (APAC). Corporate functions and
other income and expenses are evaluated on a consolidated basis and are not allocated to the Company’s segments, and
therefore are included as a reconciling item between segment and total operating income (loss). There was no impact on
consolidated net sales, operating income (loss) or net income (loss) as a result of these changes. All prior periods presented are
recast to conform to the new segment presentation.
The Company’s brands include Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister
brands, which includes Hollister and Gilly Hicks. These brands share a commitment to offering unique products of enduring
quality and exceptional comfort that allow customers around the world to express their own individuality and style.
The Company’s fiscal year ends on the Saturday closest to January 31. This typically results in a fifty-two-week year, but
occasionally gives rise to an additional week, resulting in a fifty-three-week year, as is the case in Fiscal 2023. Fiscal years are
designated in the Consolidated Financial Statements and Notes thereto, as well as the remainder of this Annual Report on Form
10-K, by the calendar year in which the fiscal year commenced. All references herein to the Company’s fiscal years are as
follows:
Fiscal year
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Year ended / ending
Number of weeks
January 29, 2022
January 28, 2023
February 3, 2024
February 1, 2025
52
52
53
52
For additional information about the Company’s business, see “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” as well as “ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA,” of this Annual Report on Form 10-K.
Abercrombie & Fitch Co.
4
2023 Form 10-K
Table of Contents
SEGMENT AND BRAND INFORMATION
The Company determines its segments after taking into consideration a variety of factors, including its organizational structure
and the basis that it uses to allocate resources and assess performance. The Company manages its business on a geographic
basis, consisting of three reportable segments: Americas; Europe, the Middle East and Africa (EMEA); and Asia-Pacific (APAC).
The Company’s segments are as follows:
Region
Americas
EMEA
APAC
Description
The Americas segment includes operations in North America and South America
The EMEA segment includes operations in Europe, the Middle East and Africa
The APAC segment includes operations in the Asia-Pacific region, including Asia and Oceania.
The Company’s brands include Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids and Hollister
brands, which includes Hollister and Gilly Hicks.
Brand
Abercrombie brands
Description
Abercrombie & Fitch believes that every day should feel as exceptional as the start of the long weekend. Since 1892,
the brand has been a specialty retailer of quality apparel, outerwear and fragrance - designed to inspire
our global customers to feel confident, be comfortable and face their Fierce.
abercrombie kids is a global specialty retailer of quality, comfortable, made-to-play favorites. abercrombie kids sees
the world through kids’ eyes and believe kids should feel exceptional every single day.
Hollister brands
The quintessential apparel brand of the global teen consumer, Hollister Co. creates clothes made for capturing
moments, creating memories and being unapologetically you.
At Gilly Hicks, we believe in energizing our minds, moods and bodies through movement every day. That's why we
offer active lifestyle products to help customers create happiness through movement.
Additional information concerning the Company’s segment and geographic information is contained in Note 17, “SEGMENT
REPORTING” of the Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
STRATEGY AND KEY BUSINESS PRIORITIES
The Company remains committed to, and confident in, its vision of being a global, digitally-led, omnichannel apparel retailer and
continues to evaluate opportunities and initiatives that support this vision as outlined in its 2025 Always Forward Plan, which was
announced during the second quarter of Fiscal 2022. While we have successfully executed certain goals in our 2025 Always
Forward Plan, we plan to continue to focus on achieving sustainable performance results and on achieving other strategic goals
outlined in the 2025 Always Forward Plan.
2025 Always Forward Plan
In June of Fiscal 2022, we announced our 2025 Always Forward Plan, which outlines our long-term strategy and goals, including
growing shareholder value. The 2025 Always Forward Plan is anchored on our strategic growth principles, which are to:
•
•
•
Execute focused growth plans;
Accelerate an enterprise-wide digital revolution; and
Operate with financial discipline
The 2025 Always Forward Plan growth principles serve as a framework for the Company achieving sustainable and profitable
growth and profitability in Fiscal 2024. Below are some additional details specific to Fiscal 2024 objectives within the 2025
Always Forward Plan:
Execute focused growth plans by:
•
•
•
driving sales growth across regions and brands primarily through marketing and store investment.
using our playbooks globally to align the brands’ products, voices, and experiences with customers, both digitally and in-
store; and
using testing and chase strategies to deliver compelling assortments and product collections across genders.
Accelerate an enterprise-wide digital revolution to improve the customer and associate experience by:
•
•
continuing to progress on our multi-year enterprise resource planning (“ERP”) transformation and cloud migration
journey; and
investing in digital and technology to improve experiences across key parts of the customer journey while delivering a
consistent omnichannel experience.
Operate with financial discipline by:
•
•
actively managing inventory levels and positioning Abercrombie brands and Hollister brands to chase inventory as
appropriate throughout the year; and
funding our growth strategies while properly balancing investments, impacts of inflation and efficiency efforts.
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
OVERVIEW OF OPERATIONS
Omnichannel Initiatives
As customer shopping preferences continue to shift and customers increasingly shop across multiple channels, the Company
aims to create best-in-class customer experiences and grow total company profitability by delivering improvements through a
continuous test-and-learn approach. During the COVID-19 pandemic, the Company experienced an acceleration in sales fulfilled
through digital channels, and continues to see a majority of sales though digital channels for the Abercrombie & Fitch brand.
Despite, this acceleration in the shift towards digital channels, stores continue to comprise a majority of sales for the Hollister
brands customer. Additionally, stores continue to be an important part of our customers’ omnichannel experience. The Company
believes that the customers’ shopping experience is improved by its offering of omnichannel capabilities, which include:
•
•
•
•
•
•
•
Purchase-Online-Pickup-in-Store, allowing customers to purchase merchandise through one of the Company’s websites
or mobile apps and pick-up the merchandise in store, which often drives incremental in-store sales;
Curbside pickup at a majority of U.S. locations;
Same-day delivery service across its entire U.S. store fleet. Each brand’s website features a “Get It Fast” filter to easily
find products that are available, or shoppers can choose the same-day delivery option for available items at checkout;
Order-in-Store, allowing customers to shop the brands’ in-store and online offerings while in-store;
Reserve-in-Store, allowing customers to reserve merchandise online and try it on in-store before purchasing;
Ship-from-Store, which allows the Company to ship in-store merchandise to customers and increases inventory
productivity; and
Cross-channel returns, allowing customers to return merchandise purchased through one channel to a different
channel.
The Company also believes that its loyalty programs, Abercrombie’s myAbercrombie®, and Hollister’s Hollister House Rewards®,
are important enablers of its omnichannel strategy as the Company aims to seamlessly interact and connect with customers
across all touchpoints through members-only offers, items and experiences. Under these programs, customers accumulate
points primarily based on purchase activity and earn rewards as points are converted at certain thresholds. These rewards can
be redeemed for merchandise discounts either in-store or online. The loyalty programs continue to provide timely customer
insights and personalization opportunities, and the Company believes these programs contribute to higher average transaction
value.
Digital Operations
In order to create a more seamless and consistent shopping experience for its customers, the Company continues to invest in its
digital infrastructure. including through the multi-year process of upgrading our merchandising ERP system. The Company has
the capability to ship merchandise to customers in more than 111 countries and process transactions in 21 currencies and
through 22 forms of payment globally. The Company operates desktop and mobile websites for its brands globally, which are
available in various local languages, and three mobile apps. The Company continues to develop and invest its mobile capabilities
as mobile engagement continues to grow, with over 86% of the Company’s digital traffic generated from mobile devices in Fiscal
2023. In addition, in its efforts to expand its global brand reach, the Company also partners with certain third-party e-commerce
platforms.
Store Operations
The Company has a goal of finding the right size, right location and right economics for omni-enabled stores that cater to local
customers. During Fiscal 2023, the Company opened 35 new store locations, remodeled thirteen store locations, right-sized an
additional nine store locations and closed 32 stores. The Company’s stores continue to play an essential role in creating brand
awareness and serving as physical gateways to the brands. Stores also serve as local hubs for online engagement as the
Company continues to grow its omnichannel capabilities to create seamless shopping experiences.
As of February 3, 2024, all of the retail stores operated by the Company are located in leased facilities, primarily in shopping
centers. These leases generally have initial terms of between one and ten years. Certain leases also include early termination
options, which can be exercised under specific conditions. The leases expire at various dates between Fiscal 2024 and Fiscal
2034.
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As of February 3, 2024, the Company operated 765 retail stores as detailed in the table below:
Americas (1)
EMEA (2)
APAC (3)
Total
Abercrombie (4)
Hollister (5)
Total (6)
194
29
24
247
384
108
26
518
578
137
50
765
(1)
(2)
(3)
(4)
(5)
(6)
The Americas segment includes the results of operations in North America and South America.
The EMEA segment includes the results of operations in Europe, the Middle East and Africa.
The APAC segment includes the results of operations in the Asia-Pacific region, including Asia and Oceania.
Abercrombie brands includes Abercrombie & Fitch and abercrombie kids.
Hollister brands includes Hollister and Gilly Hicks.
Store count excludes temporary and international franchise stores.
For store count and gross square footage by geographic region and brand as of February 3, 2024 , and January 28, 2023, refer
to “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.”
Third-Party Operations
The Company seeks to expand its global brand reach, create brand awareness and develop local presence through various
wholesale, franchise, and licensing arrangements. As of February 3, 2024, the Company had 14 wholesale partnerships,
primarily internationally. As of February 3, 2024, the Company’s franchisees operated 40 international franchise stores across the
Company’s brands primarily located within the Americas and EMEA regions in certain jurisdictions where the Company does not
operate its own stores.
SOURCING OF MERCHANDISE INVENTORY
The Company works with its network of third-party vendors to supply compelling, high-quality product assortments to its
customers. These vendors are expected to operate in compliance with the laws of their respective countries and all other
applicable laws, rules, and regulations and have committed to follow the standards set forth in the Company’s Vendor Code of
Conduct, regarding human rights, labor rights, environmental responsibility, and workplace safety.
The Company sourced merchandise through approximately 130 vendors located in 17 countries, including the U.S., during Fiscal
2023. The Company’s largest vendor accounted for approximately 11% of merchandise sourced in Fiscal 2023, based on the
cost of sourced merchandise. The Company believes its product sourcing is appropriately distributed among vendors.
Refer to Note 5, “INVENTORIES,” of the Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K for a summary of inventory sourced based
on vendor location and dollar cost of merchandise receipts during Fiscal 2023.
DISTRIBUTION OF MERCHANDISE INVENTORY
The Company’s distribution network is built to deliver inventory to Company-operated and global franchise stores and fulfill digital
and wholesale orders with speed and efficiency. Generally, merchandise is shipped directly from vendors to the Company’s
distribution centers, where it is received and inspected before being shipped to the Company’s stores or its digital or wholesale
customers.
The Company relies on both Company-owned and third-party distribution centers to manage the receipt, storage, sorting,
packing and distribution of its merchandise. Additional information pertaining to certain of the Company’s distribution centers as
of February 3, 2024 follows:
Location
New Albany, Ohio (Primarily serves store and digital operations)
New Albany, Ohio (Serves only digital operations)
Bergen op Zoom, Netherlands
Shanghai, China
Goodyear, Arizona (Serves only digital operations)
Company-owned or third-party
Company-owned
Company-owned
Third-party
Third-party
Third-party
The Company primarily used six contract carriers to ship merchandise and related materials to its North American customers,
and several contract carriers for its global customers during Fiscal 2023.
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COMPETITION
The Company operates in a rapidly evolving and highly competitive retail business environment. Competitors include: individual
and chain specialty apparel retailers; local, regional, national and global department stores; discount stores; and digitally-native
brands and online-exclusive businesses. Additionally, the Company competes for consumers’ discretionary spending with
businesses in other product and experiential categories such as technology, restaurants, travel and media content.
The Company competes primarily on the basis of differentiating its brands from those of its competition through product,
providing high quality and newness; brand voice, amplifying and consolidating brand messaging; and experience, investing in
immersive, participatory omnichannel shopping environments.
Operating in a highly competitive industry environment can cause the Company to engage in greater than expected promotional
activity, which would result in pressure on average unit retail and gross profit. Refer to “ITEM 1A. RISK FACTORS - Our failure to
operate effectively in a highly competitive and constantly evolving industry could have a material adverse impact on our
business” of this Annual Report on Form 10-K for further discussion of the potential impacts competition may have on the
Company.
SEASONAL BUSINESS
Historically, the Company’s operations have been seasonal in nature and consist of two principal selling seasons: the spring
season, which includes the first and second fiscal quarters (“Spring”) and the fall season, which includes the third and fourth
fiscal quarters (“Fall”). Due to the seasonal nature of the retail apparel industry, the results of operations for any current period
are not necessarily indicative of the results expected for the full fiscal year and the Company could have significant fluctuations in
certain asset and liability accounts. The Company historically experiences its greatest sales activity during the Fall season due to
back-to-school and holiday sales periods, respectively. Refer to “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of this Annual Report on Form 10-K for further discussion.
TRADEMARKS
The trademarks Abercrombie & Fitch®, abercrombie®, Hollister®, Gilly Hicks®, and the “Moose” and “Seagull” logos are registered
with the U.S. Patent and Trademark Office and registered, or the Company has applications for registration pending, with the
registries of countries in key markets within the Company’s sales and distribution channels. In addition, these trademarks are
either registered, or the Company has applications for registration pending, with the registries of many of the foreign countries in
which the manufacturers of the Company’s products are located. The Company has also registered, or has applied to register,
certain other trademarks in the U.S. and around the world. The Company believes its products are identified by its trademarks
and, therefore, its trademarks are of significant value. Each registered trademark has a duration of 10 to 20 years, depending on
the date it was registered, and the country in which it is registered, and is subject to an indefinite number of renewals for a like
period upon continued use and appropriate application. The Company intends to continue using its core trademarks and to timely
renew each of its registered trademarks that remain in use.
INFORMATION TECHNOLOGY SYSTEMS
The Company’s owned and third-party-operated management information technology systems consist of a full range of retail,
merchandising, human resource and financial systems. These systems include applications related to point-of-sale, digital
operations, inventory management, supply chain, planning, sourcing, merchandising, payroll, scheduling and financial reporting.
The Company continues to invest in technology to upgrade its core systems, including its merchandising ERP system, to
enhance reporting and analytics, create efficiencies and to support its digital operations, omnichannel capabilities, customer
relationship management tools and loyalty programs.
WORKING CAPITAL
Refer to “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS” of this Annual Report on Form 10-K for a discussion of the Company’s cash requirements and sources of cash
available for working capital needs and investment opportunities.
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HUMAN CAPITAL MANAGEMENT
The Company strives to create a culture that drives strategic and key business priorities forward, while is also welcoming,
inclusive, and diverse, and encourages associates to create a positive impact in their global communities. The Company
believes that the strength of its unique culture is a competitive advantage, and intends to continue building upon that culture to
improve performance across its business.
Therefore, the Company believes that the attraction, retention, and management of qualified talent representing diverse
backgrounds, experiences, and skill sets - and fostering a diverse, equitable, and inclusive work environment - are integral to its
success. The Company also has policies and practices in place that are focused on creating a culture and work environment
free from abuse, harassment or discrimination of any kind. Highlights of our key human capital management programs and
efforts include the following:
•
•
•
•
•
•
•
Living a corporate purpose of “Being here for you on the journey to being and becoming who you are.” The
Company’s corporate purpose was developed after conducting listening sessions with its associates and its customers,
and by weaving in key themes from each of the brand purposes.
Offering competitive compensation and benefits, to help the Company attract, motivate, and retain the key talent
necessary to achieve outstanding business and financial results. The Company’s compensation offerings include cash-
based and equity-based incentive awards in order to align the interests of associates and stockholders. In addition, the
Company continues to evolve its approach to work flexibility, including supporting remote work arrangements for key
roles and “work from anywhere days and weeks” for our corporate home office associates where feasible. We also
support our associates and their families beyond our competitive compensation with comprehensive benefits offerings,
providing eligible associates with paid parental leave in the United States and internationally based on local law, as well
as adoption and fertility support benefits to all eligible associates globally.
Improving associate engagement through open communication channels with a focus on development. The
Company regularly holds all-company meetings to communicate with its associates. The Company also collects
feedback through various engagement surveys to better understand associate experience and drive improvements, with
the most recent organization-wide survey conducted in July 2023.
Fostering associate development by providing a wide variety of growth and development opportunities throughout
associates’ careers. This includes stretch assignments, internal career pathing, self-awareness exercises, and active
coaching. The Company also uses leadership standards to help associates identify the core behaviors essential for their
career growth, as well as personal growth, on their journey at the Company. Resources in support of these efforts
include the Company’s internal job board, which empowers associates to apply for open roles and/or to seek
advancement opportunities within the Company.
Embracing inclusion and diversity in all forms, including gender, race, ethnicity, disability, nationality, religion, age,
veteran status, LGBTQIA+ status, and other factors. The Company regularly reviews metrics including representation,
retention, pay, and promotion among associates from diverse backgrounds, including those in leadership positions. The
Company also encourages associates to enhance their understanding of inclusion and diversity through participating in
the Company’s various associate resource groups, which allow associates from different business functions around the
world to have discussions, attend activities, and receive materials focused on allyship, community, celebration, and
education. Additionally, the Company invests in inclusion and diversity learning and development opportunities for
associates on topics relating to the fundamentals of inclusion and diversity, including trainings, learning sessions, and
workshops.
Encouraging community involvement of its associates by promoting various charitable, philanthropic, and social
awareness programs, which the Company believes fosters a collaborative and rewarding work environment. The
Company provides support to global organizations in the form of cash donations, volunteerism and in-kind support. In
partnership with its vendor partners, customers and associates, the Company is proud to support community partners
serving youth, teens, and young adults with a focus on mental health and wellness, empowerment, and inclusion and
diversity. The Company offers its associates a paid volunteer day each year for eligible volunteer work.
Focusing on the health and safety of its associates by investing in various wellness programs that are designed to
enhance the physical, financial, and mental well-being of its associates globally. The Company provides benefits-eligible
associates and their families with access to free and confidential counseling through our Employee Assistance Program,
as well as free access to Headspace, a mediation and mindfulness app. The Company also provides regular
programming on financial planning and mental health.
Associates
The Company employed approximately 31,700 associates globally as of February 3, 2024, of whom approximately 25,000 were
part-time associates. As of February 3, 2024, the Company employed approximately 25,200 associates in the U.S., and
employed approximately 6,500 associates outside of the U.S. The Company employs temporary, seasonal associates at times,
particularly during Fall, when it experiences its greatest sales activity due to back-to-school and holiday sales periods.
The proportion of associates represented by works councils and unions is not significant and is generally limited to associates in
the Company’s European stores.
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Board Oversight
A&F’s Board of Directors (the “Board of Directors”) and its committees oversee human capital issues. The Compensation and
Human Capital Committee of the Board of Directors oversees the Company’s overall compensation structure, policies and
programs, as well as administration of our cash-based and equity-based performance award programs. Members of the Board of
Directors also review succession plans for the Company’s executive officers and discuss with senior leadership the Company’s
human capital management strategies, programs, policies and practices, including those relating to organizational structure and
key reporting relationships, along with development of strategies and practices relating to recruitment, retention and development
of the Company’s associates as needed. Additionally, the Environmental, Social and Governance Committee of the Board of
Directors oversees the Company’s strategies, policies and practices regarding social issues and trends, including inclusion and
diversity initiatives, health and safety, and philanthropy and community investment matters.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The Company’s executive officers serve at the pleasure of the Board of Directors. Set forth below is certain information regarding
the executive officers of the Company as of April 1, 2024:
Fran Horowitz, Chief Executive Officer and Director
Age: 60
Executive Roles:
• Chief Executive Officer, and member of the Board of Directors of the Company (February 2017 to present)
• Former President and Chief Merchandising Officer for all brands of the Company (December 2015 to February
2017), former member of the Office of the Chairman of the Company (December 2014 to February 2017) and
former Brand President of Hollister (October 2014 to December 2015)
• Former President of Ann Taylor Loft, at that time a division of ANN Inc. (October 2013 to October 2014)
• Formerly held various roles at Express, Inc., a specialty apparel and accessories retailer of women’s and men’s
merchandise (February 2005 to November 2012), including Executive Vice President of Women’s Merchandising
and Design (May 2010 to November 2012)
• Formerly held various merchandising roles at Bloomingdale’s and various positions at Bergdorf Goodman, Bonwit
Teller and Saks Fifth Avenue
Other Leadership Roles:
• Member of the Board of Directors of Conagra Brands, Inc. (NYSE: CAG), one of North America’s leading branded
food companies (July 2021 to present)
• Member of the Board of Directors of Chief Executives for Corporate Purpose (CECP), a CEO-led coalition that
helps companies transform their social strategy by providing customized resources (October 2019 to present)
Scott D. Lipesky, Executive Vice President, Chief Financial Officer and Chief Operating Officer
Age: 49
Executive Roles:
• Executive Vice President, Chief Financial Officer and Chief Operating Officer of the Company (May 2023 to
present)
• Executive Vice President and Chief Financial Officer of the Company (April 2021 to May 2023)
• Senior Vice President and Chief Financial Officer of the Company (October 2017 to April 2021)
• Prior to rejoining the Company, formerly served as Chief Financial Officer of American Signature, Inc., a privately-
held home furnishings company (October 2016 to October 2017)
• Formerly held various leadership roles and finance positions with the Company (November 2007 to October 2016)
including: Chief Financial Officer, Hollister Brand (September 2014 to October 2016); Vice President, Merchandise
Finance (March 2013 to September 2014); Vice President, Financial Planning and Analysis (November 2012 to
March 2013); and Senior Director, Financial Planning and Analysis (November 2010 to November 2012)
• Former Corporate Finance Director with FTI Consulting Inc., a global financial services advisory firm
• Former Director of Corporate Business Development with The Goodyear Tire & Rubber Company
• Formerly held position as a Certified Public Accountant with PricewaterhouseCoopers LLP
Samir Desai, Executive Vice President, Chief Digital and Technology Officer
Age: 43
Executive Roles:
• Executive Vice President, Chief Digital and Technology Officer of the Company (July 2021 to present)
• Formerly held various leadership and technology positions at Equinox Group, a luxury fitness company that
operates several lifestyle brands (October 2005 to June 2021), including: Chief Technology Officer (April 2016 to
June 2021), Vice President, Technology (April 2013 to April 2016), Senior Director Technology (April 2011 to April
2013), Director Technology (October 2005 to April 2011)
• Formerly held technology roles at Intertex Apparel Group, a manufacturer and importer of branded and private
label apparel (July 2002 to October 2005), including Director, Information Technology
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Gregory J. Henchel, Executive Vice President, General Counsel and Corporate Secretary
Age: 56
Executive Roles:
• Executive Vice President, General Counsel and Corporate Secretary of the Company (October 2021 to present)
• Senior Vice President, General Counsel and Corporate Secretary of the Company (October 2018 to October 2021)
• Former Executive Vice President, Chief Legal Officer and Secretary of HSN, Inc., a $3+ billion multi-channel
retailer (February 2010 to December 2017)
• Former Senior Vice President and General Counsel of Tween Brands, Inc., a specialty retailer (October 2005 to
February 2010) and Secretary (August 2008 to February 2010)
• Formerly held various roles at Cardinal Health, Inc., a global medical device, pharmaceutical and healthcare
technology company, including Assistant General Counsel (2001 to October 2005), and Senior Litigation Counsel
(May 1998 to 2001)
• Formerly held position as a litigation associate with the law firm of Jones Day (September 1993 to May 1998)
Jay Rust, Executive Vice President, Global Human Resources
Age: 37
Executive Roles:
• Executive Vice President, Global Human Resources of the Company (May 2023 to present)
• Senior Vice President, Global Human Resources of the Company (March 2022 to May 2023)
• Group Vice President, Interim Head of Global Human Resources of the Company (October 2021 to March 2022)
• Vice President, Human Resources of the Company (June 2019 to October 2021)
• Formerly held various leadership roles of increasing responsibility in the Company’s human resources department
since February 2013, including roles supporting employee relations, learning and development, talent acquisition,
and other human resources functions
• Formerly held roles in the Company’s merchandising department
GOVERNMENT REGULATIONS
As a global organization, the Company is subject to the laws and regulations of the U.S. and multiple foreign jurisdictions in
which it operates. These laws and regulations include, but are not limited to: trade, transportation and logistic laws, including
tariffs and import and export regulations; tax laws and regulations; product and consumer safety laws; anti-bribery and corruption
laws; employment and labor laws; antitrust or competition laws; data privacy laws; and environmental regulations.
Laws and regulations have had, and may continue to have, a material impact on the Company’s operations as described further
within “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" of this Annual Report on Form 10-K.
Refer to “ITEM 1A. RISK FACTORS,” of this Annual Report on Form 10-K for a discussion of the potential impacts regulatory
matters may have on the Company in the future, including those related to environmental matters. Compliance with government
laws and regulations has not had a material effect on the Company’s capital expenditures, earnings or competitive position.
OTHER INFORMATION
A&F makes available free of charge on its website, corporate.abercrombie.com, under the “Investors – Financials/SEC Filings”
section, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), as soon as reasonably practicable after A&F electronically files such material with, or furnishes it to, the
Securities and Exchange Commission (the “SEC”). A&F also makes available free of charge in the same section of its website its
definitive proxy materials filed pursuant to Section 14 of the Exchange Act, as soon as reasonably practicable after A&F
electronically files such proxy materials with the SEC. The SEC maintains a website that contains electronic filings by A&F and
other issuers at www.sec.gov.
A&F has included certain of its website addresses throughout this filing as textual references only. Information on the A&F
websites shall not be deemed incorporated by reference into, and do not form any part of, this Annual report on Form 10-K or
any other report or document that A&F files with or furnishes to the SEC.
Abercrombie & Fitch Co.
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Item 1A. Risk Factors
Investing in our securities involves risk. The following risk factors should be read carefully in connection with evaluating our
business and the forward-looking statements contained in this Annual Report on Form 10-K. Any of these risk factors could lead
to material adverse effects on our business, operating results and financial condition. Additional risks and uncertainties not
currently known to us or that we currently do not view as material may also become materially adverse to our business in future
periods or if circumstances change.
MACROECONOMIC AND INDUSTRY RISKS.
Failure to engage our customers, anticipate customer demand and changing fashion trends, and manage our inventory
commensurately could have a material adverse impact on our business.
Our success largely depends on our ability to anticipate and gauge the fashion preferences of our customers and provide
merchandise that satisfies constantly shifting demands in a timely manner. Because we may enter into agreements for the
manufacture and purchase of merchandise well in advance of the applicable selling season, we are vulnerable to changes in
consumer preferences and demand, pricing shifts, and the sub-optimal selection and timing of merchandise purchases.
Moreover, there can be no assurance that we will continue to anticipate consumer demands and macroeconomic events or to be
successful in accurately planning inventory in the future. Changing consumer preferences and fashion trends, and our ability to
anticipate, identify and swiftly respond to them, could adversely impact our sales. Inventory levels for certain merchandise styles
no longer considered to be “on trend” may increase, leading to higher markdowns to sell through excess inventory and,
therefore, lower than planned margins. Conversely, if we underestimate consumer demand for our merchandise, or if our
manufacturers fail to supply quality products in a timely manner, we may experience inventory shortages that we cannot
adequately mitigate through expedited inventory production and delivery, which may negatively impact customer relationships,
diminish brand loyalty and result in lost sales.
We could also be at a competitive disadvantage if we are unable to effectively leverage data analytics to retrieve timely, customer
insights to appropriately respond to customer demands and improve customer engagement through efforts such as marketing
activities. Any of these events could significantly harm our operating results and financial condition.
We are also vulnerable to factors affecting inventory flow and availability of inventory. Impacts may be caused by natural
disasters, unanticipated climate patterns and events, or inventory shrinkage due to theft (including by our employees, customers,
or through organized retail crime). Such events may significantly impact anticipated customer demand or may impact availability
of our inventory. If we are not able to adjust appropriately to such factors, our inventory management may be negatively affected,
which could adversely impact our performance and our reputation.
Our failure to operate effectively in a highly competitive and constantly evolving industry could have a material adverse impact on
our business.
The sale of apparel, personal care products and accessories for men, women and kids is a highly competitive business with
numerous participants, including individual and chain specialty apparel retailers, local, regional, national and global department
stores, discount stores and online-exclusive businesses. Proliferation of the digital channel within the last few years has
encouraged the entry of many new competitors and an increase in competition from established companies. These increases in
competition could reduce our ability to retain and grow sales, resulting in an adverse impact to our operating results and
business.
We face a variety of challenges in the highly competitive and constantly evolving retail industry, including:
Anticipating and responding to changing consumer shopping preferences more quickly than our competitors;
•
• Maintaining favorable brand recognition;
•
Effectively marketing our products to consumers across diverse demographic markets, including through social media
platforms which have become increasingly important in order to stay connected to our customers, as our digital sales
penetration has increased. Individual country laws and regulations governing the use and availability of these social
media platforms continue to evolve, and if we are unable to effectively use social media platforms as marketing tools our
ability to retain or acquire customers and our financial condition may suffer;
Retaining customers, including our loyalty club members, and the resulting increased marketing costs to acquire new
customers;
Developing innovative, high-quality merchandise in styles that appeal to consumers and in ways that favorably distinguish
us from our competitors;
Countering the pricing and promotional activities of our competitors without diminishing the aspirational nature of our
brands and brand equity; and
•
•
•
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2023 Form 10-K
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•
Identifying and assessing disruptive innovation, by existing or new competitors, that could alter the competitive landscape
by: improving the customer experience and heightening customer expectations; transforming supply chain and corporate
operations through digital technologies and artificial intelligence; and enhancing management decision-making through
use of data analytics to develop new, consumer insights.
In light of the competitive challenges we face, we may not be able to compete successfully in the future.
Changes in global economic and financial conditions, including the impact on consumer confidence and spending, could have a
material adverse impact on our business.
Uncertainty as to, and the state of, the global economy and global financial condition could have an adverse effect on our
operating results and business. Our business is subject to factors that are impacted by worldwide economic conditions, including
heightened inflation levels (which has occurred), unemployment levels, consumer credit availability, consumer debt levels,
reductions in consumer net worth based on declines in the financial, residential real estate and mortgage markets, bank failures,
sales and personal income tax rates, fuel and energy prices, global food supplies, interest rates, consumer confidence in future
economic and political conditions, consumer perceptions of personal well-being and security, the value of the U.S. dollar versus
foreign currencies, geopolitical conflicts, and other macroeconomic factors. Changes in global economic and financial conditions
could impact our ability to fund growth and our ability to access external financing in the credit and capital markets.
In addition, our business depends on consumer demand for our merchandise. Consumer confidence and discretionary spending
habits, including purchases of our merchandise, can be adversely impacted by recessionary periods, inflation and other
macroeconomic conditions adversely impacting levels of disposable income. We may not be able to accurately anticipate or
predict consumer demand and behavior, such as taste and purchasing trends, in response to adverse economic conditions,
which could result in lower sales, excess inventories and increased mark-downs, all of which could negatively impact our ability
to achieve or maintain profitability. In the event that the U.S. and global economy worsens, or if there is a decline in consumer
spending levels or other unfavorable conditions, we could experience lower than expected revenues, which could force us to
delay or slow the implementation of our growth strategies and adversely impact our results of operations.
The economic conditions and factors described above could adversely impact our results of operations, liquidity and capital
resources, and may exacerbate other risks within this section of “ITEM 1A. RISK FACTORS”.
The impact of war, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience could have a material
adverse impact on our business.
In the past, the impact of war, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience and the
associated heightened security measures taken in response to these events have disrupted commerce. Further events of this
nature, domestic or abroad, including international and domestic unrest and the ongoing conflicts between Russia and Ukraine or
Israel and Hamas and the surrounding areas, may disrupt commerce and undermine consumer confidence and consumer
spending by causing a decline in traffic, store closures and a decrease in digital demand adversely affecting our operating
results.
Furthermore, the existence or threat of any other unforeseen interruption of commerce, including as a result of geopolitical or
armed conflict and the possible interference with international trade, supplier deliveries or freight costs, could negatively impact
our business by interfering with the availability of raw materials or our ability to obtain merchandise from foreign manufacturers.
With a substantial portion of our merchandise being imported from foreign countries, failure to obtain merchandise from our
foreign manufacturers or substitute other manufacturers, at similar costs and in a timely manner, could adversely affect our
operating results and financial condition.
Fluctuations in foreign currency exchange rates and our ability to mitigate the effects of such volatility could have a material
adverse impact on our business.
Due to our global operations, we are exposed to foreign currency exchange rate risk with respect to our sales, profits, assets and
liabilities denominated in currencies other than the U.S. dollar. In addition, certain of our subsidiaries transact in currencies other
than their functional currency, including intercompany transactions, which results in foreign currency transaction gains or losses.
Furthermore, we purchase substantially all of our inventory in U.S. dollars. As a result, our sales, gross profit and gross profit rate
from global operations will be negatively impacted during periods of a strengthened U.S. dollar relative to the functional
currencies of our foreign subsidiaries. Additionally, changes in the effectiveness of our hedging instruments may negatively
impact our ability to mitigate the risks associated with fluctuations in foreign currency exchange rates. For example, changes in
inventory purchase assumptions have resulted in changes in the effectiveness to certain of our hedging instruments, and we
could see similar impacts in future periods.
Fluctuations in foreign currency exchange rates could adversely impact consumer spending, delay or prevent successful
penetration into new markets or adversely affect the profitability of our global operations. Certain events, such as the conflicts
between Russia and Ukraine or Israel and Hamas and the surrounding areas, uncertainty with respect to trade policies, tariffs
and government regulations and actions affecting trade between the U.S. and other countries, have increased global economic
and political uncertainty in recent years and could result in volatility of foreign currency exchange rates as these events develop.
Abercrombie & Fitch Co.
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Our ability to attract customers to our stores depends, in part, on the success of the shopping malls or area attractions that our
stores are located in or around.
Our stores are primarily located in shopping malls and other shopping centers. Our sales at these stores, as well as sales at our
flagship locations, are partially dependent upon the volume of traffic in those shopping centers and the surrounding area which,
for some centers, has been in decline. Our stores may benefit from the ability of a shopping center’s other tenants and area
attractions to generate consumer traffic in the vicinity of our stores and the continuing popularity of the shopping center. We
cannot control the loss of a significant tenant in a shopping mall or area attraction, the development of new shopping malls in the
U.S. or around the world, the availability or cost of appropriate locations or the success of individual shopping malls and there is
competition with other retailers for prominent locations.
All of these factors may impact our ability to meet our productivity or our growth objectives for our stores and could have a
material adverse impact on our financial condition or results of operations. Part of our future growth is dependent on our ability to
operate stores in desirable locations, with capital investment and lease costs providing the opportunity to earn a reasonable
return. We cannot be sure when or whether such desirable locations will become available at reasonable costs.
The impact of natural disasters, negative climate patterns, public health crises, political crises and other unexpected and
catastrophic events could result in interruptions to our operations, as well as to the operations of our third-party partners, and
have a material adverse impact on our business..
Our retail stores, corporate offices, distribution centers, infrastructure projects and digital operations, as well as the operations of
our vendors and manufacturers, are vulnerable to disruption from natural disasters, such as hurricanes, tornadoes, floods,
earthquakes, extreme cold events and other adverse weather events; negative climate patterns, such as those in domestic and
global water-stressed regions; public health crises, such as pandemics and epidemics; political crises, such as terrorists attacks,
war, labor, unrest and other political instability; significant power interruptions or outages; and other unexpected, catastrophic
events. These events could disrupt the operations of our corporate offices, global stores and supply chain and those of our third-
party partners, including our vendors and manufacturers. In addition to immediate impacts on global operations, these events
could result in a reduction in the availability and quality, and as a result pricing volatility of, raw materials used to manufacture our
merchandise, delays in merchandise fulfillment and deliveries, loss of customers and revenues due to store closures and inability
to respond to customer demand, increased costs to meet consumer demand (which we may not be able to pass on to
customers), reduced consumer confidence or changes in consumers’ discretionary spending habits.
Other factors that would negatively impact our ability to successfully operate due to the impact of natural disasters, negative
climate patterns, public health crises, political crises, significant power interruptions or outages, and other unexpected,
catastrophic events and other unexpected and other catastrophic events include, but are not limited to:
•
•
•
•
•
•
•
Supply chain delays due to closed or reduced capacity for trade routes and factories, reduced workforces, or scarcity of
raw materials;
Physical losses to our stores, distribution centers or offices that may incur costs that exceed our applicable insurance
coverage for any necessary repairs to damages or business disruptions caused by natural disasters or other
unexpected and catastrophic events;
Our ability to keep our stores open if there are severe weather or climate conditions, stay-at-home orders, social
distancing requirement, travel restrictions, or other concerns related to physical safety;
Our ability to attract customers to our stores, given the risks, or perceived risks, of gathering in public places;
Delays in, or our ability to complete, planned store openings on the expected terms or timing, or at all based on
shortages in labor and materials and delays in the production and delivery of materials;
Our ability to preserve liquidity to be able to take advantage of market conditions during periods of uncertainty and
instability in the global financial markets; and
Difficulty accessing debt and equity capital on attractive terms, or at all, during periods of uncertainty and instability in
the global financial markets, or a deterioration in credit and financing conditions may affect our access to capital
necessary to fund business operations or address maturing liabilities.
Historically, our operations have been seasonal, and natural disasters or unseasonable weather conditions, may diminish
demand for our seasonal merchandise and could also influence consumer preferences and fashion trends, consumer traffic and
shopping habits. In addition, to the extent natural disasters cause physical losses to our stores, distribution centers or offices, we
may incur costs that exceed our applicable insurance coverage for any necessary repairs to damages or business disruption.
Abercrombie & Fitch Co.
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STRATEGIC RISKS.
Our failure to successfully execute on our 2025 Always Forward Plan.
In 2022 we introduced our 2025 Always Forward Plan as our long-term strategic plan, as described in “ITEM 1. BUSINESS.”
While we have successfully executed certain goals in our 2025 Always Forward Plan, our continued ability to effectively execute
on and maintain the results of our 2025 Always Forward Plan is subject to various risks and uncertainties as described herein.
We believe that our 2025 Always Forward Plan will lead to long-term revenue growth and profitability, however, there is no
assurance regarding the extent to which we will realize the anticipated objectives or sustain the financial objectives, if at all, or
regarding the timing of such anticipated benefits. Our failure to realize the anticipated objectives or sustain the financial
objectives, which may be due to our inability to execute on the various elements of our 2025 Always Forward Plan, changes in
consumer demand, competition, macroeconomic conditions (including inflation), retention of key talent, and other risks described
herein, could have a material adverse effect on our business.
If the continued execution and maintenance of our 2025 Always Forward Plan is not successful, or we do not realize the full
objectives to the extent or in the timeline that we anticipate, our financial condition and reputation could be adversely affected.
Our failure to attract, retain, and effectively manage strategic partnerships with third parties.
In order to compete in this highly competitive and constantly evolving industry, at times, we may launch new concepts or brands
to expand our portfolio, or we may also enter into strategic partnerships with third parties to expand our global brand reach. Such
partnerships may include wholesale, franchise, licensing arrangements in which we license our brands and intellectual property
for use on products produced and marketed by third parties, and licensing arrangements in which we license intellectual property
from third parties. Such arrangements are subject to additional risks, including our ability to comply with obligations under license
agreements that we have with third-party licensors, the abrupt termination of such arrangements, or actions taken by third party
wholesale, franchise, or licensee partners that may materially diminish the value of our intellectual property or our brands’
reputations.
These initiatives, and others that we may engage in to respond to the highly competitive and evolving industry in which we
operate, could result in significant financial and operational investments that do not provide the anticipated benefits or desired
rates of return and there can be no guarantee that pursuing these investments or strategic partnerships will result in improved
operating results.
Our failure to optimize our global store network could have a material adverse impact on our business.
With the evolution of digital and omnichannel capabilities, customer expectations have shifted and there has been greater
pressure for a seamless omnichannel experience across all channels. As a result, global store network optimization is an
important part of our business and failure to optimize our global store network could have an adverse impact on our results of
operations.
The ability to modify existing leases, to remodel or repurpose existing locations, and to open new stores experiences requires
partnership with our landlords. If our partnerships with our landlords were to deteriorate, this could adversely affect the pace of
opening new store experiences and/or lead to an increase in store closures. In addition, if there is an increase in events such as
landlord bankruptcies, or mall foreclosures, competition between retailers could increase for remaining suitable store locations.
Pursuing the wrong opportunities and any delays, cost increases, disruptions or other uncertainties related to those opportunities
could adversely affect our results of operations. If our investments in new stores or remodeling and right-sizing existing stores do
not achieve appropriate returns, our financial condition and results of operations could be adversely affected.
Although we attempt to open new stores in prominent locations, it is possible that locations which were prominent when we
opened our stores may lose favor over time.
Our failure to realize the anticipated benefits of our recent transition to a regional-based organizational model could have a
negative impact on our business.
During the second quarter of 2023, to drive ongoing brand growth and leverage the knowledge and experience of its regional
teams, the company reorganized its structure and now primarily manages its business on a geographic basis, consisting of three
reportable segments: Americas; Europe; the Middle East and Africa (EMEA) and Asia-Pacific (APAC). As a result of our regional-
based organizational model, we have decentralized execution of our commercial strategy in each international region from our
global home office to our regional headquarters located in Shanghai, China and London, United Kingdom. Failure to realize the
anticipated benefits of our recent transition to a regional-based organizational model could have a negative impact on our
business. In addition, realization of the anticipated benefits of this new regional-based organizational model is dependent on the
effectiveness of this new operating structure.
Abercrombie & Fitch Co.
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Our inability to effectively conduct business in global markets, including as a result of legal, tax, regulatory, political and
economic risks could have a material adverse impact on our business.
We operate on a global basis and are subject to risks associated with operating in different global markets that could have a
material adverse effect on our reputation, business and results of operations if we fail to address them.
Such risks include, but are not limited to, the following:
•
•
•
addressing the different operational requirements present in each country in which we operate, including those related to
employment and labor, transportation, logistics, real estate, lease provisions and local reporting or legal requirements;
supporting global growth by successfully implementing local customer and product-facing teams and certain corporate
support functions at our regional headquarters located in Shanghai, China and London, United Kingdom;
supporting global growth by decentralizing execution of our commercial strategy authority from our global home office to
our regional headquarters located in Shanghai, China and London, United Kingdom;
hiring, training and retaining qualified personnel;
•
• maintaining good labor relations with individual associates and groups of associates;
•
avoiding work stoppages or other labor-related issues in our European stores, where some associates are represented
by workers’ councils and unions;
retaining acceptance from local customers;
•
• managing inventory effectively to meet the needs of existing stores on a timely basis;
•
political, civil and social unrest, such as the conflicts between Russia and Ukraine or Israel and Hamas and conflict in the
surrounding areas;
government regulations affecting trade between the U.S. and other countries, including tariffs and customs laws;
tax rate volatility and our ability to realize tax benefits resulting from non-U.S. operations;
•
•
• managing foreign currency exchange rate risks effectively;
•
substantial investments of time and resources in our global operations may not result in achievement of acceptable levels
of returns; for example, we recently have experienced year-over-year declines in revenues from our global operations;
and
continued and sustained declines in our global revenues could lead to store closures, restructuring costs, and impairment
losses, all of which could adversely impact our business, profitability, and results of operations.
•
We are subject to domestic laws related to global operations, including the Foreign Corrupt Practices Act, in addition to the laws
of the foreign countries in which we operate. If any of our overseas operations, or our associates or agents, violate such laws, we
could become subject to sanctions or other penalties that could negatively affect our reputation, business and operating results.
Our failure to appropriately address Environmental, Social, and Governance (ESG) matters could have a material adverse
impact on our reputation and, as a result, our business.
There is an increased focus from certain government regulators, investors, customers, associates, business partners and other
stakeholders concerning ESG matters.
The expectations related to ESG matters are rapidly evolving. The increased focus by investors and other stakeholders on the
ESG practices of publicly traded companies, like us, has included or may in the future include expanding mandatory and
voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, labor and risk oversight, and
could expand the nature, scope, and complexity of matters that we are required to control, assess and report. If we announce
certain initiatives and goals, related to ESG matters, such as those through our participation in the United Nations Global
Compact, we could fail, or be perceived to fail, to accurately set, meet or accurately report our progress on such initiatives and
goals. We could fail, or be perceived to fail, to act responsibly in our ESG efforts. In addition, we could be criticized for the speed
of adoption of such initiatives or goals, or the scope of such initiatives or goals. As a result, we could suffer negative publicity and
our reputation could be adversely impacted, which in turn could have a negative impact on investor perception and our products'
acceptance by consumers. This may also impact our ability to attract and retain talent to compete in the marketplace. In addition,
we could be criticized by ESG detractors for the scope or nature of our ESG initiatives or goals or for any revisions to these
goals. We could also be subjected to negative responses by governmental actors (such as anti-ESG legislation or retaliatory
legislative treatment) or consumers (such as boycotts or negative publicity campaigns) that could adversely affect our reputation,
results of operations, financial condition and cash flows.
There is also uncertainty regarding the implementation of laws, regulations, and policies related to ESG and global
environmental sustainability matters, including disclosure obligations and reporting on such matters, and appropriately
responding to potentially competing and/or contradictory regulatory requirements and expectations in the jurisdictions in which
we operate. Changes in the legal or regulatory environment affecting ESG disclosure, responsible sourcing, supply chain
transparency, or environmental protection, among others, including regulations to limit carbon dioxide and other greenhouse gas
emissions, to discourage the use of plastic or to limit or to impose additional costs on commercial water use may result in
increased costs for us and our business partners, all of which may negatively impact our results of operations, financial condition
and cash flows.
Abercrombie & Fitch Co.
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OPERATIONAL RISKS.
Failure to protect our reputation could have a material adverse impact on our business.
Our ability to maintain our reputation is critical and public perception about our products or operations, whether justified or not,
could impair our reputation, involve us in litigation, damage our brands and have a material adverse impact on our business.
Events that could jeopardize our reputation, include, but are not limited to, the following:
• We fail to maintain high standards for merchandise quality and integrity;
• We fall victim to a cyber-attack, resulting in customer data being compromised;
• We fail to comply with ethical, social, product, labor, health and safety, legal, accounting or environmental standards, or
•
•
•
•
related political considerations;
Third parties with which we have a business relationship, including our brand representatives and influencer network,
and our wholesale, franchise licensing, or marketplace partners, fail to represent our brands in a manner consistent with
our brand image or act in a way that harms their reputation;
Third-party vendors fail to comply with our Vendor Code of Conduct or any third parties with which we have a business
relationship fail to represent our brands in a manner consistent with our brand image;
Unfavorable media publicity and consumer perception of our products, operations, brand or experience; and
Our position or perceived lack of position on ESG, public policy or other similar issues and any perceived lack of
transparency about those matters.
In addition, in recent years there has been an increase in media platforms, particularly, social media and our use of social media
platforms is an important element of our omnichannel marketing efforts. For example, we maintain various social media accounts
for our brands, including Instagram, TikTok, Facebook, Twitter and Pinterest accounts. Negative publicity or actions taken by
individuals that we partner with, such as brand representatives, influencers or our associates, that fail to represent our brands in
a manner consistent with our brand image or act in a way that harms their reputation, whether through our social media accounts
or their own, could harm our brand reputation and materially impact our business. Social media also allows for anyone to provide
public feedback, which could influence perceptions of our brands and reduce demand for our merchandise.
Damage to our reputation and loss of consumer confidence for these or any other reasons could lead to adverse consumer
actions, including boycotts, have negative impacts on investor perception and could impact our ability to attract and retain the
talent necessary to compete in the marketplace or to attract or retain business partners for third party relationships such as
licensing or franchise arrangements, all of which could have a material adverse impact on our business, as well as require
additional resources to rebuild our reputation.
Failure to continue to successfully manage the complexities of our omnichannel operations and of our customers’ omnichannel
shopping experience, or failure to continue to successfully invest in customer, digital and omnichannel initiatives could have a
material adverse impact on our business.
As omnichannel retailing continues to evolve, our customers increasingly interact with our brands through a variety of digital and
physical spaces, and expect seamless integration across all touchpoints. As our success depends on our ability to effectively
manage the complexities of our omnichannel operations and of our customers’ omnichannel shopping experience, including our
ability to respond to shifting consumer traffic patterns, receive and fulfill orders, and engage our customers, we have made
significant investments and operational changes to develop our digital and omnichannel capabilities globally. Such investments
and operational changes include the development of localized fulfillment, shipping and customer service operations, investments
in digital media to attract new customers, and the rollout of omnichannel capabilities listed in “ITEM 1. BUSINESS.”
While we must keep up to date with technology trends in the retail environment in order to manage our successful omnichannel
shopping experience, it is possible these initiatives may not provide the anticipated benefits or desired rates of return. For
example, we could be at a competitive disadvantage if we are unable to effectively collect data and leverage data analytics to
retrieve timely, customer insights to appropriately respond to customer demands and improve customer engagement across
channels or if innovative digital products and features we develop are not utilized or received by customers as anticipated.
In addition, digital operations are subject to numerous risks, including reliance on third-party computer hardware/software and
service providers, data breaches, the variability of the rate of merchandise returns, violations of evolving government
interpretations of laws and regulations, including those relating to online privacy, credit card fraud, telecommunication failures,
electronic break-ins and similar compromises, and disruption of services. Changes in foreign governmental regulations and
interpretations may also negatively impact our omnichannel operations, including our ability to accept orders and deliver product
to our customers. Failure to successfully respond to these risks may adversely affect sales as well as damage the reputation of
our brands.
Abercrombie & Fitch Co.
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If our information technology systems are disrupted or cease to operate effectively, it could have a material adverse impact on
our business.
We rely heavily on our own information technology systems and on third-party information technology systems in both our
customer-facing and corporate operations to: operate our websites and mobile apps; record and process transactions; respond
to customer inquiries; manage inventory; purchase, sell and ship merchandise on a timely basis; maintain cost-efficient
operations; create a customer relationship management database through our loyalty programs; and complete other customer-
facing and business objectives. Given the significant number of transactions that are completed annually, it is vital to maintain
constant operation of our computer hardware, telecommunication systems and software systems, and maintain data security.
Despite efforts to prevent such an occurrence, our information technology systems may be vulnerable, from time to time, to
damage or interruption from computer viruses, power interruptions or outages or other system failures, third-party intrusions,
inadvertent or intentional breaches by our associates or third-party service providers, and other technical malfunctions. Further,
the sophistication, availability and use of artificial intelligence by threat actors present an increased level of risk. If our systems
are damaged, fail to function properly, or are obsolete in comparison to those of our competition, we may have to make monetary
investments to repairs or replace the systems and we could endure delays in our operations. We have made and expect to
continue to make significant monetary investments and devote significant attention to modernizing our core systems, and the
effectiveness of these investments can be less predictable than others and may fail to provide the expected benefits. Additionally,
we rely on services provided by third-party vendors and platforms for certain information technology processes, including point-
of-sale, digital operations, inventory management, supply chain, planning, sourcing, merchandising, payroll, scheduling, financial
reporting, and managing third-party relationships, including our brand representatives and influencer network, and our wholesale,
franchise licensing, or marketplace partners. This reliance on third parties makes our operations vulnerable to a failure by any
one of these parties to perform adequately or maintain effective internal controls.
We regularly evaluate our information technology systems and requirements to ensure appropriate functionality and use in
response to business demands. For example, in 2022 we started a multi-year process of upgrading our merchandising enterprise
resource planning ("ERP") system. We are aware of the inherent risks associated with replacing and modifying these systems,
including inaccurate system information, system disruptions and user acceptance and understanding. Any material disruption or
slowdown of our systems, including a disruption or slowdown caused by our failure to successfully upgrade or replace our
systems could impact our ability to effectively manage and maintain our inventory, to ship products to customers on a timely
basis, and may cause information to be lost or delayed, including data related to customer orders. Such a loss or delay,
especially if the disruption or slowdown occurred during our peak selling seasons, could have a material adverse effect on our
results of operations. In addition the upgrading of our ERP system requires significant financial and operational investments, and
such investments may not provide the anticipated benefits or desired rates of returns.
We may be exposed to risks and costs associated with cyber-attacks, data protection, credit card fraud and identity theft that
could have a material adverse impact on our business.
In the standard course of business, we receive and maintain confidential information about customers, associates and other third
parties. In addition, third parties also receive and maintain certain confidential information. The protection of this information is
critical to our business and subjects us to numerous laws, rules and regulations domestically and in foreign jurisdictions. The
retail industry in particular has been the target of many cyber-attacks and it is possible that an individual or group could defeat
our security measures, or those of a third-party service provider, and access confidential information about our business,
customers and associates. Further, like other companies in the retail industry, during the ordinary course of business, we and our
vendors have in the past experienced, and we expect to continue to experience, cyber-attacks of varying degrees and types,
including phishing, and other attempts to breach, or gain unauthorized access to, our systems. To date, cyber attacks have not
had a material impact on our operations, but we cannot provide assurance that cyber attacks will not have a material impact in
the future.
We have experienced, and expect to continue to experience, increased costs associated with protecting confidential information
through the implementation of security technologies, processes and procedures, including training programs for associates to
raise awareness about phishing, malware and other cyber risks, especially as we implement new technologies, such as new
payment capabilities or updates to our mobile apps and websites. Additionally, the techniques and sophistication used to conduct
cyber-attacks and breaches of information technology systems change frequently and increase in complexity and are often not
recognized until such attacks are launched or have been in place for a period of time. We (or the third parties on which we rely)
may not have the resources or technical sophistication to sufficiently anticipate, prevent, or immediately identify and remediate
cyber-attacks.
Furthermore, the global regulatory environment is increasingly complex and demanding with frequent new and changing
requirements surrounding information security and privacy, including new regulations applicable to public companies in the
United States, China’s Cybersecurity Law, the California Consumer Privacy Act, and the European Union’s General Data
Protection Regulation. We may incur significant costs related to compliance with these laws and failure to comply with these
regulatory standards, and others, could have a material adverse impact on our business.
Abercrombie & Fitch Co.
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We have also implemented a flexible work policy allowing most of our corporate associates to work remotely, from time to time,
as have certain of our third-party vendors. Offsite working by associates, which requires increased use of public internet
connection, and use of office equipment off premises may make our business more vulnerable to cybersecurity breach attempts,
phishing and other scams, fraud, money laundering, theft and other criminal activity.
If we, or a third-party partner, were to fall victim to a successful cyber-attack or suffer intentional or unintentional data and
security breaches by associates or third-parties, it could have a material adverse impact on our business, especially an event
that compromises customer data or results in the unauthorized release of confidential business or customer information. In
addition, if we are unable to avert a denial of service attack that renders our website inoperable, it could result in negative
consequences, such as lost sales and customer dissatisfaction. Additional negative consequences that could result from these
and similar events may include, but are not limited to:
•
•
•
•
•
•
•
remediation costs, such as liability for stolen assets or information, potential legal settlements to affected parties, repairs
of system damage, and incentives to customers or business partners in an effort to maintain relationships after an
attack;
increased cybersecurity protection costs, which may include the costs of making organizational changes, deploying
additional personnel and protection technologies, training associates, and engaging third party experts and consultants;
lost revenues resulting from the unauthorized use of proprietary information or the failure to retain or attract customers
following an attack;
litigation and legal risks, including costs of litigation and regulatory, fines, penalties or actions by domestic or
international governmental authorities;
increased insurance premiums, or the ability to obtain insurance on commercially reasonable terms;
reputational damage that adversely affects customer or investor confidence; and
damage to the Company’s competitiveness, stock price, and long-term shareholder value.
Although we maintain cybersecurity insurance, there can be no assurance that it will be sufficient for a specific cyber incident, or
that insurance proceeds will be paid to us in a timely fashion.
Changes in the cost, availability and quality of raw materials, transportation and labor, including changes due to trade relations
could have a material adverse impact on our business.
Changes in the cost, availability and quality of the fabrics or other raw materials used to manufacture our merchandise could
have a material adverse effect on our cost of sales, or our ability to meet customer demand. The prices for such fabrics depend
largely on the market prices for the raw materials used to produce them, particularly cotton. The price and availability of such raw
materials may fluctuate significantly, depending on many factors, including crop yields, weather patterns and other unforeseen
events. For example, significant inflationary pressures have and may continue to impact the cost of labor, cotton and other raw
materials. Increased global uncertainty has also impacted and may in the future impact the cost, availability and quality of the
fabrics or other raw materials used to manufacture our merchandise, and compliance with sanctions, customs trade orders and
sourcing laws, such as those issued by the U.S. government related to the ongoing conflict in Russia and Ukraine and entities
and individuals connected to China’s Xinjiang Uyghur Autonomous Region, could impact the price of cotton in the marketplace
and the global supply chain.
Fluctuations in the cost of transportation could also have a material adverse effect on our cost of sales and ability to meet
customer demand. We primarily use six contract carriers to ship merchandise and related materials to our North American
customers, and several contract carriers for our global customers. If the shipping operations of these third parties were disrupted,
and we are unable to respond in a quick and efficient manner, our ability to replace inventory in our stores and process digital
and third-party orders could be interrupted, potentially resulting in adverse impacts to sales or increased costs. Furthermore, we
are susceptible to increases in fuel costs which may increase the cost of distribution. If we are not able to pass this cost on to our
customers, our financial condition and results of operations could be adversely affected.
In addition, we have experienced increasing wage pressures in recent years related to the cost of labor at our third-party
manufacturers, at our distribution centers and at our stores. For example, recent government initiatives in the U.S. or changes to
existing laws, such as the adoption and implementation of national, state, or local government proposals relating to increases in
minimum wage rates, may increase our costs of doing business and adversely affect our results of operations. We may not be
able to pass all or a portion of higher labor costs on to our customers, which could adversely affect our gross margin and results
of operations.
Abercrombie & Fitch Co.
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Table of Contents
We depend upon independent third parties for the manufacture and delivery of all our merchandise, and a disruption of the
manufacture or delivery of our merchandise could have a material adverse impact on our business.
We do not own or operate any manufacturing facilities. As a result, the continued success of our operations is tied to our timely
receipt of quality merchandise from third-party manufacturers. We source the majority of our merchandise outside of the U.S.
through arrangements with approximately 130 vendors, primarily located in southeast Asia. Political, social or economic
instability in the regions in which our manufacturers are located could cause disruptions in trade, including exports to the U.S.
and EMEA. In addition, the inability of vendors to access liquidity, or the insolvency of vendors, could lead to their failure to
deliver merchandise to us. A manufacturer’s inability to ship orders in a timely manner or meet our quality standards could cause
delays in responding to consumer demand and negatively affect consumer confidence or negatively impact our competitive
position, any of which could have a material adverse effect on our financial condition and results of operations.
For example, the recent attacks on cargo vessels in the Red Sea have resulted in delayed deliveries and may result in increased
freight costs, and a prolonged or escalating armed conflict may result in additional costs, including any impact from using air
freight instead of ocean freight to mitigate inventory delays. It is possible that the adverse impact of these and future attacks,
including additional costs associated with mitigation efforts, could materially adversely affect our business and results of
operation.
All factories that we partner with are contractually required to adhere to the Company’s Vendor Code of Conduct, go through
social audits which include on-site walk-throughs to appraise the physical working conditions and health and safety practices,
and review payroll and age documentation. If these factories are unwilling or not able to meet the standards set forth within the
Company’s Vendor Code of Conduct, it could limit the options available to us and could result in an increase of costs of
manufacturing, which we may not be able to pass on to our customers.
Other events that could disrupt the timely delivery of our merchandise include new trade law provisions or regulations, reliance
on a limited number of shipping carriers and associated alliances, weather events, significant labor disputes, port congestion and
other unexpected events.
Our reliance on our distribution centers makes us susceptible to disruptions or adverse conditions affecting our supply chain.
Our distribution center operations are susceptible to local and regional factors, such as system failures, accidents, labor
disputes, economic and weather conditions, natural disasters, significant power interruptions or outages, demographic and
population changes, and other unforeseen events and circumstances. We rely on both company-operated and third-party
distribution centers to manage the receipt, storage, sorting, packing and distribution of our merchandise. If our distribution
centers are not adequate to support our operations, including as a result of capacity constraints in response to an increase in
digital sales or performance issues related to third-party management, the increased rate of merchandise returns, we could
experience adverse impacts such as shipping delays and or customer dissatisfaction. In addition, if our distribution operations
were disrupted due to, for example, labor shortages, natural disasters or power interruptions or outages, and we were unable to
relocate operations or find other property adequate for conducting business, our ability to replace inventory in our stores and
process digital and third-party orders could be interrupted, potentially resulting in adverse impacts to sales or increased costs.
Refer to “ITEM 1. BUSINESS,” for a listing of certain distribution centers on which we rely.
We rely on the experience and skills of our executive officers and associates, and the failure to attract or retain this talent,
effectively manage succession, and establish a diverse workforce could have a material adverse impact on our business.
Our ability to succeed may be adversely impacted if we are not able to attract, retain and develop talent and future leaders,
including our executive officers. We believe that the attraction, retention and management of qualified talent is integral to our
success in advancing our strategies and key business priorities and avoiding disruptions in our business. We rely on our
associates across the organization, including those at our corporate offices, stores and distribution centers, as well as their
experience and expertise in the retail business.
Our executive officers closely supervise all aspects of our operations, have substantial experience and expertise in the retail
business and have an integral role in the growth and success of our brands. If we were to lose the benefit of the involvement of
our executive officers or other personnel, without adequate succession plans, our business could be adversely affected.
In addition, if we are unable to attract and retain talent at the associate level, our business could be adversely impacted.
Competition for such qualified talent is intense, and we cannot be sure that we will be able to attract, retain and develop a
sufficient number of qualified individuals in future periods. In addition, we cannot guarantee that we will be able to find adequate
temporary or seasonal personnel to staff our operations when needed. For example, as automation, artificial intelligence and
similar technological advancements continue to evolve, we may need to compete for talent that is familiar with these
advancements in technologies in order to compete effectively with our industry peers. If we are not successful in these efforts,
our business may be adversely affected.
If we are not successful in these efforts or fail to successfully execute against the key human capital management initiatives
discussed in “ITEM 1. BUSINESS,” our business could be adversely impacted.
Abercrombie & Fitch Co.
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If we identify a material weakness in our internal control over financial reporting, fail to remediate a material weakness, or fail to
establish and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial
results could be adversely affected.
The effectiveness of any controls or procedures is subject to certain inherent limitations, and as a result, there can be no
assurance that our controls and procedures will prevent or detect misstatements. Even an effective system of internal control
over financial reporting will provide only reasonable, not absolute, assurance with respect to financial statement preparation.
Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
If we fail to remediate a material weakness, or are otherwise unable to maintain effective internal control over financial reporting,
management could be required to expend significant resources. Additionally, we could fail to meet our public reporting
requirements on a timely basis, and be subject to fines, penalties, investigations or judgements, all of which could negatively
affect investor confidence and adversely impact our stock price.
LEGAL, TAX, REGULATORY AND COMPLIANCE RISKS.
Misconduct or illegal activities by our current and former associates, directors, advisers, third-party service providers, or others
affiliated, or perceived to be affiliated, with the Company could subject to us to reputational harm, regulatory scrutiny or inquiries,
or legal liability.
There is a risk that current or former associates, executives, directors, advisers or third party-service providers of the Company,
or others who are actually or perceived to be affiliated with us, could engage, deliberately or recklessly, in misconduct or fraud
that creates legal exposure for us and adversely affects our business. If such individuals were to engage, or be accused of
engaging in, illegal or suspicious activities, sexual misconduct or harassment, racial or gender discrimination, improper use or
disclosure of confidential information, fraud, payment or solicitation of bribes, or any other type of similar misconduct or violation
of other laws and regulations, during their employment or service with us, we could suffer serious harm to our brand, reputation,
be subject to penalties or sanctions, suffer serious harm to our financial position and current and future business relationships,
and face potentially significant litigation or investigations.
For example, Michael Jeffries, who served as chief executive officer of the Company from 1992 to 2014, has been accused of
sexual abuse and exploitation, which include claims relating to behavior that is alleged to have occurred during his tenure with
us. Litigation has been filed against Mr. Jeffries and the Company that relates to this alleged behavior. Although we believe the
claims against us are without merit, the allegations against this former executive, as well as the claims brought against us, have
resulted in negative media attention and may result in additional litigation or may result in other adverse consequences to our
reputation, brand, and business. In addition, in early March 2024, the Delaware Court of Chancery ruled that Mr. Jeffries was
entitled to advancement by the Company of his defense costs for the litigation.
Fluctuations in our tax obligations and effective tax rate may result in volatility in our results of operations could have a material
adverse impact on our business.
We are subject to income taxes in many U.S. and foreign jurisdictions. In addition, our products are subject to import and excise
duties and/or sales, consumption or value-added taxes (“VAT”) in many jurisdictions. We record tax expense based on our
estimates of future payments, which include reserves for estimates of probable settlements of foreign and domestic tax audits. At
any time, many tax years are subject to audit by various taxing jurisdictions. The results of these audits and negotiations with
taxing authorities may affect the ultimate settlement of these issues. As a result, we expect that throughout the year, there could
be ongoing variability in our quarterly tax rates as taxable events occur and exposures are evaluated. In addition, our effective
tax rate in any given financial reporting period may be materially impacted by changes in the mix and level of earnings or losses
by taxing jurisdictions or by changes to existing accounting rules or regulations. Fluctuations in duties could also have a material
impact on our financial condition, results of operations or cash flows.
The Organization for Economic Co-operation and Development (“OECD”), along with members of its inclusive framework, have,
through the Base Erosion and Profit Shifting project, proposed changes to numerous long-standing tax principles (“Pillar Two
Rules”). Although the U.S. has not yet enacted legislation implementing Pillar Two Rules, other countries where the Company
does business, including the U.K. and Germany, have enacted legislation implementing Pillar Two Rules which are effective from
January 1, 2024. The Company does not expect The Pillar Two Rules will have a material impact on the effective tax rate for
fiscal 2024, but the rules will likely increase tax complexity, and may adversely affect our provision for income taxes.
In some global markets, we are required to withhold and remit VAT to the appropriate local tax authorities. Failure to correctly
calculate or remit the appropriate amounts could subject us to substantial fines and penalties that could have an adverse effect
on our financial condition, results of operations or cash flows.
In the past, tax law has been enacted, domestically and abroad, impacting our current or future tax structure and effective tax
rate, such as the Inflation Reduction Act in the U.S. Tax law may be enacted in the future, domestically or abroad, that impacts
our current or future tax structure and effective tax rate.
Abercrombie & Fitch Co.
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Litigation and any future stockholder activism could have a material adverse impact on our business.
We, along with third parties we do business with, are involved, from time to time, in litigation arising in the ordinary course of
business. Litigation matters may include, but are not limited to, contract disputes, employment-related actions, labor relations,
commercial litigation, intellectual property rights, product safety, environmental matters and shareholder actions.
Litigation, in general, may be expensive and disruptive. We cannot predict with certainty the outcomes of these legal proceedings
and other contingencies, and the costs incurred in litigation can be substantial, regardless of the outcome. Substantial
unanticipated verdicts, fines and rulings do sometimes occur. As a result, we could, from time to time, incur judgments, enter into
settlements, or revise our expectations regarding the outcome of certain matters, and such developments could have a material
adverse effect on our results of operations in the period in which the amounts are accrued and/or our cash flows in the period in
which the amounts are paid. The outcome of some of these legal proceedings and other contingencies could require us to take,
or refrain from taking, actions which could negatively affect our operations and, depending on the nature of the allegations, could
negatively impact our reputation. Additionally, defending against these legal proceedings may involve significant expense and
diversion of management’s attention and resources.
Stockholder activism, which could take many forms or arise in a variety of situations, remains popular with many public investors.
Due to the potential volatility of our stock price and for a variety of other reasons, we may become the target of securities
litigation or stockholder activism. Responding to stockholder activists campaigns may involve significant expense and diversion
of management’s attention and resources without yielding any improvement in our results of operations or financial condition.
Failure to adequately protect and enforce our intellectual property, or failure to adequately ensure that we are not infringing the
intellectual property rights of others, could have a negative impact on our brand image and limit our ability to penetrate new
markets which could have a material adverse impact on our business.
We believe our core trademarks, Abercrombie & Fitch®, abercrombie®, Hollister®, Gilly Hicks®, and the “Moose” and “Seagull”
logos, are essential to the effective implementation of our strategy. We have obtained or applied for federal registration of these
trademarks with the U.S. Patent and Trademark Office and the registries of countries in key markets within the Company’s sales
and distribution channels. In addition, these trademarks are either registered, or the Company has applications for registration
pending, with the registries of many of the foreign countries in which the manufacturers of the Company’s products are located.
There can be no assurance that we will obtain registrations that have been applied for or that the registrations we obtain will
prevent the imitation of our products or infringement of our intellectual property rights by others. Although brand security
initiatives are in place, we cannot guarantee that our efforts against the infringement or counterfeiting of our brands will be
successful. If a third party copies our products in a manner that projects lesser quality or carries a negative connotation, our
brand image could be materially adversely affected.
Because we have not yet registered all of our trademarks in all categories, or in all foreign countries in which we source or offer
our merchandise now, or may in the future, our global expansion and our merchandising of products using these marks could be
limited. The pending applications for international registration of various trademarks could be challenged or rejected in those
countries because third parties of whom we are not currently aware have already registered similar marks in those countries.
Accordingly, it may be possible, in those foreign countries where the status of various applications is pending or unclear, for a
third-party owner of the national trademark registration for a similar mark to prohibit the manufacture, sale or exportation of
branded goods in or from that country. Failure to register our trademarks or purchase or license the right to use our trademarks
or logos in these jurisdictions could limit our ability to obtain supplies from, or manufacture in, less costly markets or penetrate
new markets should our business plan include selling our merchandise in those non-U.S. jurisdictions.
In addition, if third parties successfully claim we infringe their intellectual property rights, we may be subject to liability, be
prevented from using our trademarks or other intellectual property rights, or be obligated to remove this merchandise from our
inventory, which could have an adverse effect on our financial conditions and operations. Defending infringement claims could be
expensive and time consuming and might result in our incurring additional costs, entering into costly license agreements, actions
to recover unpaid royalty fees, or other settlement agreements. These risks may be magnified if we increase our use of licensing
arrangements or partnerships with third parties.
Abercrombie & Fitch Co.
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Changes in the regulatory or compliance landscape could have a material adverse impact on our business.
We are subject to numerous domestic and foreign laws and regulations, including those related to customs, truth-in-advertising,
securities, environmental and social disclosures, consumer protection, general privacy, health information privacy, identity theft,
online privacy, general employment, employee health and safety, minimum wages, unsolicited commercial communication and
zoning and occupancy laws, as well as ordinances that regulate retailers generally and/or govern the importation, intellectual
property, promotion and sale of merchandise and the operation of retail stores, digital operations and distribution centers. If these
laws and regulations were to change, or were violated by our management, associates, suppliers, vendors or other parties with
whom we do business, the costs of certain merchandise could increase, or we could experience delays in shipments of our
merchandise, be subject to fines or penalties, temporary or permanent store closures, or increased regulatory scrutiny or suffer
reputational harm, which could reduce demand for our merchandise and adversely affect our business and results of operations.
Any changes in regulations, the imposition of additional regulations, or the enactment of any new or more stringent legislation
including the areas referenced above, could adversely affect our business and results of operations.
Laws and regulations at the local, state, federal and various global levels frequently change, and the ultimate cost of compliance
cannot be precisely estimated. Changes in the legal or regulatory environment affecting responsible sourcing, supply chain
transparency, or environmental protection, among others, may result in increased compliance costs for us and our business
partners. Additionally, we may face regulatory challenges in complying with applicable global sanctions and trade regulations and
reputational challenges with our consumers and other stakeholders if we are unable to sufficiently verify the origins of material
sourced for the manufacture of our products.
In addition, we are subject to a variety of regulatory and reporting requirements, including, but not limited to, those related to
corporate governance and public disclosure. Stockholder activism, the current political environment, financial reform legislation,
government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations. New
requirements or changes in current regulatory reporting requirements may introduce additional complexities, lead to additional
compliance costs, divert management’s time and attention from strategic business activities, and could have a significant effect
on our reported results for the affected periods. Failure to comply with such regulations could result in fines, penalties, or lawsuits
and could have a material adverse impact on our business.
The agreements related to A&F Management’s senior secured asset-based revolving credit facility and senior secured notes
include restrictive covenants that limit our flexibility in operating our business and our inability to obtain additional credit on
reasonable terms in the future could have an adverse impact on our business.
The Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) of Abercrombie & Fitch
Management Co. (“A&F Management”), a wholly-owned indirect subsidiary of A&F, provides for a senior secured asset-based
revolving credit facility of up to $400 million (the “ABL Facility”), which matures on April 29, 2026. A&F Management’s senior
secured notes (the “Senior Secured Notes””) have a fixed 8.75% interest rate and mature on July 15, 2025. The agreements
related to the ABL Facility and the Senior Secured Notes contain restrictive covenants that, subject to specified exemptions,
restrict, among other things, the ability of the Company and its subsidiaries to: incur, assume or guarantee additional
indebtedness; grant or incur liens; sell or otherwise dispose of assets, including capital stock of subsidiaries; make investments
in certain subsidiaries; pay dividends or make distributions on our capital stock; redeem or repurchase capital stock; change the
nature of our business; and consolidate or merge with or into, or sell substantially all of the assets of the Company or A&F
Management to another entity.
If an event of default under either related agreement occurs, any outstanding obligations under the Senior Secured Notes and
the ABL Facility could be declared immediately due and payable or the lenders or noteholders could foreclose on or exercise
other remedies with respect to the assets securing the indebtedness under the Senior Secured Notes and the ABL Facility. In
addition, there is no assurance that we would have the cash resources available to repay such accelerated obligations.
Moreover, the Senior Secured Notes and ABL Facility are secured by certain of our real property, inventory, intellectual property,
general intangibles and receivables, among other things, and lenders may exercise remedies against the collateral in an event of
default.
We have, and expect to continue to have, a level of indebtedness. In addition, we may, from time to time, incur additional
indebtedness. We may need to refinance all or a portion of our existing indebtedness before maturity, including the Senior
Secured Notes, and any indebtedness under the ABL Facility. There can be no assurance that we would be able to obtain
sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all. Changes in
market conditions could potentially impact the size and terms of a replacement facility or facilities in the future. The inability to
obtain credit on commercially reasonable terms in the future could adversely impact our liquidity and results of operations as well
as limit our ability to take advantage of business opportunities that may arise.
Abercrombie & Fitch Co.
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Our amended and restated bylaws provide that certain courts in the State of Delaware or the federal district courts of the United
States will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our
shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of
Chancery located within the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding
brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer,
other employee or shareholder to us or our shareholders, any action asserting a claim arising pursuant to any provision of the
General Corporation Law of the State of Delaware, our certificate of incorporation or our bylaws (as either may be amended or
restated) or as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery of
the State of Delaware, or any action asserting a claim governed by the internal affairs doctrine of the law of the State of
Delaware. However, if the Court of Chancery within the State of Delaware lacks jurisdiction over such action, the action may be
brought in the United States District Court for the District of Delaware. Additionally, unless we consent in writing to the selection
of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of
any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (the “Securities Act”). The
exclusive forum provisions will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions.
Section 27 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) creates exclusive federal jurisdiction over
all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result,
the exclusive forum provisions will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any
other claim for which the federal courts have exclusive jurisdiction. There is, however, uncertainty as to whether a court would
enforce the exclusive forum provisions, and investors cannot waive compliance with the federal securities laws and the rules and
regulations thereunder. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts
over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Abercrombie & Fitch Co.
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Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
The Company has established an information security program and related processes for assessing, identifying, and managing
material risks from cybersecurity threats to the Company, including governance at the executive and Board level of the
Company’s cyber risk management strategy and the controls designed to protect its operations. The Company’s information
security program is established at the executive level, with regular reporting to, and oversight by, the Company’s Board of
Directors (the “Board”) as described below. At the highest level, the Company’s program includes multi-layered governance by
management, the Audit and Finance Committee of the Board and the Board, as described in greater detail below.
The Company’s policies and procedures identify how cybersecurity measures and controls are developed, implemented, and
regularly reviewed and updated. The Company implements and maintains a set of controls to manage information risk,
establishes guidelines for the use of information technology, and defines standards for identifying and mitigating information
risks, considering controls from multiple security frameworks, such as the Center for Internet Security’s Critical Security Control
and the Payment Card Industry Data Security Standard. The Company, internally and through third parties, conducts multiple
information risk assessments each year. Risks identified in such assessments are considered for inclusion in the Company’s
information risk portfolio and are then prioritized and addressed where appropriate through the Company’s broader information
security programs. Assessments along with risk-based analysis and judgment are used by the Company to determine what the
Company believes to be the optimal way to manage these risks.
In addition, the Company’s Incident Response Plan (“IRP”) provides an outline for the Company on how to identify and address a
significant cybersecurity incident. The IRP includes certain steps to be taken by the Information Security team to, among other
things, assess the severity of an incident, determine the appropriate escalation, and mitigate or remediate the incident. The IRP
is intended to serve as a framework to aid the Information Security team and other corporate functions in coordinating the
Company’s response to an incident in order to minimize the impact on the Company’s business and operations, as well as the
affected parties.
The Company also conducts cybersecurity exercises and training. For example, certain corporate associates and management-
level associates in our stores and distribution centers must complete cybersecurity training on an at least annual basis, which
educates the associates on the Company’s policies and procedures for the handling of customer and employee personal data,
incident reporting, and avoiding common cybersecurity threats such as phishing attacks. In addition, targeted training for
corporate associates occurs throughout the year, and regular audiences include associates on the Company’s marketing, data
analytics, and user experience teams. The Company’s management holds annual executive data incident tabletop exercises and
the information security team holds more frequent technical tabletop exercises.
The Company leverages third-party security firms in different capacities to implement or operate various aspects of the
Company’s information security program, including to conduct risk assessments and penetration testing. The Company uses a
variety of processes to address cybersecurity threats related to the use of third-party technology and services, such as
conducting risk assessments of third-party vendors where the Company has determined it to be appropriate.
The Company (or the third parties on which it relies) may not be able to fully, continuously, and effectively implement security
controls as intended. As described above, we utilize a risk-based approach and judgment to determine the security controls to
implement and it is possible we may not implement sufficient controls if we do not recognize or underestimate a particular risk. In
addition, security controls, no matter how well designed or implemented, may only partially mitigate and not fully eliminate risks.
Events, when detected by security tools or third parties, may not always be immediately understood or acted upon.
Board Governance and Management
Cybersecurity risk is managed as an enterprise risk in the Company’s enterprise risk management process. Responsibility for
risk oversight and management generally lies with the Company’s Board. To effectively manage oversight of our cybersecurity
risk management practices, since 2019 the Board has delegated such responsibility to the Company’s Audit and Finance
Committee. The Company’s Chief Information Security Officer (“CISO”) and the Information Security team provide reports to
either the Audit and Finance Committee or the Board on a quarterly basis on various matters, such as current and emerging
cybersecurity risks to the Company, risks and incidents that were escalated to management during the prior quarter (including
those that did not require immediate escalation to the Audit and Finance Committee and/or full Board), internal and external
assessments of the Company’s information security program, and a roadmap of projects and major initiatives to manage its
information security posture.
At the executive and management level, the CISO has primary responsibility for the architecture, implementation, and
management of the Company’s information security program. The CISO has approximately two decades of experience in
technology risk management, including over a decade with the Company, and has passed examinations and received
certifications as a SANS Global Information Security Leader and a Certified Information Systems Auditor. The CISO reports
Abercrombie & Fitch Co.
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2023 Form 10-K
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directly to the Company’s Chief Digital and Technology Officer. The Company’s Information Security team, under the direction of
the CISO, implements and provides governance and functional oversight for cybersecurity controls and services. Information
Security processes include escalation of certain risks and incidents, including those that originate or occur at third parties, to the
CISO and the executive team as appropriate based on the severity or potential severity. In addition, regular updates from the
Information Security team, in conjunction with real-time escalation on an as-needed basis, are also used to assess the risk
landscape and adjust the Company’s strategy and roadmap to address such risk.
Although the risks from cybersecurity threats have not materially affected our business strategy, results of operations, or financial
condition to date, they may in the future and we continue to closely monitor cyber risk. See ITEM 1A. RISK FACTORS for
additional information regarding the Company’s cybersecurity risks and which should be read in conjunction with this Item 1C.
Item 2. Properties
The Company’s global headquarters are located on a campus-like setting in New Albany, Ohio, which is owned by the Company.
The Company’s global headquarters also include company-owned distribution centers that support distribution to all domestic
stores and the majority of domestic digital orders. The Company also leases property for its regional headquarters located in
London, United Kingdom and Shanghai, China. In addition, the Company owns or leases facilities both domestically and
internationally to support the Company’s operations, such as its distribution centers and various support centers.
The Company does not believe any individual regional headquarters, third-party distribution center or support center lease is
material as, if necessary or desirable to relocate an operation, other suitable property could be found. These properties are
utilized by both of the Company’s operating segments and are currently suitable and adequate for conducting the Company’s
business.
As of February 3, 2024, the Company operated 765 retail stores across its brands. The Company does not believe that any
individual store lease is material; however, certain geographic areas may have a higher concentration of store locations.
Item 3. Legal Proceedings
The Company is a defendant in lawsuits and other adversary proceedings arising in the ordinary course of business. The
Company’s legal costs incurred in connection with the resolution of claims and lawsuits are generally expensed as incurred, and
the Company establishes estimated liabilities for the outcome of litigation where losses are deemed probable and the amount of
loss, or range of loss, is reasonably estimable. The Company also determines estimates of reasonably possible losses or ranges
of reasonably possible losses in excess of related accrued liabilities, if any, when it has determined that a loss is reasonably
possible, and it is able to determine such estimates. For information regarding legal proceedings, see Note 18
“CONTINGENCIES” to the Consolidated Financial Statements included in this Annual report on Form 10-K. The Company’s
accrued charges for certain legal contingencies are classified within accrued expenses on the Consolidated Balance Sheets
included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA,” of this Annual Report on Form 10-K. Based
on currently available information, the Company cannot estimate a range of reasonably possible losses in excess of the accrued
charges for legal contingencies. In addition, the Company has not established accruals for certain claims and legal proceedings
pending against the Company where it is not possible to reasonably estimate the outcome or potential liability, and the Company
cannot estimate a range of reasonably possible losses for these legal matters. Actual liabilities may differ from the amounts
recorded, due to uncertainties regarding final settlement agreement negotiations and the terms of any approval by the courts,
and there can be no assurance that the final resolution of legal matters will not have a material adverse effect on the Company’s
financial condition, results of operations, or cash flows. The Company’s assessment of the current exposure could change in the
event of the discovery of additional facts.
In addition, pursuant to Item 103(c)(3)(iii) of Regulation S-K under the Exchange Act, the Company is required to disclose certain
information about environmental proceedings to which a governmental authority is a party if the Company reasonably believes
such proceedings may result in monetary sanctions, exclusive of interest and costs, above a stated threshold. The Company has
elected to apply a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required.
Item 4. Mine Safety Disclosures
Not applicable.
Abercrombie & Fitch Co.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Market Information and Holders
A&F’s Class A Common Stock, $0.01 par value (“Common Stock”) is traded on the New York Stock Exchange under the symbol
“ANF.” As of April 1, 2024, there were approximately 2,400 stockholders of record. However, when including investors holding
shares of Common Stock in broker accounts under street name, A&F estimates that there were approximately 167,000
stockholders.
Performance Graph
The following graph shows the changes, over the five-year period ended February 3, 2024 (the last day of A&F’s Fiscal 2023) in
the value of $100 invested in (i) shares of Common Stock; (ii) Standard & Poor’s 500 Stock Index (the “S&P 500”); and
(iii) Standard & Poor’s Apparel Retail Composite Index (the “S&P Apparel Retail”), including reinvestment of dividends. The
plotted points represent the closing price on the last trading day of the fiscal year indicated.
PERFORMANCE GRAPH (1)
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among A&F, the S&P 500 Index and the S&P Apparel Retail Index
A&F
S&P 500
S&P Apparel Retail
02/02/19
02/01/20
01/30/21
01/29/22
01/28/23
02/03/24
$ 100.00 $
80.09 $ 114.88 $ 181.70 $ 135.99 $ 545.10
100.00
100.00
121.54
116.51
142.49
127.14
172.39
140.78
160.93
168.22
199.26
203.80
*
(1)
$100 invested on February 02, 2019, including reinvestment of dividends.
Copyright© 2024 Standard & Poor’s, a division of S&P Global. All rights reserved.
This performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or to the liabilities of
Section 18 of the Exchange Act, except to the extent that A&F specifically requests that the performance graph be treated as soliciting material or
specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
Abercrombie & Fitch Co.
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2023 Form 10-K
Abercrombie & Fitch Co.S&P 500S&P Apparel Retail02/02/1902/01/2001/30/2101/29/2201/28/2302/03/24$0$50$100$150$200$250$300$350$400$450$500$550$600
Table of Contents
Equity Securities
The following table provides information regarding the purchase of shares of Common Stock made by or on behalf of A&F or any
“affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act during each fiscal month of the fourteen weeks
ended February 3, 2024:
Period (fiscal month)
October 29, 2023 through November 25, 2023
November 26, 2023 through December 30, 2023
December 31, 2023 through February 3, 2024
Total Number of
Shares
Purchased (1)
Average Price
Paid per Share
913 $
3,449
635
4,997 $
69.80
77.09
109.47
79.87
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (2)
Maximum Number of
Shares (or Approximate
Dollar Value) that May
Yet Be Purchased Under
the Plans or Programs (3)
— $
—
—
—
232,184,768
232,184,768
232,184,768
232,184,768
An aggregate of 4,997 shares of A&F’s Common Stock purchased during the fourteen weeks ended February 3, 2024 were withheld for tax
payments due upon the vesting of employee restricted stock units and exercise of employee stock appreciation rights.
On November 23, 2021, we announced that the Board of Directors approved a new $500 million share repurchase authorization, replacing the prior
2021 share repurchase authorization of 10.0 million shares, which had approximately 3.9 million shares remaining available
The number shown represents, as of the end of each period, the approximate dollar value of Common Stock that may yet be purchased under
A&F’s publicly announced stock repurchase authorization described in footnote 2 above. The shares may be purchased, from time to time,
depending on business and market conditions.
Total
(1)
(2)
(3)
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) generally
discusses our results of operations for Fiscal 2023 and Fiscal 2022 and provides comparisons between such fiscal years. For
discussion and comparison of Fiscal 2022 and Fiscal 2021, see “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2022, filed with the SEC on March 27,
2023. This MD&A should be read together with the Company’s audited Consolidated Financial Statements and notes thereto
included in this Annual Report on Form 10-K in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA,” to which
all references to Notes in MD&A are made.
INTRODUCTION
MD&A is provided as a supplement to the accompanying Consolidated Financial Statements and notes thereto to help provide
an understanding of the Company’s results of operations, financial condition, and liquidity. MD&A is organized as follows:
•
•
•
•
•
•
•
Overview. A general description of the Company’s business and certain segment information, and an overview of key
performance indicators reviewed by management in assessing the Company’s results.
Current Trends and Outlook. A discussion of the Company’s long-term plans for growth and a summary of the
Company’s performance over recent years, primarily Fiscal 2023 and Fiscal 2022.
Results of Operations. An analysis of certain components of the Company’s Consolidated Statements of Operations
and Comprehensive Income (Loss) for Fiscal 2023 as compared to Fiscal 2022.
Liquidity and Capital Resources. A discussion of the Company’s financial condition, changes in financial condition and
liquidity as of February 3, 2024, which includes (i) an analysis of changes in cash flows for Fiscal 2023 as compared to
Fiscal 2022, (ii) an analysis of liquidity, including availability under the Company’s credit facility, and outstanding debt
and covenant compliance and (iii) a summary of contractual and other obligations as of February 3, 2024.
Recent Accounting Pronouncements. The recent accounting pronouncements the Company has adopted or is currently
evaluating, including the dates of adoption or expected dates of adoption, as applicable, and anticipated effects on the
Company’s audited Consolidated Financial Statements, are included in Note 2 “SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES.”
Critical Accounting Estimates. A discussion of the accounting estimates considered to be important to the Company’s
results of operations and financial condition, which typically require significant judgment and estimation on the part of
the Company’s management in their application.
Non-GAAP Financial Measures. MD&A provides a discussion of certain financial measures that have been determined
to not be presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). This section
includes certain reconciliations between GAAP and non-GAAP financial measures and additional details on non-GAAP
financial measures, including information as to why the Company believes the non-GAAP financial measures provided
within MD&A are useful to investors.
Abercrombie & Fitch Co.
30
2023 Form 10-K
Table of Contents
OVERVIEW
Business Summary
Abercrombie & Fitch Co. (“A&F”), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and its
subsidiaries are referred to as the “Company”), is a global, digitally-led omnichannel retailer. The Company offers a broad
assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its
Company-owned stores and digital channels, as well as through various third-party arrangements.
During the second quarter of Fiscal 2023, to leverage the knowledge and experience of our regional teams to drive brand growth,
the Company reorganized its structure and now primarily manages its business on a geographic basis, consisting of three
reportable segments: Americas; Europe, the Middle East and Africa (EMEA); and Asia-Pacific (APAC). Corporate functions and
other income and expenses are evaluated on a consolidated basis and are not allocated to the Company’s segments, and
therefore are included as a reconciling item between segment and total operating income (loss). There was no impact on
consolidated net sales, operating income (loss) or net income (loss) as a result of these changes. All prior periods presented are
recast to conform to the new segment presentation.
The Company’s brands include Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister
brands, which includes Hollister and Gilly Hicks. These brands share a commitment to offering unique products of enduring
quality and exceptional comfort that allow customers around the world to express their own individuality and style.
The Company’s fiscal year ends on the Saturday closest to January 31. This typically results in a fifty-two-week year, but
occasionally gives rise to an additional week, resulting in a fifty-three-week year, as is the case in Fiscal 2023. All references
herein to the Company’s fiscal years are as follows:
Fiscal year
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Seasonality
Year ended/ ending
Number of weeks
January 29, 2022
January 28, 2023
February 3, 2024
February 1, 2025
52
52
53
52
Historically, the Company’s operations have been seasonal in nature and consist of two principal selling seasons: the spring
season, which includes the first and second fiscal quarters (“Spring”) and the fall season, which includes the third and fourth
fiscal quarters (“Fall”). Due to the seasonal nature of the retail apparel industry, the results of operations for any current period
are not necessarily indicative of the results expected for the full fiscal year and the Company could have significant fluctuations in
certain asset and liability accounts. The Company historically experiences its greatest sales activity during the Fall season due to
back-to-school and holiday sales periods, respectively.
Key Performance Indicators
The following measurements are among the key performance indicators reviewed by the Company’s management in assessing
the Company’s results:
Changes in net sales and comparable sales;
Gross profit and gross profit rate;
Cost of sales, exclusive of depreciation and amortization, as a percentage of net sales;
Stores and distribution expense as a percentage of net sales;
•
•
•
•
• Marketing, general and administrative expense as a percentage of net sales;
•
•
•
•
•
•
•
Operating income and operating income as a percentage of net sales (“operating margin”);
Net income and net income attributable to A&F;
Cash flow and liquidity measures, such as the Company’s working capital, operating cash flow, and free cash flow;
Inventory metrics, such as inventory turnover;
Return on invested capital and return on equity;
Store metrics, such as net sales per gross square foot, and store four-wall operating margins;
Digital and omnichannel metrics, such as total shipping expense as a percentage of digital sales, and certain metrics
related to our purchase-online-pickup-in-store and order-in-store programs;
Transactional metrics, such as traffic and conversion, performance across key product categories, average unit retail
(“AUR’), average unit cost (“AUC”), average units per transaction and average transaction values, return rates, shrink;
and
Customer-centric metrics such as customer satisfaction, customer retention and acquisition, and certain metrics related
to the loyalty programs.
•
•
While not all of these metrics are disclosed publicly by the Company due to the proprietary nature of the information, the
Company discusses many of these metrics within this MD&A.
Abercrombie & Fitch Co.
31
2023 Form 10-K
Table of Contents
CURRENT TRENDS AND OUTLOOK
Focus Areas for Fiscal 2024
In June of Fiscal 2022, we announced our 2025 Always Forward Plan, which outlines our long-term strategy and goals, including
growing shareholder value. The 2025 Always Forward Plan is anchored on our strategic growth principles, which are to:
•
•
•
Execute focused growth plans;
Accelerate an enterprise-wide digital revolution; and
Operate with financial discipline
The 2025 Always Forward Plan growth principles serve as a framework for the Company achieving sustainable and profitable
growth and profitability in Fiscal 2024. Below are some additional details specific to Fiscal 2024 objectives within the 2025
Always Forward Plan:
Execute focused growth plans by:
•
•
•
driving sales growth across regions and brands primarily through marketing and store investment.
using our playbooks globally to align the brands’ products, voices, and experiences with customers, both digitally and in-
store; and
using testing and chase strategies to deliver compelling assortments and product collections across genders.
Accelerate an enterprise-wide digital revolution to improve the customer and associate experience by:
•
•
continuing to progress on our multi-year enterprise resource planning (“ERP”) transformation and cloud migration
journey; and
investing in digital and technology to improve experiences across key parts of the customer journey while delivering a
consistent omnichannel experience.
Operate with financial discipline by:
•
•
actively managing inventory levels and positioning Abercrombie brands and Hollister brands to chase inventory as
appropriate throughout the year; and
funding our growth strategies while properly balancing investments, impacts of inflation and efficiency efforts.
Current Macroeconomic Conditions
Macroeconomic conditions, including inflation, the geopolitical landscape, political uncertainty including elections in several
countries, higher interest rates, foreign exchange rate fluctuations, and declines in consumer discretionary spending continue to
negatively impact our business. While freight costs have decreased in Fiscal 2023 and cotton costs waned towards the end of
Fiscal 2023, there continues to be pricing volatility with respect to freight, cotton and other raw materials. Continued inflationary
pressures and pricing volatility could further impact expenses and have a long-term impact on the Company because increasing
costs may impact its ability to maintain satisfactory margins.
In addition, these macroeconomic conditions may result in delays in merchandise fulfillment and deliveries, increased costs to
meet consumer demand (which we may not be able to pass on to customers through average unit retail (“AUR”)), or reduced
consumer confidence. In periods of perceived or actual unfavorable economic conditions, consumers may reallocate available
discretionary spending, which may adversely impact demand for our products.
Global Events and Supply Chain Disruptions
As a global multi-brand omnichannel specialty retailer, with operations in North America, Europe, the Middle East, and Asia,
among other regions, management is mindful of macroeconomic risks, global challenges and the changing global geopolitical
environment, including the ongoing armed conflicts between Russia and Ukraine or Israel and Hamas, and conflict in the
surrounding areas, which could adversely impact certain areas of the business. Starting in late Fiscal 2023, disruptions to ocean
vessels in the Red Sea have resulted in delayed deliveries to the EMEA region. Such disruptions have also led to increased
freight costs, which could impact the Company in Fiscal 2024. The Company has taken certain mitigating actions in response to
these events, including increasing air freight usage where appropriate and prioritizing critical orders earlier to allow for longer
lead times. Further mitigating actions may be needed as we continue in to Fiscal 2024, particularly if there is prolonged or
escalating conflict in the Red Sea.
While freight costs decreased in Fiscal 2023, the recent disruptions in the Red Sea may offset anticipated future freight cost
benefits.
Management continues to monitor global events and assess the potential impacts that these events and similar events may have
on the business in future periods. Although management also develops and updates contingency plans to assist in mitigating
potential impacts, it is possible that the Company’s preparations for such events are not adequate to mitigate their impact, and
that these events could further adversely affect its business and results of operations.
Abercrombie & Fitch Co.
32
2023 Form 10-K
Table of Contents
Global Store Network Optimization
The Company has a goal of finding the right size, right location and right economics for omni-enabled stores that cater to local
customers. The Company continues to use data to inform its focus on aligning store square footage with digital penetration and
the Company delivered new store experiences across brands during Fiscal 2023 and Fiscal 2022. Details related to these new
store experiences follow:
Type of new store experience
Fiscal 2023
Fiscal 2022
New stores
Remodels
Right-sizes
Total
35
13
9
57
59
1
8
68
During Fiscal 2023, the Company opened 35 new stores, while closing 32 stores. This compares with 59 new stores and 26
closures during Fiscal 2022. Future closures could be completed through natural lease expirations, while certain other leases
include early termination options that can be exercised under specific conditions. The Company may also elect to exit or modify
other leases, and could incur charges related to these actions.
Additional details related to store count and gross square footage follow:
Fifty-Three Weeks Ended February 3, 2024
AMERICAS (1)
EMEA (2)
APAC (3)
Total Company
Abercrombie (4)
184
Hollister (5)
389
Abercrombie (4)
29
Hollister (5)
112
Abercrombie (4)
20
Hollister (5)
28
Abercrombie (4)
233
Hollister (5)
529
14
(4)
194
7
(12)
384
4
(4)
29
6
(10)
108
—
(2)
26
22
(8)
247
13
(24)
518
Total (6)
762
35
(32)
765
January 28, 2023
New
Permanently closed
February 3, 2024
Gross square footage (in thousands):
January 28, 2023
February 3, 2024
1,176
1,188
2,487
2,459
181
187
907
828
185
169
1,489
1,524
3,579
3,456
5,068
4,980
4
—
24
132
149
(1)
(2)
(3)
(4)
(5)
(6)
The Americas segment includes the results of operations in North America and South America.
The EMEA segment includes the results of operations in Europe, the Middle East and Africa.
The APAC segment includes the results of operations in the Asia-Pacific region, including Asia and Oceania.
Abercrombie brands includes Abercrombie & Fitch and abercrombie kids.
Hollister brands includes Hollister and Gilly Hicks.
This store count excludes temporary and international franchise stores.
Pillar Two Model Rules
In 2021, the Organization for Economic Cooperation and Development (“OECD”) released Pillar Two Global Anti-Base Erosion
model rules (“Pillar Two Rules”), designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of
operation. Although the U.S. has not yet enacted legislation implementing Pillar Two Rules, other countries where the Company
does business, including the U.K. and Germany, have enacted legislation implementing Pillar Two Rules which are effective from
January 1, 2024. The Company does not expect the implementation of the Pillar Two Rules in each jurisdiction in which it
operates will have a material impact on the Company’s effective tax rate. The Company will continue to evaluate the impact as
jurisdictions implement legislation and provide further guidance.
Abercrombie & Fitch Co.
33
2023 Form 10-K
Table of Contents
Summary of Results
A summary of results for Fiscal 2023 and Fiscal 2022 follows:
(in thousands, except change in net sales, gross profit rate, operating
income margin and per share amounts)
Fiscal 2023
Fiscal 2022
Fiscal 2023
Fiscal 2022
GAAP
Non-GAAP (1)
Net sales
Change in net sales from the prior fiscal year
Comparable sales (2)
Gross profit rate (3)
Operating income
Operating income margin
Net income attributable to A&F
Net income per diluted share attributable to A&F
$ 4,280,677
$ 3,697,751
16 %
— %
62.9 %
56.9 %
13 %
— %
$
484,671
11.3 %
$
$
328,123
6.22
$
$
$
92,648
$
489,107
$
106,679
2.5 %
11.4 %
2.9 %
2,816
0.05
$
$
331,328
6.28
$
$
13,045
0.25
(1)
(2)
(3)
Refer to “RESULTS OF OPERATIONS” for details on excluded items. A reconciliation of each non-GAAP financial measure presented in this Annual
Report on Form 10-K to the most directly comparable financial measure calculated in accordance with GAAP, as well as a discussion as to why the
Company believes that these non-GAAP financial measures are useful to investors, is provided below under “NON-GAAP FINANCIAL MEASURES.”
Comparable sales are calculated on a constant currency basis and exclude revenue other than store and digital sales. Refer to the discussion below
in “NON-GAAP FINANCIAL MEASURES,” for further details on the comparable sales calculation. In light of store closures related to COVID-19,
comparable sales for periods prior to Fiscal 2023 included in this Annual Report on Form 10-K are not disclosed.
Gross profit is derived from cost of sales, exclusive of depreciation and amortization. Gross profit rate is is derived from cost of sales, exclusive of
depreciation and amortization as a percentage of total net sales.
Certain components of the Company’s Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023 and
Consolidated Statements of Cash Flows for Fiscal 2023 and Fiscal 2022 were as follows:
(in thousands)
Balance Sheets data
Cash and equivalents
Gross borrowings outstanding, carrying amount
Inventories
Statements of Cash Flows data
Net cash provided by (used for) operating activities
Net cash used for investing activities
Net cash used for financing activities
February 3, 2024
January 28, 2023
$
$
900,884 $
223,214
469,466
517,602
299,730
505,621
Fiscal 2023
Fiscal 2022
653,422 $
(157,182)
(111,201)
(2,343)
(140,675)
(155,329)
Abercrombie & Fitch Co.
34
2023 Form 10-K
Table of Contents
RESULTS OF OPERATIONS
The estimated basis point (“BPS”) changes disclosed throughout this Results of Operations have been rounded based on the
change in the percentage of net sales.
Net Sales
Net sales by segment are presented by attributing revenues on the basis of the segment that fulfills the order. The Company’s
net sales by reportable segment for Fiscal 2023 and Fiscal 2022 were as follows:
(in thousands)
Americas
EMEA
APAC
Total Company
Fiscal 2023
Fiscal 2022
$ Change % Change
$ 3,455,674 $ 2,920,157 $ 535,517
687,095
137,908
658,794
118,800
28,301
19,108
$ 4,280,677 $ 3,697,751 $ 582,926
18%
4%
16%
16%
Comparable
Sales (1)
13%
7%
26%
13%
(1) Comparable sales are calculated on a constant currency basis. Refer to “NON-GAAP FINANCIAL MEASURES,” for further details on the comparable
sales calculation.
For Fiscal 2023, net sales increased 16%, as compared to Fiscal 2022, primarily due to an increase in units sold and AUR. The
additional week in fiscal 2023 benefited net sales by approximately $50 million. The year-over-year increase in net sales reflects
positive comparable sales of 13%, as compared to Fiscal 2022, with comparable sales growth in the Americas, EMEA, and
APAC segments.
The Company’s net sales by brand for Fiscal 2023 and Fiscal 2022 were as follows:
(in thousands)
Abercrombie (2)
Hollister (3)
Total Company
Fiscal 2023
Fiscal 2022
$ Change % Change
$ 2,201,686 $ 1,734,866 $ 466,820
2,078,991
1,962,885
116,106
$ 4,280,677 $ 3,697,751 $ 582,926
27%
6%
16%
Comparable
Sales (1)
23%
4%
13%
(1) Comparable sales are calculated on a constant currency basis. Refer to “NON-GAAP FINANCIAL MEASURES,” for further details on the comparable
sales calculation.
(2) Abercrombie brands includes Abercrombie & Fitch and abercrombie kids.
(3) Hollister brands includes Hollister and Gilly Hicks.
Cost of Sales, Exclusive of Depreciation and Amortization
(in thousands)
Fiscal 2023
Fiscal 2022
% of Net
Sales
% of Net
Sales
Cost of sales, exclusive of depreciation and amortization
$ 1,587,265
37.1%
$ 1,593,213
43.1%
BPS
Change
(600)
For Fiscal 2023, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales decreased approximately
600 basis points as compared to Fiscal 2022. The decrease was primarily attributable to approximately 340 basis points of
higher average unit retail and approximately 300 basis points from the combination of lower freight costs and higher raw
materials compared to Fiscal 2022. These benefits were partially offset by approximately 30 basis points from the adverse impact
of exchange rates.
Gross Profit, Exclusive of Depreciation and Amortization
Gross profit, exclusive of depreciation and amortization
$ 2,693,412
62.9%
$ 2,104,538
56.9%
Fiscal 2023
Fiscal 2022
% of Net
Sales
% of Net
Sales
BPS
Change
600
Abercrombie & Fitch Co.
35
2023 Form 10-K
Table of Contents
Stores and Distribution Expense
(in thousands)
Stores and distribution expense
Fiscal 2023
Fiscal 2022
% of Net
Sales
% of Net
Sales
$ 1,571,737
36.7%
$ 1,496,962
40.5%
BPS
Change
(380)
For Fiscal 2023, stores and distribution expense, as a percentage of net sales, decreased 380 basis points as compared to
Fiscal 2022. The decrease was primarily driven by expense leverage as a result of net sales growth, slightly offset by an increase
of $18 million in store occupancy expense compared to Fiscal 2022.
Marketing, General and Administrative Expense
(in thousands)
Fiscal 2023
Fiscal 2022
% of Net
Sales
% of Net
Sales
Marketing, general and administrative expense
$ 642,877
15.0%
$ 517,602
14.0%
BPS
Change
100
For Fiscal 2023, marketing, general and administrative expense, as a percentage of net sales increased 100 basis points as
compared to Fiscal 2022, primarily due to an increase in incentive compensation, marketing, the 53rd reporting week and digital
and technology expenses.
Other Operating Income, Net
(in thousands)
Other operating income, net
Fiscal 2023
Fiscal 2022
% of Net
Sales
% of Net
Sales
$
5,873
0.1%
$
2,674
0.1%
BPS
Change
—
For Fiscal 2023, other operating income, net, increased as compared to Fiscal 2022, primarily due to $0.9 million foreign
currency gain recognized in Fiscal 2023.
Operating Income
(in thousands)
Operating income
Excluded items:
Fiscal 2023
Fiscal 2022
% of Net
Sales
% of Net
Sales
$ 484,671
11.3%
$
92,648
2.5%
Asset impairment charges (1)
Adjusted non-GAAP operating income
4,436
$ 489,107
0.1%
11.4%
14,031
$ 106,679
0.4%
2.9%
(1) Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.
BPS
Change
880
(30)
850
Interest Expense, Net
(in thousands)
Interest expense
Interest income
Interest expense, net
Fiscal 2023
Fiscal 2022
% of Net
Sales
% of Net
Sales
BPS
Change
$
30,352
0.7%
$
30,236
0.8%
(29,980)
(0.7)%
(4,604)
(0.1)%
$
372
—%
$
25,632
0.7%
(10)
(60)
(70)
For Fiscal 2023, interest expense, net, decreased 70 basis points as compared to Fiscal 2022. The net decrease can be
attributable to higher interest income due to the increase in balance and rates received on deposits and money market accounts
as compared to Fiscal 2022.
Abercrombie & Fitch Co.
36
2023 Form 10-K
Table of Contents
Income Tax Expense
(in thousands, except ratios)
Income tax expense
Excluded items:
Tax effect of pre-tax excluded items (1)
Adjusted non-GAAP income tax expense
Fiscal 2023
Fiscal 2022
Effective Tax
Rate
Effective Tax
Rate
$
148,886
30.7%
$
56,631
84.5%
1,231
$
150,117
30.7%
$
3,802
60,433
74.6%
(1) Refer to “Operating Income” for details of pre-tax excluded items. The tax effect of pre-tax excluded items is the difference between the tax provision
calculation on a GAAP basis and an adjusted non-GAAP basis. Refer to “NON-GAAP FINANCIAL MEASURES” for further details.
The increase in income tax expense compared to Fiscal 2022 can be attributed to higher domestic income resulting from higher
sales volume and higher AURs.
During Fiscal 2023, the Company did not recognize income tax benefits on $103.0 million of pre-tax losses, primarily in
Switzerland, resulting in adverse tax impacts of $15.6 million. The primary driver relates to expense deleverage within the APAC
and EMEA regions, although to a lesser extent than in the prior year.
During Fiscal 2022, the Company did not recognize income tax benefits on $136.5 million of pre-tax losses, primarily in
Switzerland, resulting in adverse tax impacts of $20.0 million. The primary driver relates to lower sales volume, higher AUC and
overall expense deleverage within the APAC and EMEA regions.
Refer to Note 11, “INCOME TAXES,” for further discussion on factors that impacted the effective tax rate in Fiscal 2023 and
Fiscal 2022.
Net Income Attributable to A&F
(in thousands)
Net income attributable to A&F
Excluded items, net of tax (1)
Adjusted non-GAAP net income attributable to A&F (2)
Fiscal 2023
Fiscal 2022
% of Net
Sales
7.7%
0.1%
7.7%
$ 328,123
3,205
$ 331,328
% of Net
Sales
BPS
Change
$
2,816
10,229
$
13,045
0.1%
0.3%
0.4%
760
(20)
730
(1)
Excludes items presented above under “Operating Income,” and “Income Tax Expense.”
(2) Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.
Net Income Per Diluted Share Attributable to A&F
Net income per diluted share attributable to A&F
Excluded items, net of tax (1)
Adjusted non-GAAP net income per diluted share attributable to A&F
Impact from changes in foreign currency exchange rates
$
$
6.22 $
0.06
6.28 $
—
Adjusted non-GAAP net income per diluted share attributable to A&F on a constant currency basis(2) $
6.28 $
(1) Excludes items presented above under “Operating Income,” and “Income Tax Expense.”
(2) Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.
0.05
0.20
0.25
(0.13)
0.12
$6.17
(0.14)
$6.03
0.13
$6.16
Fiscal 2023
Fiscal 2022
$ Change
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company’s capital allocation strategy and priorities are reviewed by the A&F’s Board of Directors quarterly considering both
liquidity and valuation factors. The Company believes that it will have adequate liquidity to fund operating activities for the next
twelve months. The Company monitors financing market conditions and may in the future determine whether and when to
amend, modify, repurchase, or restructure its ABL Facility and/or the Senior Secured Notes. For a discussion of the Company’s
share repurchase activity and suspended dividend program, please see below under “Share repurchases and dividends.”
Primary Sources and Uses of Cash
The Company’s business has two principal selling seasons: the spring season, which includes the first and second fiscal
quarters (“Spring”) and the fall season, which includes the third and fourth fiscal quarters (“Fall”). The Company generally
experiences its greatest sales activity during the Fall season, due to the back-to-school and holiday sales periods. The Company
relies on excess operating cash flows, which are largely generated in Fall, to fund operations throughout the year and to reinvest
in the business to support future growth. The Company also has the ABL Facility available as a source of additional funding,
which is described further below under “Credit Facility and Senior Secured Notes”.
Over the next twelve months, the Company expects its primary cash requirements to be directed towards prioritizing investments
in the business and continuing to fund operating activities, including the acquisition of inventory, and obligations related to
compensation, marketing, data and technology, leases and any lease buyouts or modifications it may exercise, taxes and other
operating activities. In addition, the Company continuously evaluates potential opportunities to strategically deploy excess cash
and/or deleverage the balance sheet, depending on various factors, such as market and business conditions, including the
Company’s ability to accelerate investments in the business. Such opportunities may include, but are not limited to, purchasing
outstanding Senior Secured Notes or share repurchases.
The Company evaluates opportunities for investments in the business that are in line with initiatives that position the business for
sustainable long-term growth that align with its strategic pillars as described within “ITEM 1. BUSINESS - STRATEGY AND KEY
BUSINESS PRIORITIES.” Examples of potential investment opportunities include, but are not limited to, new store experiences,
and investments in the Company’s digital revolution initiatives. Historically, the Company has utilized free cash flow generated
from operations to fund any discretionary capital expenditures, which have been prioritized towards new store experiences, as
well as marketing, digital and omnichannel investments, information technology, and other projects. For Fiscal 2023, the
Company used $157.8 million towards capital expenditures, down from $164.6 million of capital expenditures in Fiscal 2022.
Total capital expenditures for Fiscal 2024 are expected to be approximately $170 million.
Share Repurchases and Dividends
In November 2021, A&F’s Board of Directors approved a $500 million share repurchase authorization. During Fiscal 2023, the
Company did not repurchase any shares of its common stock pursuant to this share repurchase authorization. The Company has
$232 million in share repurchase authorization remaining under the authorization approved in November 2021.
Historically, the Company has repurchased shares of its Common Stock from time to time, dependent on excess liquidity, market
conditions, and business conditions, with the objectives of returning excess cash to shareholders and offsetting dilution from
issuances of Common Stock associated with the exercise of employee stock appreciation rights and the vesting of restricted
stock units. Shares may be repurchased in the open market, including pursuant to trading plans established in accordance with
Rule 10b5-1 of the Exchange Act through privately negotiated transactions or other transactions or by a combination of such
methods. Refer to “ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES” of this Annual Report on Form 10-K for the amount remaining available for
purchase under the Company’s publicly announced share repurchase authorization.
In May 2020, the Company announced that it had suspended its dividend program in order to preserve liquidity and maintain
financial flexibility in light of COVID-19. The Company may in the future review its dividend program to determine, in light of facts
and circumstances at that time, whether and when to reinstate. Any dividends are declared at the discretion of A&F’s Board of
Directors. A&F’s Board of Directors reviews and establishes a dividend amount, if at all, based on A&F’s financial condition,
results of operations, capital requirements, current and projected cash flows, business prospects and other factors, including any
restrictions under the Company’s agreements related to the Senior Secured Notes and the ABL Facility. There can be no
assurance that the Company will declare and pay dividends in the future or, if dividends are paid, that they will be in amounts
similar to past dividends.
Abercrombie & Fitch Co.
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2023 Form 10-K
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Credit Facility and Senior Secured Notes
As of February 3, 2024, the Company had $223.2 million of gross indebtedness outstanding under the Senior Secured Notes.
During Fiscal 2023, A&F Management purchased $76.5 million of outstanding Senior Secured Notes and incurred a $2.0 million
loss on extinguishment of debt, recognized in interest expense, net on the Consolidated Statements of Operations and
Comprehensive Income (Loss).
In addition, the Amended and Restated Credit Agreement, as amended by the First Amendment, provides for the ABL Facility,
which is a senior secured asset-based revolving credit facility of up to $400 million. On March 15, 2023, the Company entered
into the First Amendment to the Amended and Restated Credit Agreement to eliminate LIBO rate based loans and to use the
current market definitions with respect to the Secured Overnight Financing Rate (“SOFR”)”, as well as to make other conforming
changes.
The Company did not have any borrowings outstanding under the ABL Facility as of February 3, 2024 or as of January 28, 2023.
Details regarding the remaining borrowing capacity under the ABL Facility as of February 3, 2024 follow:
(in thousands)
Loan cap
Less: Outstanding stand-by letters of credit
Borrowing capacity
Less: Minimum excess availability (1)
Borrowing capacity available
February 3, 2024
332,891
(440)
332,451
(33,289)
299,162
$
$
(1) The Company must maintain excess availability equal to the greater of 10% of the loan cap or $30 million under the ABL Facility.
Refer to Note 12, “BORROWINGS,” for additional information.
Income Taxes
The Company’s earnings and profits from its foreign subsidiaries could be repatriated to the U.S., without incurring additional
federal income tax. The Company determined that the balance of the Company’s undistributed earnings and profits from its
foreign subsidiaries as of February 2, 2019, are considered indefinitely reinvested outside of the U.S., and if these funds were to
be repatriated to the U.S., the Company would expect to incur an insignificant amount of state income taxes and foreign
withholding taxes. The Company accrues for both state income taxes and foreign withholding taxes with respect to earnings and
profits earned after February 2, 2019, in such a manner that these funds may be repatriated without incurring additional tax
expense.
As of February 3, 2024, $247.3 million of the Company’s $900.9 million of cash and equivalents were held by foreign affiliates.
Refer to Note 11, “INCOME TAXES,” for additional details regarding the impact certain events related to the Company’s income
taxes had on the Company’s Consolidated Financial Statements.
Analysis of Cash Flows
The table below provides certain components of the Company’s Consolidated Statements of Cash Flows for Fiscal 2023 and
Fiscal 2022:
(in thousands)
Cash and equivalents, and restricted cash and equivalents, beginning of period
Fiscal 2023
$
527,569 $
Fiscal 2022
834,368
Net cash provided by (used for) operating activities
Net cash used for investing activities
Net cash used for financing activities
Effects of foreign currency exchange rate changes on cash
653,422
(157,182)
(111,201)
(2,923)
Net increase (decrease) in cash and equivalents, and restricted cash and equivalents
Cash and equivalents, and restricted cash and equivalents, end of period
$
$
382,116 $
909,685 $
(2,343)
(140,675)
(155,329)
(8,452)
(306,799)
527,569
Operating activities - For Fiscal 2023 net cash provided by operating activities included increased cash receipts as a result of the
16% year-over-year increase in net sales partially offset by increased payments to vendors, including additional rent payments
made during the period due to fiscal calendar shifting relative to monthly rent due dates.
Abercrombie & Fitch Co.
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2023 Form 10-K
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Investing activities - For Fiscal 2023, net cash used for investing activities was primarily attributable to capital expenditures of
$157.8 million as compared to net cash used for investing activities of $164.6 million in Fiscal 2022, primarily attributable to
capital expenditures, partially offset by the proceeds from the withdrawal of $12.0 million of excess funds from Rabbi Trust assets
and the sale of property and equipment of $11.9 million.
Financing activities - For Fiscal 2023, net cash used for financing activities primarily consisted of the purchase of $76.5 million of
outstanding Senior Secured Notes for $78.0 million as well as amounts related to shares of Common Stock withheld
(repurchased) to cover tax withholdings upon vesting of share-based compensation awards. For Fiscal 2022, net cash used for
financing activities primarily consisted of the repurchase of approximately 4.8 million shares of Common Stock in the open
market with a market value of approximately $126 million as well as the purchase of $8.0 million of outstanding Senior Secured
Notes at a slight discount to par.
Contractual Obligations
As of February 3, 2024, the Company’s contractual obligations were as follows:
(in thousands)
Operating lease obligations (1)
Purchase obligations (2)
Long-term debt obligations (3)
Other obligations (4)
Total
Less than 1 year
1-3 years
3-5 years
More than 5 years
Payments due by period
$
968,725 $
228,719 $
396,245 $
247,000 $
289,241
223,214
119,975
242,469
—
49,546
32,110
223,214
21,064
4,438
—
20,123
96,761
10,224
—
29,242
136,227
Total
$
1,601,155 $
520,734 $
672,633 $
271,561 $
(1)
(2)
(3)
(4)
Operating lease obligations consist of the Company’s future undiscounted operating lease payments. Operating lease obligations do not include
variable payments related to both lease and nonlease components, such as contingent rent payments made by the Company based on performance,
and payments related to taxes, insurance, and maintenance costs. Total variable lease cost was $168.9 million in Fiscal 2023. Refer to Note 2,
“SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Leases,” and Note 7, “LEASES,” for further discussion.
Purchase obligations primarily consist of non-cancelable purchase orders for merchandise to be delivered during Fiscal 2024 and commitments for
fabric expected to be used during upcoming seasons. In addition, purchase obligations include agreements to purchase goods or services, including,
but not limited to, information technology, digital and marketing contracts, as well as estimated obligations related to the Company’s 13-year, 100%
renewable energy supply agreement for its global home office and Company-owned distribution centers.
Long-term debt obligations consist of principal payments under the Senior Secured Notes. Refer to Note 12, “BORROWINGS,” for further discussion.
Other obligations consists of: interest payments related to the Senior Secured Notes assuming normally scheduled principal payments; estimated
asset retirement obligations; known and scheduled payments related to the Company’s deferred compensation and supplemental retirement plans;
tax payments associated with the provisional, mandatory one-time deemed repatriation tax on accumulated foreign earnings, net payable over eight
years pursuant to the The Tax Cuts and Jobs Act; and minimum contractual obligations related to leases signed but not yet commenced, primarily
related to the Company’s stores. Refer to Note 7, “LEASES,” Note 11, “INCOME TAXES,” Note 12, “BORROWINGS,” and Note 16, “SAVINGS AND
RETIREMENT PLANS,” for further discussion.
Due to uncertainty as to the amounts and timing of future payments, tax related to uncertain tax positions, including accrued
interest and penalties, of $3.0 million as of February 3, 2024, is excluded from the contractual obligations table. Deferred taxes
are also excluded in the contractual obligations table. For further discussion, refer to Note 11, “INCOME TAXES.”
As of February 3, 2024, the Company had recorded $4.7 million and $39.6 million of obligations related to its deferred
compensation and supplemental retirement plans in accrued expenses and other liabilities on the Consolidated Balance Sheet,
respectively. Amounts payable with known payment dates of $16.4 million have been classified in the contractual obligations
table based on those scheduled payment dates. However, it is not reasonably practicable to estimate the timing and amounts for
the remainder of these obligations, therefore, those amounts have been excluded in the contractual obligations table.
A&F had historically paid quarterly dividends on Common Stock prior to the suspension of the dividend program in May 2020.
Because the dividend program remains suspended and the payment of future dividends is subject to determination and approval
by the Board of Directors, there are no amounts included in the contractual obligations table related to dividends.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company describes its significant accounting policies in Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Recent accounting pronouncements.” The Company reviews recent accounting pronouncements on a quarterly basis and has
excluded discussion of those not applicable to the Company and those that did not have, or are not expected to have, a material
impact on the Company’s consolidated financial statements.
Abercrombie & Fitch Co.
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2023 Form 10-K
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CRITICAL ACCOUNTING ESTIMATES
The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s
consolidated financial statements which have been prepared in accordance with GAAP. The preparation of these consolidated
financial statements requires the Company to make estimates and assumptions that affect the reported amounts. Since actual
results may differ from those estimates, the Company revises its estimates and assumptions as new information becomes
available. Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” describes the significant accounting policies and
methods used in the preparation of the Company’s consolidated financial statements. The estimates and assumptions discussed
below include those that the Company believes are the most critical to the portrayal of the Company’s financial condition and
results of operations.
Policy
Inventory Valuation
The Company reviews inventories on a quarterly basis. The Company reduces the
inventory valuation when the carrying cost of specific inventory items on hand
exceeds the amount expected to be realized from the ultimate sale or disposal of
the goods, through a lower of cost and net realizable value (“LCNRV”) adjustment.
The Company does not expect material changes to the
underlying assumptions used to measure the LCNRV
estimate as of February 3, 2024. However, actual results
could vary from estimates and could significantly impact
the ending inventory valuation at cost, as well as gross
profit.
Effect if Actual Results Differ from Assumptions
The LCNRV adjustment reduces inventory to its net realizable value based on the
Company’s consideration of multiple factors and assumptions, expected sell-off
activity, composition and aging of inventory, historical recoverability experience and
risk of obsolescence
in economic conditions or customer
preferences.
from changes
Income Taxes
The provision for income taxes is determined using the asset and liability
approach. Tax laws often require items to be included in tax filings at different
times than the items are being reflected in the financial statements. A current
liability is recognized for the estimated taxes payable for the current year. Deferred
taxes represent the future tax consequences expected to occur when the reported
amounts of assets and liabilities are recovered or paid. Deferred taxes are
adjusted for enacted changes in tax rates and tax laws. Valuation allowances are
recorded to reduce deferred tax assets when it is more likely than not that a tax
benefit will not be realized.
lease right-of-use assets,
Long-lived Assets
Long-lived assets, primarily operating
leasehold
improvements, furniture, fixtures and equipment, are tested for recoverability
whenever events or changes in circumstances indicate that the carrying amount of
the long-lived asset group might not be recoverable. These include, but are not
limited to, material declines in operational performance, a history of losses, an
expectation of future losses, adverse market conditions and store closure or
relocation decisions. On at least a quarterly basis, the Company reviews for
indicators of impairment at the individual store level, the lowest level for which
cash flows are identifiable.
Stores that display an indicator of impairment are subjected to an impairment
assessment. The Company’s impairment assessment requires management to
make assumptions and judgments related, but not limited, to management’s
expectations for future operations and projected cash flows. The key assumption
used in the Company’s undiscounted future store cash flow models is estimated
sales growth rate.
An impairment loss may be recognized when these undiscounted future cash flows
are less than the carrying amount of the asset group. In the circumstance of
impairment, any loss would be measured as the excess of the carrying amount of
the asset group over its fair value. Fair value of the Company’s store-related
assets is determined at the individual store level based on the highest and best
use of the asset group. The key assumptions used in the Company’s fair value
analysis are estimated sales growth and comparable market rents.
An increase or decrease in the LCNRV adjustment of
10% would have affected pre-tax loss by approximately
$3.1 million for Fiscal 2023.
in
interpretations used
The Company does not expect material changes in the
judgments, assumptions or
to
calculate the tax provision for Fiscal 2024. However,
changes
or
interpretations may occur and should those changes be
significant, they could have a material impact on the
Company’s income tax provision. As of the end of Fiscal
2023, the Company had recorded valuation allowances of
$147.0 million
assumptions
judgments,
these
Store assets that were tested for impairment as of
February 3, 2024 and not impaired, had long-lived assets
with a net book value of $11.8 million, which included $7.0
million of operating lease right-of-use assets as of
February 3, 2024.
that were previously
Store assets
impaired as of
February 3, 2024, had a remaining net book value of
$63.5 million, which included $53.8 million of operating
lease right-of-use assets, as of February 3, 2024.
If actual results are not consistent with the estimates and
assumptions used in assessing impairment or measuring
impairment losses, there may be a material impact on the
Company’s financial condition or results of operation.
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
NON-GAAP FINANCIAL MEASURES
This Annual Report on Form 10-K includes discussion of certain financial measures on both a GAAP and a non-GAAP basis. The
Company believes that each of the non-GAAP financial measures presented in this “ITEM 7. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” is useful to investors as it provides a
meaningful basis to evaluate the Company’s operating performance excluding the effect of certain items that the Company
believes do not reflect its future operating outlook, such as certain asset impairment charges, therefore supplementing investors’
understanding of comparability of operations across periods. Management used these non-GAAP financial measures during the
periods presented to assess the Company’s performance and to develop expectations for future operating performance. These
non-GAAP financial measures should be used as a supplement to, and not as an alternative to, the Company’s GAAP financial
results, and may not be calculated in the same manner as similar measures presented by other companies.
Comparable sales
At times, the Company provides comparable sales, defined as the year-over-year percentage change in the aggregate of (1)
sales for stores that have been open as the same brand at least one year and whose square footage has not been expanded or
reduced by more than 20% within the past year, with the prior year’s net sales converted at the current year’s foreign currency
exchange rates to remove the impact of foreign currency exchange rate fluctuations, and (2) digital sales with the prior year’s net
sales converted at the current year’s foreign currency exchange rates to remove the impact of foreign currency exchange rate
fluctuations. Comparable sales exclude revenue other than store and digital sales. Management uses comparable sales to
understand the drivers of year-over-year changes in net sales and believes comparable sales can be a useful metric as it can
assist investors in distinguishing the portion of the Company’s revenue attributable to existing locations from the portion
attributable to the opening or closing of stores. The most directly comparable GAAP financial measure is change in net sales. In
light of store closures related to COVID-19, comparable sales for periods prior to Fiscal 2023 included in this Annual Report on
Form 10-K are not disclosed.
Excluded Items
The following financial measures are disclosed on a GAAP basis and on an adjusted non-GAAP basis excluding the following
items, as applicable:
Financial measures (1)
Asset impairment
Operating income
Income tax expense (2)
Net income and net income per share attributable to A&F (2)
Excluded items
Certain asset impairment charges
Certain asset impairment charges
Tax effect of pre-tax excluded items
Pre-tax excluded items and the tax effect of pre-tax excluded items
(1) Certain of these financial measures are also expressed as a percentage of net sales.
(2)
The tax effect of excluded items is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis.
Abercrombie & Fitch Co.
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2023 Form 10-K
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Financial Information on a Constant Currency Basis
The Company provides certain financial information on a constant currency basis to enhance investors’ understanding of
underlying business trends and operating performance by removing the impact of foreign currency exchange rate fluctuations.
Management also uses financial information on a constant currency basis to award employee performance-based compensation.
The effect from foreign currency exchange rates, calculated on a constant currency basis, is determined by applying the current
period’s foreign currency exchange rates to the prior year’s results and is net of the year-over-year impact from hedging. The per
diluted share effect from foreign currency exchange rates is calculated using a 26% effective tax rate.
A reconciliation of financial metrics on a constant currency basis to GAAP for Fiscal 2023 and Fiscal 2022 is as follows:
(in thousands, except change in net sales, gross profit rate, operating margin
and per share data)
Net sales
GAAP
Impact from changes in foreign currency exchange rates
Net sales on a constant currency basis
Gross profit
GAAP
Impact from changes in foreign currency exchange rates
Gross profit on a constant currency basis
Operating income
GAAP
Excluded items (2)
Adjusted non-GAAP
Impact from changes in foreign currency exchange rates
Adjusted non-GAAP on a constant currency basis
Net income per diluted share attributable to A&F
GAAP
Excluded items, net of tax (2)
Adjusted non-GAAP
Impact from changes in foreign currency exchange rates
Adjusted non-GAAP on a constant currency basis
Fiscal 2023
Fiscal 2022
% Change
4,280,677 $
3,697,751
—
6,500
4,280,677 $
3,704,251
16%
0%
16%
Fiscal 2023
Fiscal 2022
BPS Change (1)
2,693,412 $
2,104,538
—
(8,969)
2,693,412 $
2,095,569
600
30
630
Fiscal 2023
Fiscal 2022
BPS Change (1)
484,671 $
(4,436)
489,107 $
—
489,107 $
92,648
(14,031)
106,679
(9,608)
97,071
880
(30)
850
30
880
Fiscal 2023
Fiscal 2022
$ Change
6.22 $
(0.06)
6.28 $
—
6.28 $
0.05
(0.20)
0.25
(0.13)
0.12
$6.17
(0.14)
$6.03
0.13
$6.16
$
$
$
$
$
$
$
$
$
$
The estimated basis point change has been rounded based on the percentage of net sales change.
(1)
(2) Refer to “RESULTS OF OPERATIONS,” for details on excluded items. The tax effect of excluded items is calculated as the difference between the
tax provision on a GAAP basis and an adjusted non-GAAP basis.
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
INVESTMENT SECURITIES
The Company’s investment securities consist of cash equivalents in financial instruments, primarily money market funds and
time deposits, with original maturities of three months or less. Due to the short-term nature of these instruments, changes in
interest rates are not expected to materially affect the fair value of these financial instruments.
Refer to Note 9, “RABBI TRUST ASSETS,” of the Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K for a discussion of the Company’s Rabbi
Trust assets.
INTEREST RATE RISK
Prior to July 2, 2020, the Company’s exposure to market risk due to changes in interest rates related primarily to the increase or
decrease in the amount of interest expense from fluctuations in the LIBO rate, or an alternate base rate associated with the ABL
Facility and the Company’s former term loan facility (the “Term Loan Facility”). On July 2, 2020, the Company issued the Senior
Secured Notes due in 2025 with an 8.75% fixed interest rate per annum and repaid all outstanding borrowings under the ABL
Facility and its prior term loan facility, thereby eliminating any then existing cash flow market risk due to changes in interest rates.
The Senior Secured Notes are exposed to interest rate risk that is limited to changes in fair value. This analysis for Fiscal 2024
may differ from actual results due to potential changes in gross borrowings outstanding under the ABL Facility and potential
changes in interest rate terms and limitations described within the Amended and Restated Credit Agreement.
In July 2017, the Financial Conduct Authority (the authority that regulates LIBO rate) announced it intended to stop compelling
banks to submit rates for the calculation of LIBO rate after 2021. Certain publications of the LIBO rate were phased out at the
end of 2021 and all LIBO rate publications will cease after June 30, 2023. On March 15, 2023, the Company entered into the
First Amendment to the Amended and Restated Credit Agreement to eliminate LIBO rate based loans and to use the current
market definitions with respect to the Secured Overnight Financing Rate (“SOFR”), as well as to make other conforming
changes.
FOREIGN CURRENCY EXCHANGE RATE RISK
A&F’s international subsidiaries generally operate with functional currencies other than the U.S. Dollar. Since the Company’s
Consolidated Financial Statements are presented in U.S. dollars, the Company must translate all components of these financial
statements from functional currencies into U.S. dollars at exchange rates in effect during or at the end of the reporting period.
The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of revenues, expenses,
assets and liabilities. The potential impact of foreign currency exchange rate fluctuations increases as international operations
relative to domestic operations increase.
A&F and its subsidiaries have exposure to changes in foreign currency exchange rates associated with foreign currency
transactions and forecasted foreign currency transactions, including the purchase of inventory between subsidiaries and foreign-
currency-denominated assets and liabilities. The Company has established a program that primarily utilizes foreign currency
exchange forward contracts to partially offset the risks associated with the effects of certain foreign currency transactions and
forecasted transactions. Under this program, increases or decreases in foreign currency exchange rate exposures are partially
offset by gains or losses on foreign currency exchange forward contracts, to mitigate the impact of foreign currency exchange
gains or losses. The Company does not use forward contracts to engage in currency speculation. Outstanding foreign currency
exchange forward contracts are recorded at fair value at the end of each fiscal period.
Foreign currency exchange forward contracts are sensitive to changes in foreign currency exchange rates. The Company
assessed the risk of loss in fair values from the effect of a hypothetical 10% devaluation of the U.S. dollar against the exchange
rates for foreign currencies under forward contracts. Such a hypothetical devaluation would decrease derivative instrument fair
values by approximately $9.0 million. As the Company’s foreign currency exchange forward contracts are primarily designated as
cash flow hedges of forecasted transactions, the hypothetical change in fair values would be expected to be largely offset by the
net change in fair values of the underlying hedged items. Refer to Note 14, “DERIVATIVE INSTRUMENTS,” included in “ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K for the fair value of outstanding
foreign currency exchange forward contracts included in other current assets and accrued expenses as of February 3, 2024 and
January 28, 2023.
For a detailed discussion of material risk factors that have the potential to cause our actual results to differ materially from our
expectations, refer to “ITEM 1A. RISK FACTORS,” included in this Annual Report on Form 10-K.
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
Item 8. Financial Statements and Supplementary Data
Abercrombie & Fitch Co.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Thousands, except per share amounts)
Net sales
Cost of sales, exclusive of depreciation and amortization
Gross profit
Stores and distribution expense
Marketing, general and administrative expense
Other operating income, net
Operating income
Interest expense
Interest income
Income before income taxes
Income tax expense
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to A&F
Net income per share attributable to A&F
Basic
Diluted
Weighted-average shares outstanding
Basic
Diluted
Other comprehensive income (loss)
Foreign currency translation, net of tax
Derivative financial instruments, net of tax
Other comprehensive income (loss)
Comprehensive income (loss)
Less: Comprehensive income attributable to noncontrolling interests
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
4,280,677 $
3,697,751 $
3,712,768
1,587,265
2,693,412
1,571,737
642,877
(5,873)
484,671
30,352
(29,980)
484,299
148,886
335,413
7,290
1,593,213
2,104,538
1,496,962
517,602
(2,674)
92,648
30,236
(4,604)
67,016
56,631
10,385
7,569
328,123 $
2,816 $
1,400,773
2,311,995
1,440,423
536,815
(8,327)
343,084
37,958
(3,848)
308,974
38,908
270,066
7,056
263,010
6.53 $
6.22 $
0.06 $
0.05 $
4.41
4.20
50,250
52,726
50,307
52,327
59,597
62,636
$
$
$
$
(3,879) $
(11,964) $
5,438
1,559
336,972
7,290
(10,857)
(22,821)
(12,436)
7,569
(22,917)
10,518
(12,399)
257,667
7,056
250,611
Comprehensive income (loss) attributable to A&F
$
329,682 $
(20,005) $
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Abercrombie & Fitch Co.
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2023 Form 10-K
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Abercrombie & Fitch Co.
Consolidated Balance Sheets
(Thousands, except par value amounts)
Assets
Current assets:
Cash and equivalents
Receivables
Inventories
Other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Other assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued expenses
Short-term portion of operating lease liabilities
Income taxes payable
Total current liabilities
Long-term liabilities:
Long-term portion of operating lease liabilities
Long-term portion of borrowings, net
Other liabilities
Total long-term liabilities
Stockholders’ equity
Class A Common Stock - $0.01 par value: 150,000 shares authorized and 103,300 shares issued
for all periods presented
Paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax (“AOCL”)
Treasury stock, at average cost: 52,800 and 54,298 shares at February 3, 2024 and January 28,
2023, respectively
Total A&F stockholders’ equity
Noncontrolling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity
February 3, 2024
January 28, 2023
$
900,884 $
78,346
469,466
88,569
517,602
104,506
505,621
100,289
1,537,265
1,228,018
538,033
678,256
220,679
551,585
723,550
209,947
$
2,974,233 $
2,713,100
$
296,976 $
436,655
179,625
53,564
966,820
646,624
222,119
88,683
957,426
1,033
421,609
2,643,629
(135,968)
258,895
413,303
213,979
16,023
902,200
713,361
296,852
94,118
1,104,331
1,033
416,255
2,368,815
(137,527)
(1,895,143)
(1,953,735)
1,035,160
14,827
1,049,987
694,841
11,728
706,569
$
2,974,233 $
2,713,100
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Abercrombie & Fitch Co.
46
2023 Form 10-K
Table of Contents
Abercrombie & Fitch Co.
Consolidated Statements of Stockholders’ Equity
(Thousands, except per share amounts)
Common Stock
Shares
outstanding
Par
value
Paid-in
capital
Non-
controlling
interests
Retained
earnings
Treasury stock
AOCL
Shares
At average
cost
Total
stockholders’
equity
Balance, January 30, 2021
62,399 $ 1,033 $ 401,283 $
12,684 $ 2,149,470 $
(102,307) 40,901 $ (1,512,851) $
949,312
Net income
—
Purchase of common stock
(10,200)
—
—
—
—
7,056
263,010
—
—
—
270,066
—
—
— 10,200
(377,290)
(377,290)
Share-based compensation
issuances and exercises
Share-based compensation
expense
Derivative financial
instruments, net of tax
Foreign currency translation
adjustments, net of tax
Distributions to noncontrolling
interests, net
786
—
(17,397)
—
(26,324)
—
(786)
30,558
(13,163)
—
—
29,304
—
—
—
—
—
—
—
—
—
—
—
—
—
29,304
—
10,518
—
—
10,518
—
(22,917)
—
—
(22,917)
—
—
—
(8,506)
—
—
—
—
(8,506)
Balance, January 29, 2022
52,985 $ 1,033 $ 413,190 $
11,234 $ 2,386,156 $
(114,706) 50,315 $ (1,859,583) $
837,324
Net income
Purchase of common stock
Share-based compensation
issuances and exercises
Share-based compensation
expense
Derivative financial
instruments, net of tax
Foreign currency translation
adjustments, net of tax
Distributions to noncontrolling
interests, net
—
(4,770)
—
—
—
—
7,569
2,816
—
—
—
10,385
—
—
—
4,770
(125,775)
(125,775)
787
—
(25,930)
—
(20,157)
—
(787)
31,623
(14,464)
—
—
28,995
—
—
—
—
—
—
—
—
—
—
—
—
—
28,995
—
(10,857)
—
—
(10,857)
—
(11,964)
—
—
(11,964)
—
—
—
(7,075)
—
—
—
—
(7,075)
Balance, January 28, 2023
49,002 $ 1,033 $ 416,255 $
11,728 $ 2,368,815 $
(137,527) 54,298 $ (1,953,735) $
706,569
Net income
Purchase of common stock
Share-based compensation
issuances and exercises
Share-based compensation
expense
Derivative financial
instruments, net of tax
Foreign currency translation
adjustments, net of tax
Distributions to noncontrolling
interests, net
—
—
—
—
—
—
7,290
328,123
—
—
—
—
—
—
—
—
335,413
—
1,498
—
(34,768)
—
(53,309)
—
(1,498)
58,592
(29,485)
—
—
40,122
—
—
—
—
—
—
—
—
—
—
—
—
—
40,122
—
5,438
—
—
5,438
—
(3,879)
—
—
(3,879)
—
—
—
(4,191)
—
—
—
—
(4,191)
Balance, February 3, 2024
50,500 $ 1,033 $ 421,609 $
14,827 $ 2,643,629 $
(135,968) 52,800 $ (1,895,143) $ 1,049,987
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Abercrombie & Fitch Co.
47
2023 Form 10-K
Table of Contents
Operating activities
Net income
Abercrombie & Fitch Co.
Consolidated Statements of Cash Flows
(Thousands)
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
335,413 $
10,385 $
270,066
Adjustments to reconcile net income to net cash provided by (used for) operating
activities:
Depreciation and amortization
Asset impairment
Loss on disposal
(Benefit) provision for deferred income taxes
Share-based compensation
Loss (gain) on extinguishment of debt
Changes in assets and liabilities
Inventories
Accounts payable and accrued expenses
Operating lease right-of use assets and liabilities
Income taxes
Other assets
Other liabilities
Net cash provided by (used for) operating activities
Investing activities
Purchases of property and equipment
Proceeds from the sale of property and equipment
Withdrawal of funds from Rabbi Trust assets
Net cash used for investing activities
Financing activities
Purchase of senior secured notes
Payment of debt issuance costs and fees
Purchases of common stock
Other financing activities
Net cash used for financing activities
Effect of foreign currency exchange rates on cash
Net increase (decrease) in cash and equivalents, and restricted cash and equivalents
Cash and equivalents, and restricted cash and equivalents, beginning of period
Cash and equivalents, and restricted cash and equivalents, end of period
Supplemental information related to non-cash activities
Purchases of property and equipment not yet paid at end of period
Operating lease right-of-use assets additions, net of terminations, impairments and other
reductions
Supplemental information related to cash activities
Cash paid for interest
Cash paid for income taxes
Cash received from income tax refunds
Cash paid for amounts included in measurement of operating lease liabilities
$
$
$
$
$
$
$
141,104
8,289
6,408
(4,743)
40,122
1,975
35,043
82,925
(55,646)
35,806
33,623
(6,897)
653,422
132,243
14,031
552
11,500
28,995
(52)
144,035
12,100
5,020
(31,922)
29,304
5,347
18,505
(123,221)
(115,152)
(18,495)
(7,390)
(86,923)
9,458
(2,343)
77,910
(93,827)
(3,086)
396
(14,340)
277,782
(157,797)
(164,566)
(96,979)
615
—
11,891
12,000
—
—
(157,182)
(140,675)
(96,979)
(77,972)
(180)
—
(33,049)
(111,201)
(2,923)
382,116
527,569
(7,862)
(181)
(125,775)
(21,511)
(155,329)
(8,452)
(306,799)
(46,969)
(2,016)
(377,290)
(20,623)
(446,898)
(23,694)
(289,789)
834,368
1,124,157
909,685 $
527,569 $
834,368
35,568 $
57,313 $
29,932
155,184 $
269,430 $
29,241
24,891 $
26,687 $
120,448 $
53,011 $
1,843 $
3,701 $
28,413
74,709
2,292
296,834 $
263,269 $
364,842
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Abercrombie & Fitch Co.
48
2023 Form 10-K
Table of Contents
Abercrombie & Fitch Co.
Index for Notes to Consolidated Financial Statements
Note 1.
Note 2.
Note 3.
Note 4.
Note 5.
Note 6.
Note 7.
Note 8.
Note 9.
Note 10.
Note 11.
Note 12.
Note 13.
Note 14.
Note 15.
Note 16.
Note 17.
Note 18.
NATURE OF BUSINESS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
FAIR VALUE
INVENTORIES
PROPERTY AND EQUIPMENT, NET
LEASES
ASSET IMPAIRMENT
RABBI TRUST ASSETS
ACCRUED EXPENSES
INCOME TAXES
BORROWINGS
SHARE-BASED COMPENSATION
DERIVATIVE INSTRUMENTS
ACCUMULATED OTHER COMPREHENSIVE LOSS
SAVINGS AND RETIREMENT PLANS
SEGMENT REPORTING
CONTINGENCIES
Page No.
50
50
60
60
62
62
63
64
64
65
65
68
69
72
74
75
75
77
Abercrombie & Fitch Co.
49
2023 Form 10-K
Table of Contents
Abercrombie & Fitch Co.
Notes to Consolidated Financial Statements
1. NATURE OF BUSINESS
Abercrombie & Fitch Co. (“A&F”), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and its
subsidiaries are referred to as the “Company”), is a global, digitally-led omnichannel retailer. The Company offers a broad
assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its
Company-owned stores and digital channels, as well as through various third-party arrangements.
During the second quarter of Fiscal 2023, to leverage the knowledge and experience of our regional teams to better drive brand
growth, the Company reorganized its structure and now manages its business on a geographic basis, consisting of three
reportable segments: Americas; Europe, the Middle East and Africa (EMEA); and Asia-Pacific (APAC). Corporate functions and
other income and expenses are evaluated on a consolidated basis and are not allocated to the Company’s segments, and
therefore are included as a reconciling item between segment and total operating income (loss). There was no impact on
consolidated net sales, operating income (loss) or net income (loss) as a result of these changes. All prior periods presented are
recast to conform to the new segment presentation.
The Company’s brands include Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister
brands, which includes Hollister and Gilly Hicks. These brands share a commitment to offering unique products of enduring
quality and exceptional comfort that allow customers around the world to express their own individuality and style.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying Consolidated Financial Statements include historical financial statements of, and transactions applicable to,
the Company and reflect its financial position, results of operations and cash flows.
The Company has interests in an Emirati business venture and in a Kuwaiti business venture with Majid al Futtaim Fashion
L.L.C. (“MAF”) and a “U.S.” business venture with Dixar L.L.C. (“Dixar”), each of which meets the definition of a variable interest
entity (“VIE”). The purpose of the business ventures with MAF is to operate stores in the United Arab Emirates and Kuwait and
the purpose of the business venture with Dixar is to hold certain intellectual property assets related to the Social Tourist product.
The Company is deemed to be the primary beneficiary of these VIEs; therefore, the Company has consolidated the operating
results, assets and liabilities of these VIEs, with the noncontrolling interests’ (“NCI”) portions of net income presented as net
income attributable to NCI on the Consolidated Statements of Operations and Comprehensive Income (Loss) and the NCI
portion of stockholders equity presented as NCI on the Consolidated Balance Sheets.
Fiscal Year
The Company’s fiscal year ends on the Saturday closest to January 31. This typically results in a fifty-two week year, but
occasionally gives rise to an additional week, resulting in a fifty-three week year, as is the case in Fiscal 2023. Fiscal years are
designated in the Consolidated Financial Statements and notes by the calendar year in which the fiscal year commences. All
references herein to the Company’s fiscal years are as follows:
Fiscal year
Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Use of Estimates
Year ended/ ending
Number of weeks
January 30, 2021
January 29, 2022
January 28, 2023
February 3, 2024
February 1, 2025
52
52
52
53
52
The preparation of financial statements, in conformity with U.S. generally accepted accounting principles (“GAAP”), requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses
during the reporting period. Due to the inherent uncertainty involved with estimates, actual results may differ. Additionally, these
estimates and assumptions may change as a result of the impact of global economic conditions such as the uncertainty
regarding a slowing economy, rising interest rates, continued inflation, fluctuation in foreign exchange rates, the ongoing conflicts
between Russia and Ukraine and Israel and Hamas which could result in material impacts to the Company’s consolidated
financial statements in future reporting periods.
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
Reclassifications
Abercrombie & Fitch Co.
The Company reclassified asset impairment charges into stores and distribution expense on the Consolidated Statements of
Operations and Comprehensive Income (Loss). In addition, the Company expanded the presentation of interest expense, net to
present interest expense and interest income on the Consolidated Statements of Operations and Comprehensive Income (Loss).
There were no changes to operating income (loss) or net income (loss). Prior period amounts have been reclassified to conform
to current year’s presentation.
Cash and Equivalents
A summary of cash and equivalents on the Consolidated Balance Sheets follows:
(in thousands)
Cash (1)
Cash equivalents: (2)
Time deposits
Money market funds
Cash and equivalents
(1) Primarily consists of amounts on deposit with financial institutions.
(2)
Investments with original maturities of less than three months.
Consolidated Statements of Cash Flows Reconciliation
February 3, 2024
January 28, 2023
$
524,735 $
467,238
26,975
349,174
$
900,884 $
—
50,364
517,602
The following table provides a reconciliation of cash and equivalents and restricted cash and equivalents to the amounts shown
on the Consolidated Statements of Cash Flows:
(in thousands)
Cash and equivalents
Long-term restricted cash and equivalents (1)
Location
February 3, 2024
January 28, 2023
January 29, 2022
Cash and equivalents
$
900,884 $
517,602 $
Other assets
8,801
9,967
Cash and equivalents and restricted cash and equivalents
$
909,685 $
527,569 $
823,139
11,229
834,368
(1) Restricted cash and equivalents primarily consists of amounts on deposit with banks that are used as collateral for customary non-debt banking
commitments and deposits into trust accounts to conform to standard insurance security requirements.
Receivables
Receivables on the Consolidated Balance Sheets primarily include credit card receivables, lessor construction allowance and
lease incentive receivables, value added tax (“VAT”) receivables and trade receivables or refunds.
As part of the normal course of business, the Company has approximately three to four days of proceeds from sales transactions
outstanding with its third-party credit card vendors at any point. The Company classifies these outstanding balances as credit
card receivables. Lessor construction allowances are recorded for certain store lease agreements for improvements completed
by the Company. VAT receivables are payments the Company has made on purchases of goods that will be recovered as those
goods are sold. Trade receivables are amounts billed by the Company to wholesale, franchise and licensing partners in the
ordinary course of business. Income tax receivables represent refunds of certain tax payments along with net operating loss and
credit carryback claims for which the Company expects to receive refunds within the next 12 months.
Inventories
Inventories on the Consolidated Balance Sheets are valued at the lower of cost and net realizable value on a weighted-average
cost basis. The Company reduces the carrying value of inventory through a lower of cost and net realizable value adjustment,
the impact of which is reflected in cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of
Operations and Comprehensive Income (Loss). The lower of cost and net realizable value adjustment is based on the
Company’s consideration of multiple factors and assumptions including demand forecasts, current sales volumes, expected sell-
off activity, composition and aging of inventory, historical recoverability experience and risk of obsolescence from changes in
economic conditions or customer preferences.
Additionally, as part of inventory valuation, inventory shrinkage estimates based on historical trends from actual physical
inventories are made each quarter that reduce the inventory value for lost or stolen items. The Company performs physical
inventories on a periodic basis and adjusts the gross inventory balance and shrink estimate accordingly. Refer to Note 5,
“INVENTORIES.”
The Company’s global sourcing of merchandise is generally negotiated, contracted, and settled in U.S. Dollars.
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
Other Current Assets
Abercrombie & Fitch Co.
Other current assets on the Consolidated Balance Sheets consist of: prepaid expenses including those related to rent,
information technology maintenance and taxes; current store supplies; derivative contracts and other.
Property and Equipment, Net
Depreciation of property and equipment is computed for financial reporting purposes on a straight-line basis using the following
service lives:
Category of property and equipment
Information technology
Furniture, fixtures and equipment
Leasehold improvements
Other property and equipment
Buildings
Service lives
3 - 7 years
3 - 15 years
3 - 15 years
3 - 20 years
30 years
Leasehold improvements are amortized over either their respective lease terms or their service lives, whichever is shorter. The
cost of assets sold or retired and the related accumulated depreciation are removed from the accounts with any resulting gain or
loss included in net income on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Maintenance and repairs are charged to expense as incurred. Major remodels and improvements that extend the service lives of
the related assets are capitalized.
The Company capitalizes certain direct costs associated with the development and purchase of internal-use software within
property and equipment and other assets. Capitalized costs are amortized on a straight-line basis over the estimated useful lives
of the software, generally not exceeding seven years.
Refer to Note 6, “PROPERTY AND EQUIPMENT, NET.”
Leases
The Company determines if an arrangement is an operating lease at inception. For new operating leases, the Company
recognizes an asset for the right to use a leased asset and a liability based on the present value of remaining lease payments
over the lease term on the lease commencement date. The commencement date for new leases is when the lessor makes
the leased asset available for use by the Company, typically the possession date.
As the rates implicit in the Company’s leases are not readily determinable, the Company uses its incremental borrowing rate,
based on the local economic environment and the duration of the lease term, for the initial measurement of the operating lease
right-of-use asset and liability.
The measurement of operating lease right-of-use assets and liabilities includes amounts related to:
•
•
•
•
•
Lease payments made prior to the lease commencement date;
Incentives from landlords received by the Company for signing a lease, including construction allowances or deferred
lease credits paid to the Company by landlords towards construction and tenant improvement costs, which are
presented as a reduction to the right-of-use asset recorded;
Fixed payments related to operating lease components, such as rent escalation payments scheduled at the lease
commencement date;
Fixed payments related to nonlease components, such as taxes, insurance, and maintenance costs; and
Unamortized initial direct costs incurred in conjunction with securing a lease, including key money, which are amounts
paid directly to a landlord in exchange for securing the lease, and leasehold acquisition costs, which are amounts paid
to parties other than the landlord, such as an existing tenant, to secure the desired lease.
The measurement of operating lease right-of-use assets and liabilities excludes amounts related to:
•
•
•
•
Costs expected to be incurred to return a leased asset to its original condition, also referred to as asset retirement
obligations, which are classified within other liabilities on the Consolidated Balance Sheets;
Variable payments related to operating lease components, such as contingent rent payments made by the Company
based on performance, the expense of which is recognized in the period incurred on the Consolidated Statements of
Operations and Comprehensive Income (Loss);
Variable payments related to nonlease components, such as taxes, insurance, and maintenance costs, the expense of
which is recognized in the period incurred in the Consolidated Statements of Operations and Comprehensive Income
(Loss); and
Leases not related to Company-operated retail stores with an initial term of 12 months or less, the expense of which is
recognized in the period incurred in the Consolidated Statements of Operations and Comprehensive Income (Loss).
Abercrombie & Fitch Co.
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2023 Form 10-K
Table of Contents
Abercrombie & Fitch Co.
Certain of the Company’s operating leases include options to extend the lease or to terminate the lease. The Company assesses
these operating leases and, depending on the facts and circumstances, may or may not include these options in the
measurement of the Company’s operating lease right-of-use assets and liabilities. Generally, the Company’s options to extend its
operating leases are at the Company’s sole discretion and at the time of lease commencement are not reasonably certain of
being exercised. There may be instances in which a lease is being renewed on a month-to-month basis and, in these instances,
the Company will recognize lease expense in the period incurred in the Consolidated Statements of Operations and
Comprehensive Income (Loss) until a new agreement has been executed. Upon the signing of the renewal agreement, the
Company recognizes an asset for the right to use the leased asset and a liability based on the present value of remaining lease
payments over the lease term.
Amortization and interest expense related to operating lease right-of-use assets and liabilities are generally calculated on a
straight-line basis over the lease term. Amortization and interest expense related to previously impaired operating lease right-of-
use assets are calculated on a front-loaded pattern. Depending on the nature of the operating lease, amortization and interest
expense are primarily recorded within stores and distribution expense, marketing, or general and administrative expense, on the
Consolidated Statements of Operations and Comprehensive Income (Loss).
The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive
covenants. In addition, the Company does not have any sublease arrangements with any related party.
Refer to Note 7, “LEASES.”
Long-lived Asset Impairment
For the purposes of asset impairment, the Company’s long-lived assets, primarily operating lease right-of-use assets, leasehold
improvements, furniture, fixtures and equipment, are grouped with other assets and liabilities at the store level, which is the
lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. On at least a
quarterly basis, management reviews the Company’s asset groups for indicators of impairment, which include, but are not limited
to, material declines in operational performance, a history of losses, an expectation of future losses, adverse market conditions,
store closure or relocation decisions, and any other events or changes in circumstances that would indicate the carrying amount
of an asset group might not be recoverable.
If an asset group displays an indicator of impairment, it is tested for recoverability by comparing the sum of the estimated future
undiscounted cash flows attributable to the asset group to the carrying amount of the asset group. This recoverability test
requires management to make assumptions and judgments related, but not limited, to management’s expectations for future
cash flows from operating the store. The key assumption used in developing these projected cash flows used in the
recoverability test is estimated sales growth rate.
If the sum of the estimated future undiscounted cash flows attributable to an asset group is less than its carrying amount, and it is
determined that the carrying amount of the asset group is not recoverable, management determines if there is an impairment
loss by comparing the carrying amount of the asset group to its fair value. Fair value of an asset group is based on the highest
and best use of the asset group, often using a discounted cash flow model that utilizes Level 3 fair value inputs. The key
assumptions used in the Company’s fair value analyses are estimated sales growth rate and comparable market rents. An
impairment loss is recognized based on the excess of the carrying amount of the asset group over its fair value.
Refer to Note 8, “ASSET IMPAIRMENT.”
Other Assets
Other assets on the Consolidated Balance Sheets consist primarily of the Company’s trust-owned life insurance policies held in
the irrevocable rabbi trust (the “Rabbi Trust”), deferred tax assets, long-term deposits, intellectual property, long-term restricted
cash and equivalents, long-term supplies, certain costs incurred to develop internal-use computer software during the application
development stage and various other assets.
Rabbi Trust Assets
The Rabbi Trust includes amounts, restricted in their use, to meet funding obligations to participants in the Abercrombie & Fitch
Co. Nonqualified Savings and Supplemental Retirement Plan I, the Abercrombie & Fitch Co. Nonqualified Savings and
Supplemental Retirement Plan II and the Supplemental Executive Retirement Plan. The Rabbi Trust assets primarily consist of
trust-owned life insurance policies which are recorded at cash surrender value and are included in other assets on the
Consolidated Balance Sheets. The change in cash surrender value of the life insurance policies in the Rabbi Trust is recorded in
interest expense, net on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Refer to Note 9, “RABBI TRUST ASSETS.”
Abercrombie & Fitch Co.
53
2023 Form 10-K
Table of Contents
Abercrombie & Fitch Co.
Intellectual Property
Intellectual property primarily includes trademark assets associated with the Company’s international operations, consisting of
finite-lived and indefinite-lived intangible assets. The Company’s finite-lived intangible assets are amortized over a useful life of
10 to 20 years.
Supply Chain Finance Program
Under the supply chain finance (“SCF”) program, which is administered by a third party, the Company’s vendors, at their sole
discretion, are given the opportunity to sell receivables from the Company to a participating financial institution at a discount that
leverages the Company’s credit profile. The commercial terms negotiated by the Company with its vendors are consistent,
irrespective of whether a vendor participates in the SCF program. A participating vendor has the option to be paid by the financial
institution earlier than the original invoice due date. The Company’s responsibility is limited to making payment on the terms
originally negotiated by the Company with each vendor, regardless of whether the vendor sells its receivable to a financial
institution. If a vendor chooses to participate in the SCF program, the Company pays the financial institution the stated amount of
confirmed merchandise invoices on the stated maturity date, which is typically 75 days from the invoice date. The agreement
with the financial institution does not require the Company to provide assets pledged as security or other forms of guarantees for
the SCF program.
As of February 3, 2024 and January 28, 2023, $72.4 million and $68.4 million of SCF program liabilities were recorded in
accounts payable in the Consolidated Balance Sheets, respectively, and reflected as a cash flow from operating activities in the
Consolidated Statements of Cash Flows when settled
Income Taxes
Income taxes are calculated using the asset and liability method. Deferred tax assets and liabilities are recognized based on the
difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using current enacted tax rates in effect for the years in which those temporary
differences are expected to reverse. Inherent in the determination of the Company’s income tax liability and related deferred
income tax balances are certain judgments and interpretations of enacted tax law and published guidance with respect to
applicability to the Company’s operations. The Company is subject to audit by taxing authorities, usually several years after tax
returns have been filed, and the taxing authorities may have differing interpretations of tax laws. Valuation allowances are
established to reduce deferred tax assets to the amount expected to be realized when it is more likely than not that some portion
or all of the deferred tax assets will not be realized.
The Company records tax expense or benefit that does not relate to ordinary income in the current fiscal year discretely in the
period in which it occurs. Examples of such types of discrete items include, but are not limited to: changes in estimates of the
outcome of tax matters related to prior years, assessments of valuation allowances, return-to-provision adjustments, tax-exempt
income, the settlement of tax audits and changes in tax legislation and/or regulations.
Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon
examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount
recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon
settlement. The Company’s effective tax rate includes the impact of reserve provisions and changes to reserves on uncertain tax
positions that are not more likely than not to be sustained upon examination as well as related interest and penalties.
A number of years may elapse before a particular matter, for which the Company has established a reserve, is audited and finally
resolved. The number of years with open tax audits varies depending on the tax jurisdiction. While it is often difficult to predict the
final outcome or the timing of resolution of any particular tax matter, the Company believes that its reserves reflect the probable
outcome of known tax contingencies. Unfavorable settlement of any particular issue may require use of the Company’s cash.
Favorable resolution would be recognized as a reduction to the Company’s effective tax rate in the period of resolution.
The Company recognizes accrued interest and penalties related to uncertain tax positions as a component of income tax
expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Refer to Note 11, “INCOME TAXES.”
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Foreign Currency Translation and Transactions
The functional currencies of the Company’s foreign subsidiaries are generally the currencies of the environments in which each
subsidiary primarily generates and expends cash, which is often the local currency of the country in which each subsidiary
operates. The financial statements of the Company’s foreign subsidiaries with functional currencies other than the U.S. Dollar are
translated into U.S. Dollars (the Company’s reporting currency) as follows: assets and liabilities are translated at the exchange
rate prevailing at the balance sheet date, equity accounts are translated at historical exchange rates, and revenues and
expenses are translated at the monthly average exchange rate for the period.
Foreign currency transactions, which are transactions denominated in a currency other than the entity’s functional currency, are
initially measured in the functional currency of the recording entity using the exchange rate in effect at that date. Subsequently,
assets and liabilities associated with foreign currency transactions are remeasured into the entity’s functional currency using
historical exchange rates when remeasuring nonmonetary assets and liabilities and current exchange rates when remeasuring
monetary assets and liabilities.
Gains and losses resulting from the remeasurement of monetary assets and liabilities are included in other operating income,
net; whereas, translation adjustments and gains and losses associated with measuring inter-company loans of a long-term
investment nature are reported as an element of other comprehensive income (loss).
Derivative Instruments
The Company is exposed to risks associated with changes in foreign currency exchange rates and uses derivative instruments,
primarily forward contracts, to manage the financial impacts of these exposures. The Company does not use forward contracts to
engage in currency speculation and does not enter into derivative financial instruments for trading purposes.
In order to qualify for hedge accounting treatment, a derivative instrument must be considered highly effective at offsetting
changes in either the hedged item’s cash flows or fair value. Additionally, the hedge relationship must be documented to include
the risk management objective and strategy, the hedging instrument, the hedged item, the risk exposure, and how hedge
effectiveness will be assessed prospectively and retrospectively. The extent to which a hedging instrument has been, and is
expected to continue to be, effective at offsetting changes in fair value or cash flows is assessed and documented at least
quarterly. If the underlying hedged item is no longer probable of occurring, hedge accounting is discontinued.
For derivative instruments that either do not qualify for hedge accounting or are not designated as hedges, all changes in the fair
value of the derivative instrument are recognized in earnings. For qualifying cash flow hedges, the change in the fair value of the
derivative instrument is recorded as a component of other comprehensive income (loss) (“OCI”) and recognized in earnings
when the hedged cash flows affect earnings. If the cash flow hedge relationship is terminated, the derivative instrument gains or
losses that are deferred in OCI will be recognized in earnings when the hedged cash flows occur. However, for cash flow hedges
that are terminated because the forecasted transaction is not expected to occur in the original specified time period, or a two-
month period thereafter, the derivative instrument gains or losses are immediately recognized in earnings.
The Company uses derivative instruments, primarily forward contracts designated as cash flow hedges, to hedge the foreign
currency exchange rate exposure associated with forecasted foreign-currency-denominated intercompany inventory transactions
with foreign subsidiaries before inventory is sold to third parties. Fluctuations in exchange rates will either increase or decrease
the Company’s intercompany equivalent cash flows and affect the Company’s U.S. Dollar earnings. Gains or losses on the
foreign currency exchange forward contracts that are used to hedge these exposures are expected to partially offset this
variability. Foreign currency exchange forward contracts represent agreements to exchange the currency of one country for the
currency of another country at an agreed upon settlement date. These forward contracts typically have a maximum term of
twelve months. The conversion of the inventory to cost of sales, exclusive of depreciation and amortization, will result in the
reclassification of related derivative gains and losses that are reported in AOCL on the Consolidated Balance Sheets into
earnings.
The Company also uses foreign currency exchange forward contracts to hedge certain foreign-currency-denominated net
monetary assets and liabilities, such as cash balances, receivables and payables. Fluctuations in foreign currency exchange
rates result in transaction gains and losses being recorded in earnings as monetary assets and liabilities are remeasured at the
spot exchange rate at the Company’s fiscal month-end or upon settlement. The Company has chosen not to apply hedge
accounting to these foreign currency exchange forward contracts because there are no differences in the timing of gain or loss
recognition on the hedging instruments and the hedged items.
The Company presents its derivative assets and derivative liabilities at their gross fair values within other current assets and
accrued liabilities, respectively, on the Consolidated Balance Sheets. However, the Company’s derivative instruments allow net
settlements under certain conditions.
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Refer to Note 14, “DERIVATIVE INSTRUMENTS.”
Stockholders’ Equity
A summary of the Company’s Class A Common Stock, $0.01 par value, and Class B Common Stock, $0.01 par value, follows:
(in thousands)
Class A Common Stock
Shares authorized
Shares issued
Shares outstanding
Class B Common Stock (1)
Shares authorized
February 3, 2024
January 28, 2023
150,000
103,300
50,500
150,000
103,300
49,002
106,400
106,400
(1) No shares were issued or outstanding as of each of February 3, 2024 and January 28, 2023.
Holders of Class A Common Stock generally have identical rights to holders of Class B Common Stock, except holders of
Class A Common Stock are entitled to one vote per share while holders of Class B Common Stock are entitled to three votes per
share on all matters submitted to a vote of stockholders.
Revenue Recognition
The Company recognizes revenue from product sales when control of the good is transferred to the customer, generally upon
pick up at, or shipment from, a Company location.
The Company provides shipping and handling services to customers in certain transactions under its digital operations. Revenue
associated with the related shipping and handling obligations is deferred until the obligation is fulfilled, typically upon the
customer’s receipt of the merchandise. The related shipping and handling costs are classified in stores and distribution expense
on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Revenue is recorded net of estimated returns, associate discounts, promotions and other similar customer incentives. The
Company estimates reserves for sales returns based on historical experience among other factors. The sales return reserve is
classified in accrued expenses with a corresponding asset related to the projected returned merchandise recorded in inventory
on the Consolidated Balance Sheets.
The Company accounts for gift cards sold to customers by recognizing an unearned revenue liability at the time of sale, which is
recognized as net sales when redeemed by the customer or when the Company has determined the likelihood of redemption to
be remote, referred to as gift card breakage. Gift card breakage is recognized proportionally with gift card redemptions in net
sales. Gift cards sold to customers do not expire or lose value over periods of inactivity and the Company is not required by law
to escheat the value of unredeemed gift cards to the jurisdictions in which it operates.
The Company also maintains loyalty programs, which primarily provide customers with the opportunity to earn points toward
future merchandise discount rewards with qualifying purchases. The Company accounts for expected future reward redemptions
by recognizing an unearned revenue liability as customers accumulate points, which remains until revenue is recognized at the
earlier of redemption or expiration.
Unearned revenue liabilities related to the Company’s gift card program and loyalty programs are classified in accrued expenses
on the Consolidated Balance Sheets and are typically recognized as revenue within a 12-month period.
For additional details on the Company’s unearned revenue liabilities related to the Company’s gift card and loyalty programs,
refer to Note 3, “REVENUE RECOGNITION.”
The Company also recognizes revenue under wholesale arrangements when control passes to the wholesale partner, which is
generally upon shipment. Revenue from the Company’s franchise and license arrangements, primarily royalties earned upon the
sale of merchandise, is generally recognized at the time merchandise is sold to the franchisees’ retail customers or to the
licensees’ wholesale customers.
The Company does not include tax amounts collected from customers on behalf of third parties, including sales and indirect
taxes, in net sales.
All revenues are recognized in net sales in the Consolidated Statements of Operations and Comprehensive Income (Loss). For a
discussion of the disaggregation of revenue, refer to Note 17, “SEGMENT REPORTING.”
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Cost of Sales, Exclusive of Depreciation and Amortization
Cost of sales, exclusive of depreciation and amortization on the Consolidated Statements of Operations and Comprehensive
Income (Loss), primarily consists of cost incurred to ready inventory for sale, including product costs, freight, and import costs, as
well as provisions for reserves for shrink and lower of cost and net realizable value. Gains and losses associated with the
effective portion of designated foreign currency exchange forward contracts related to the hedging of intercompany inventory
transactions are also recognized in cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of
Operations and Comprehensive Income (Loss).
The Company’s cost of sales, exclusive of depreciation and amortization, and consequently gross profit, may not be comparable
to those of other retailers, as inclusion of certain costs vary across the industry. Some retailers include all costs related to buying,
design and distribution operations in cost of sales, while others may include either all or a portion of these costs in selling,
general and administrative expenses.
Stores and Distribution Expense
Stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss) primarily
consists of: store payroll; store management; operating lease costs; utilities and other landlord expenses; depreciation and
amortization, except for those amounts included in marketing, general and administrative expense; repairs and maintenance and
other store support functions; marketing and other costs related to the Company’s digital operations; shipping and handling
costs; and distribution center (“DC”) expense.
A summary of shipping and handling costs, which includes costs incurred to store, move and prepare product for shipment and
costs incurred to physically move product to our customers across channels, follows:
(in thousands)
Shipping and handling costs
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
362,545
$
356,280
$
306,220
Marketing, General and Administrative Expense
Marketing, general and administrative expense on the Consolidated Statements of Operations and Comprehensive Income
(Loss) primarily consists of: home office compensation and marketing, except for those departments included in stores and
distribution expense; information technology; outside services, such as legal and consulting; depreciation, primarily related to IT
and other home office assets; amortization related to trademark assets; costs to design and develop the Company’s
merchandise; relocation; recruiting; and travel expenses.
Other Operating Income, Net
Other operating income, net on the Consolidated Statements of Operations and Comprehensive Income (Loss) primarily consists
of gains and losses resulting from foreign-currency-denominated transactions. A summary of foreign-currency-denominated
transaction gains (losses), including those related to derivative instruments, follows:
(in thousands)
Foreign-currency-denominated transaction gains (losses)
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
1,936 $
(1,626) $
4,232
Interest Expense and Interest Income
Interest expense primarily consists of interest expense on the Company’s long-term borrowings outstanding. Interest income
primarily consists of interest income earned on the Company’s investments and cash holdings and realized gains from the Rabbi
Trust assets.
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Advertising Costs
Abercrombie & Fitch Co.
Advertising costs consist primarily of paid media advertising, direct digital advertising, including e-mail distribution, digital content
and in-store photography and signage.
Advertising costs related specifically to digital operations are expensed as incurred and the production of in-store photography
and signage is expensed when the marketing campaign commences as components of stores and distribution expense. All other
advertising costs are expensed as incurred as components of marketing, general and administrative expense.
A summary of advertising costs follows:
(in thousands)
Advertising costs
Share-based Compensation
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
217,276 $
189,347 $
204,575
The Company issues shares of Class A Common Stock, $0.01 par value (the “Common Stock”) from treasury stock upon
exercise of stock appreciation rights and vesting of restricted stock units, including those converted from performance share
awards. As of February 3, 2024, the Company had sufficient treasury stock available to settle restricted stock units and stock
appreciation rights outstanding. Settlement of stock awards in Common Stock also requires that the Company have sufficient
shares available in stockholder-approved plans at the applicable time.
In the event there are not sufficient shares of Common Stock available to be issued under the Abercrombie & Fitch Co. 2016
Long-Term Incentive Plan for Directors (as amended effective May 20, 2020, the “2016 Directors LTIP”) and the Abercrombie &
Fitch Co. 2016 Long-Term Incentive Plan for Associates (as amended effective June 8, 2023, the “2016 Associates LTIP”), or
under a successor or replacement plan at each reporting date as of which share-based compensation awards remain
outstanding, the Company may be required to designate some portion of the outstanding awards to be settled in cash, which
would result in liability classification of such awards. The fair value of liability-classified awards would be re-measured each
reporting date until such awards no longer remain outstanding or until sufficient shares of Common Stock become available to be
issued under the existing plans or under a successor or replacement plan. As long as the awards are required to be classified as
a liability, the change in fair value would be recognized in current period expense based on the requisite service period rendered.
Fair value of both service-based and performance-based restricted stock units is calculated using the market price of the
underlying Common Stock on the date of grant reduced for anticipated dividend payments on unvested shares. In determining
fair value, the Company does not take into account performance-based vesting requirements. Performance-based vesting
requirements are taken into account in determining the number of awards expected to vest. For market-based restricted stock
units, fair value is calculated using a Monte Carlo simulation with the number of shares that ultimately vest dependent on the
Company’s total stockholder return measured against the total stockholder return of a select group of peer companies over a
three-year period. For awards with performance-based or market-based vesting requirements, the number of shares that
ultimately vest can vary from 0% to 200% of target depending on the level of achievement of performance criteria.
The Company estimates the fair value of stock appreciation rights using the Black-Scholes option-pricing model, which requires
the Company to estimate the expected term of the stock appreciation rights and expected future stock price volatility over the
expected term. Estimates of expected terms, which represent the expected periods of time the Company believes stock
appreciation rights will be outstanding, are based on historical experience. Estimates of expected future stock price volatility are
based on the volatility of the Common Stock price for the most recent historical period equal to the expected term of the stock
appreciation rights, as appropriate. The Company calculates the volatility as the annualized standard deviation of the differences
in the natural logarithms of the weekly closing price of the Common Stock, adjusted for stock splits and dividends.
Service-based restricted stock units are expensed on a straight-line basis over the award’s requisite service period.
Performance-based restricted stock units subject to graded vesting are expensed on an accelerated attribution basis.
Performance share award expense is primarily recognized in the performance period of the award’s requisite service period.
Market-based restricted stock units without graded vesting features are expensed on a straight-line basis over the award’s
requisite service period. Compensation expense for stock appreciation rights is recognized on a straight-line basis over the
award’s requisite service period. The Company adjusts share-based compensation expense on a quarterly basis for actual
forfeitures.
For awards that are expected to result in a tax deduction, a deferred tax asset is recorded in the period in which share-based
compensation expense is recognized. A current tax deduction arises upon the issuance of restricted stock units and performance
share awards or the exercise of stock options and stock appreciation rights and is principally measured at the award’s intrinsic
value. If the tax deduction differs from the recorded deferred tax asset, the excess tax benefit or deficit associated with the tax
deduction is recognized within income tax expense.
Refer to Note 13, “SHARE-BASED COMPENSATION.”
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Abercrombie & Fitch Co.
Net Income per Share Attributable to A&F
Net income per basic and diluted share attributable to A&F is computed based on the weighted-average number of outstanding
shares of Common Stock. Additional information pertaining to net income per share attributable to A&F follows:
(in thousands)
Shares of Common Stock issued
Weighted-average treasury shares
Weighted-average — basic shares
Dilutive effect of share-based compensation awards
Weighted-average — diluted shares
Anti-dilutive shares (1)
Fiscal 2023
103,300
(53,050)
50,250
2,476
52,726
541
Fiscal 2022
103,300
(52,993)
50,307
2,020
52,327
2,233
Fiscal 2021
103,300
(43,703)
59,597
3,039
62,636
1,002
(1)
Reflects the total number of shares related to outstanding share-based compensation awards that have been excluded from the computation of net
income (loss) per diluted share because the impact would have been anti-dilutive. Unvested contingently issuable shares related to restricted stock
units with performance-based and market-based vesting conditions can achieve up to 200% of their target vesting amount and are reflected at the
maximum vesting amount less any dilutive portion.
Recent Accounting Pronouncements
The Company reviews recent accounting pronouncements on a quarterly basis and has excluded discussion of those not
applicable to the Company and those not expected to have a material impact on the Company’s consolidated financial
statements. The following table provides a brief description of certain recent accounting pronouncements that the Company has
adopted or that could affect the Company’s financial statements.
Accounting Standards
Update (ASU)
Standards adopted
ASU 2022-04, Liabilities
— Supplier Finance
Programs (Subtopic
405-50): Disclosure of
Supplier Finance Program
Obligations
Standards not yet adopted
ASU 2023-07, Segment
Reporting (Topic 280):
Improvements to
Reportable Segment
Disclosures
Description
Date of
adoption
Effect on the financial statements
or other significant matters
January 29, 2023
information about
The update relates to disclosure requirements for
buyers in supplier finance programs. The amendments
in the update require that a buyer disclose qualitative
and quantitative
their supplier
finance programs. Interim and annual requirements
include disclosure of outstanding amounts under the
obligations as of the end of the reporting period, and
annual requirements include a roll-forward of those
obligations for the annual reporting period, as well as a
description of payment and other key terms of the
programs. This update is effective for annual periods
beginning after December 15, 2022, and interim
periods within those fiscal years, except for the
requirement to disclose roll-forward information, which
is effective for fiscal years beginning after December
15, 2023.
the
the
standard under
The Company adopted the changes
to
retrospective method in the first
quarter of Fiscal 2023, except for
roll-forward information, which is
effective for fiscal years beginning
after December 15, 2023. Other
disclosure
new
than
requirements, the adoption of this
guidance did not have a significant
impact
Company's
the
consolidated financial statements.
the
on
than
Other
the new disclosure
requirements, the adoption of this
guidance will not have a significant
impact
Company's
the
consolidated financial statements.
on
to
of
that are
segments.
the disclosure/presentation
The update modifies
requirements
The
reportable
amendments in the update require the disclosure of
significant segment expenses
regularly
provided
the chief operating decision maker
(CODM) and included within each reported measure of
segment profit and loss. The amendments also require
disclosure of all other segment items by reportable
segment and a description of
Additionally, the amendments require disclosure of the
title and position of the CODM and an explanation of
how the CODM uses the reported measure(s) of
in assessing segment
loss
segment profit or
performance
allocate
to
deciding
and
resources.This update is effective for annual periods
beginning after December 15, 2023, and interim
periods within fiscal years beginning after December
15, 2024. Early adoption is permitted.
how
its composition.
ASU 2023-09, Income
Taxes (Topic 740):
Improvements to Income
Tax Disclosures
The standard requires disaggregated information about
a reporting entity’s effective tax rate reconciliation as
well as information on income taxes paid. For public
business entities (PBEs), the requirement will be
effective for annual periods beginning after December
15, 2024. The guidance will be applied on a
prospective basis with the option to apply the standard
retrospectively. Early adoption is permitted.
than
Other
the new disclosure
requirements, the adoption of this
guidance will not have a significant
impact
Company's
the
consolidated financial statements.
on
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3. REVENUE RECOGNITION
Disaggregation of revenue
All revenues are recognized in net sales in the Consolidated Statements of Operations and Comprehensive Income
(Loss). For information regarding the disaggregation of revenue, refer to Note 17, “SEGMENT REPORTING.”
Contract liabilities
The following table details certain contract liabilities representing unearned revenue as of February 3, 2024, January 28, 2023
and January 29, 2022:
(in thousands)
Gift card liability (1)
Loyalty programs liability
February 3, 2024
January 28, 2023
January 29, 2022
$
41,144 $
39,235 $
27,937
25,640
36,984
22,757
(1)
Includes $20.0 million and $16.4 million of revenue recognized during Fiscal 2023 and Fiscal 2022, respectively, that was included in the gift card
liability at the beginning of January 28, 2023 and January 29, 2022, respectively.
The following table details recognized revenue associated with the Company’s gift card program and loyalty programs for Fiscal
2023, Fiscal 2022, and Fiscal 2021:
(in thousands)
Fiscal 2023
Fiscal 2022
Fiscal 2021
Revenue associated with gift card redemptions and gift card breakage
$
112,749 $
98,488 $
80,088
Revenue associated with reward redemptions and breakage related to the
Company’s loyalty programs
56,406
48,624
45,417
Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue recognition,” for discussion regarding
significant accounting policies related to the Company’s revenue recognition.
4. FAIR VALUE
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The inputs used to measure fair value are prioritized based on a three-level
hierarchy. The three levels of inputs to measure fair value are as follows:
•
•
•
Level 1—inputs are unadjusted quoted prices for identical assets or liabilities that are available in active markets that
the Company can access at the measurement date.
Level 2—inputs are other than quoted market prices included within Level 1 that are observable for assets or liabilities,
directly or indirectly.
Level 3—inputs to the valuation methodology are unobservable.
The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
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The three levels of the hierarchy and the distribution of the Company’s assets and liabilities that are measured at fair value on a
recurring basis, were as follows:
(in thousands)
Assets:
Cash equivalents (1)
Derivative instruments (2)
Rabbi Trust assets (3)
Restricted cash equivalents (1)
Total assets
Liabilities:
Derivative instruments (2)
Total liabilities
(in thousands)
Assets:
Cash equivalents (1)
Derivative instruments (2)
Rabbi Trust assets (3)
Restricted cash equivalents (1)
Total assets
Liabilities:
Derivative instruments (2)
Total liabilities
Assets and Liabilities at Fair Value as of February 3, 2024
Level 1
Level 2
Level 3
Total
$
349,174 $
26,975 $
— $
376,149
—
1,164
4,282
1,092
52,521
1,420
—
—
—
1,092
53,685
5,702
354,620 $
82,008 $
— $
436,628
— $
— $
539 $
539 $
— $
— $
539
539
Assets and Liabilities at Fair Value as of January 28, 2023
Level 1
Level 2
Level 3
Total
$
$
$
$
50,364 $
—
1
1,690
— $
32
51,681
5,174
— $
—
—
—
52,055 $
56,887 $
— $
50,364
32
51,682
6,864
108,942
— $
— $
4,986 $
4,986 $
— $
— $
4,986
4,986
$
$
$
(1)
(2)
(3)
Level 1 assets consisted of investments in money market funds and U.S. treasury bills. Level 2 assets consisted of time deposits.
Level 2 assets and liabilities consisted primarily of foreign currency exchange forward contracts.
Level 1 assets consisted of investments in money market funds. Level 2 assets consisted of trust-owned life insurance policies.
The Company’s Level 2 assets and liabilities consisted of:
•
•
•
Trust-owned life insurance policies, which were valued using the cash surrender value of the life insurance policies;
Time deposits, which were valued at cost, approximating fair value, due to the short-term nature of these investments;
and
Derivative instruments, primarily foreign currency exchange forward contracts, which were valued using quoted market
prices of the same or similar instruments, adjusted for counterparty risk.
Fair Value of Long-term Borrowings
The Company’s borrowings under the Senior Secured Notes are carried at historical cost in the Consolidated Balance Sheets.
The carrying amount and fair value of the Company’s long-term gross borrowings were as follows:
(in thousands)
Gross borrowings outstanding, carrying amount
Gross borrowings outstanding, fair value
February 3, 2024
January 28, 2023
$
223,214 $
226,004
299,730
304,975
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5. INVENTORIES
Inventories consisted of:
(in thousands)
Inventories at original cost
Less: Lower of cost and net realizable value adjustment
Inventories (1)
February 3, 2024
January 28, 2023
$
$
500,020 $
(30,554)
469,466 $
541,299
(35,678)
505,621
(1)
Included $103.5 million and $93.7 million of inventory in transit, merchandise owned by the Company that has not yet been received at a Company
DC, as of February 3, 2024 and January 28, 2023, respectively.
A summary of the Company’s vendors based on location and the percentage of cost of merchandise receipts during Fiscal 2023,
Fiscal 2022 and Fiscal 2021 follows:
Location
Vietnam
Cambodia
India
China (2)
Other (3)
Total
% of Total Company Merchandise Receipts (1)
Fiscal 2022
Fiscal 2023
Fiscal 2021
34 %
19
12
9
26
100 %
33 %
17
9
13
28
100 %
36 %
16
6
14
28
100 %
(1) Calculated as the cost of merchandise receipts from all vendors within a country during the respective fiscal year divided by cost of total merchandise
receipts during the respective fiscal year.
(2) Only a portion of the Company’s total merchandise sourced from China is subject to the additional U.S. tariffs on imported consumer goods that were
effective beginning in Fiscal 2019. The Company estimates approximately 7%, 9% and 9% of total merchandise receipts were directly imported to the
United States from China in Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.
(3) No country included within this category sourced more than 10% of total merchandise receipts during any fiscal year presented above.
Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories,” for discussion regarding significant
accounting policies related to the Company’s inventories.
6. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of:
(in thousands)
Land
Buildings
Furniture, fixtures and equipment
Information technology
Leasehold improvements
Construction in progress
Other
Total
Less: Accumulated depreciation
Property and equipment, net
February 3, 2024
January 28, 2023
$
28,599 $
238,185
632,056
718,693
846,097
44,359
1,195
28,599
232,996
611,277
685,539
888,464
68,984
2,003
2,509,184
(1,971,151)
2,517,862
(1,966,277)
$
538,033 $
551,585
Depreciation expense for Fiscal 2023, Fiscal 2022 and Fiscal 2021 was $138.5 million, $129.7 million and $141.4 million,
respectively.
Refer to Note 8, “ASSET IMPAIRMENT,” for details related to property and equipment impairment charges incurred during Fiscal
2023, Fiscal 2022 and Fiscal 2021.
Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment, net,” for discussion
regarding significant accounting policies related to the Company’s property and equipment, net.
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7. LEASES
Abercrombie & Fitch Co.
The Company is a party to leases related to its Company-operated retail stores as well as for certain of its DCs, office space,
information technology and equipment.
The following table provides a summary of the Company’s operating lease costs for Fiscal 2023, Fiscal 2022 and Fiscal 2021:
(in thousands)
Single lease cost (1)
Variable lease cost (2)
Operating lease right-of-use asset impairment (3)
Sublease income
Total operating lease cost
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
248,567 $
246,824 $
168,881
1,440
150,909
6,248
(3,949)
(3,826)
272,246
110,889
9,509
(4,292)
$
414,939 $
400,155 $
388,352
(1)
(2)
Includes amortization and interest expense associated with operating lease right-of-use assets and the impact from remeasurement of operating lease
liabilities.
Includes variable payments related to both lease and nonlease components, such as contingent rent payments made by the Company based on
performance, and payments related to taxes, insurance, and maintenance costs.
(3) Refer to Note 8, “ASSET IMPAIRMENT,” for details related to operating lease right-of-use asset impairment charges.
The following table provides the weighted-average remaining lease term of the Company’s operating leases and the weighted-
average discount rate used to calculate the Company’s operating lease liabilities as of February 3, 2024 and January 28, 2023:
Weighted-average remaining lease term (years)
Weighted-average discount rate
February 3, 2024
January 28, 2023
4.7
6.7 %
5.3
6.3 %
The following table provides a maturity analysis of the Company’s operating lease liabilities, based on undiscounted cash flows,
as of February 3, 2024:
(in thousands)
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Fiscal 2028
Fiscal 2029 and thereafter
Total undiscounted operating lease payments
Less: Imputed interest
Present value of operating lease liabilities
February 3, 2024
$
$
228,719
220,039
176,206
140,281
106,719
96,761
968,725
(142,475)
826,249
During Fiscal 2020, the Company entered into a sublease agreement with a third party for the remaining lease term of one of its
European Abercrombie & Fitch flagship store locations upon its closure. As of February 3, 2024, future minimum tenant operating
lease payments remaining under this sublease were $15.5 million with a remaining sublease term of 3.8 years.
The Company had minimum commitments related to operating lease contracts that have not yet commenced, primarily for its
Company-operated retail stores, of approximately $29.1 million as of February 3, 2024.
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8. ASSET IMPAIRMENT
The following table provides additional details related to long-lived asset impairment charges:
(in thousands)
Operating lease right-of-use asset impairment
Property and equipment asset impairment (1)
Total asset impairment (2)
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
$
1,441 $
6,848
6,248 $
7,783
8,289 $
14,031 $
9,509
2,591
12,100
(1)
(2)
Amounts for Fiscal 2022 include store asset impairment of $4.8 million and other asset impairment of $3.0 million. Amounts for Fiscal 2023 and Fiscal
2021 only include store asset impairment.
Included in Stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Asset impairment charges for Fiscal 2023 were related to certain of the Company’s assets including stores across brands,
primarily in the Americas and EMEA segments. The impairment charges for Fiscal 2023 reduced the then carrying amount of the
impaired stores’ assets to their fair value of approximately $28.1 million, including $23.7 million related to operating lease right-of-
use assets.
Asset impairment charges for Fiscal 2022 were related to certain of the Company’s stores across brands, segments and store
formats and other assets. The impairment charges for Fiscal 2022 reduced the then carrying amount of the impaired stores’
assets to their fair value of approximately $39.7 million, including $37.0 million related to operating lease right-of-use assets.
Asset impairment charges for Fiscal 2021 were principally the result of the impact of COVID-19 and were related to certain of the
Company’s stores across brands, segments and store formats. The impairment charges for Fiscal 2021 reduced the then
carrying amount of the impaired stores’ assets to their fair value of approximately $18.1 million, including $15.6 million related to
operating lease right-of-use assets.
Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Long-lived Asset Impairment,” for discussion
regarding significant accounting policies related to impairment of the Company’s long-lived assets.
9. RABBI TRUST ASSETS
Investments of Rabbi Trust assets consisted of the following as of February 3, 2024 and January 28, 2023:
(in thousands)
Trust-owned life insurance policies (at cash surrender value)
Money market funds
Rabbi Trust assets
February 3, 2024
January 28, 2023
$
$
52,521 $
51,681
1,164
1
53,685 $
51,682
Realized gains resulting from the change in cash surrender value and benefits paid pursuant to the trust-owned life insurance
policies of the Rabbi Trust assets for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were as follows:
(in thousands)
Fiscal 2023
Fiscal 2022
Fiscal 2021
Realized gains related to Rabbi Trust assets
$
1,978 $
1,409 $
1,483
Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Rabbi Trust Assets,” for further discussion related to
the Company’s Rabbi Trust assets.
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10. ACCRUED EXPENSES
Accrued expenses consisted of:
(in thousands)
Accrued payroll and related costs (1)
Accrued costs related to the Company’s DCs and digital operations
Other (2)
Accrued expenses
February 3, 2024
January 28, 2023
$
$
100,825 $
33,220
302,610
436,655 $
70,815
38,729
303,759
413,303
Accrued payroll and related costs include salaries, incentive compensation, benefits, withholdings and other payroll-related costs.
(1)
(2) Other primarily includes the Company’s gift card and loyalty programs liabilities, accrued taxes, accrued rent and expenses incurred but not yet paid
primarily related to outside services associated with store and home office operations and construction in progress. Refer to Note 3, “REVENUE
RECOGNITION.”
11. INCOME TAXES
Impact of valuation allowances and other tax benefits during Fiscal 2023
During Fiscal 2023, the Company did not recognize income tax benefits on $103.0 million of pre-tax losses, primarily in
Switzerland, resulting in adverse tax impacts of $15.6 million.
As of February 3, 2024, the Company had foreign net deferred tax assets of approximately $36.7 million, including $7.6 million,
$7.5 million, and $12.6 million in China, Japan, and the United Kingdom, respectively. While the Company believes that these net
deferred tax assets are more-likely-than-not to be realized, it is not a certainty, as the Company continues to evaluate and
respond to emerging situations. Should circumstances change, the net deferred tax assets may become subject to additional
valuation allowances in the future. Additional valuation allowances would result in additional tax expense.
Impact of valuation allowances and other tax benefits during Fiscal 2022
During Fiscal 2022, the Company did not recognize income tax benefits on $136.5 million of pre-tax losses, primarily in
Switzerland, resulting in adverse tax impacts of $20.0 million.
As of January 28, 2023, the Company had foreign net deferred tax assets of approximately $43.8 million, including $8.0 million,
$9.1 million, and $15.6 million in China, Japan, and the United Kingdom, respectively.
Impact of valuation allowances and other tax charges during Fiscal 2021
During Fiscal 2021, as a result of the improvement seen in business conditions, the Company recognized $42.5 million of tax
benefits due to the release of valuation allowances, primarily in the U.S. and Germany, and a discrete tax benefit of $3.9 million
due to a rate change in the United Kingdom. The Company did not recognize income tax benefits on $25.3 million of pre-tax
losses generated in Fiscal 2022, primarily in Switzerland, resulting in adverse tax impacts of $4.6 million.
As of January 29, 2022, the Company had foreign net deferred tax assets of approximately $54.6 million, including $9.7 million,
$12.2 million, and $20.1 million in China, Japan, and the United Kingdom, respectively.
Components of Income Taxes
Income before income taxes consisted of:
(in thousands)
Domestic (1)
Foreign
Income before income taxes
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
$
526,967 $
152,608 $
(42,668)
(85,592)
484,299 $
67,016 $
283,793
25,181
308,974
(1)
Includes intercompany charges to foreign affiliates for management fees, cost-sharing, royalties and interest and excludes a portion of foreign income
that is currently includable on the U.S. federal income tax return.
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Income tax expense consisted of:
(in thousands)
Current:
Federal
State
Foreign
Total current
Deferred:
Federal
State
Foreign
Total deferred
Income tax expense
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
113,765 $
25,577 $
32,299
7,565
10,371
9,183
153,629 $
45,131 $
51,321
14,061
5,448
70,830
(9,160) $
4,586 $
(15,401)
(1,196)
5,613
(4,743)
122
6,792
11,500
$
148,886 $
56,631 $
(8,995)
(7,526)
(31,922)
38,908
$
$
The Company’s earnings and profits from its foreign subsidiaries could be repatriated to the U.S., without incurring additional
federal income tax. The Company determined that the balance of the Company’s undistributed earnings and profits from its
foreign subsidiaries as of February 2, 2019, are considered indefinitely reinvested outside of the U.S., and if these funds were to
be repatriated to the U.S., the Company would expect to incur an insignificant amount of state income taxes and foreign
withholding taxes. The Company accrues for both state income taxes and foreign withholding taxes with respect to earnings and
profits earned after February 2, 2019, in such a manner that these funds may be repatriated without incurring additional tax
expense.
Reconciliation between the statutory federal income tax rate and the effective tax rate is as follows:
Fiscal 2023
Fiscal 2022
Fiscal 2021
U.S. Federal income tax rate
State income tax, net of U.S. federal income tax effect
Net change in valuation allowances
Foreign taxation of non-U.S. operations (1)
Internal Revenue Code Section 162(m)
Additional U.S. taxation of non-U.S.operations
Audit and other adjustments to prior years' accruals, net
Net income attributable to noncontrolling interests
Credit for increasing research activities
Tax benefit recognized on share-based compensation expense (2)
Other items, net
Other statutory tax rate and law changes
Total
21.0 %
21.0 %
4.9
3.4
1.4
1.4
0.1
(0.2)
(0.3)
(0.5)
(0.5)
—
—
12.4
30.7
16.2
4.6
1.3
5.9
(2.4)
(2.5)
(2.6)
(0.1)
—
21.0 %
4.4
(19.7)
3.5
1.6
0.6
4.7
(0.5)
(0.6)
(1.3)
0.1
(1.2)
30.7 %
84.5 %
12.6 %
(1)
(2)
U.S. branch operations in Puerto Rico were subject to tax at the full U.S. tax rates. As a result, income from these operations do not create
reconciling items.
Refer to Note 13, “SHARE-BASED COMPENSATION,” for details on discrete income tax benefits and charges related to share-based compensation
awards during Fiscal 2023, Fiscal 2022, and Fiscal 2021.
For certain years, the impact of various tax items on the Company's effective tax rate were amplified on a percentage basis at
lower levels of consolidated pre-tax income (loss) in absolute dollars. The effective tax rate remains dependent on jurisdictional
mix. The taxation of non-U.S. operations line items in the table above excludes items related to the Company's non-U.S.
operations reported separately in the appropriate corresponding line items.
For Fiscal 2023, Fiscal 2022, and Fiscal 2021, the impact of taxation of non-U.S. operations on the Company's effective income
tax rate was related to the Company's jurisdictional mix driven primarily by the Company’s operations within Switzerland.
Components of Deferred Income Tax Assets and Deferred Income Tax Liabilities
The effect of temporary differences which gives rise to deferred income tax assets (liabilities) were as follows:
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(in thousands)
Deferred income tax assets:
Operating lease liabilities
Intangibles, foreign step-up in basis
Net operating losses (NOL), tax credit and other carryforwards
Accrued expenses and reserves
Deferred compensation
Inventory
Rent
Other
Valuation allowances
Total deferred income tax assets
Deferred income tax liabilities:
Operating lease right-of-use assets
Property and equipment and intangibles
Prepaid expenses
Store supplies
Undistributed profits of non-U.S. subsidiaries
U.S. offset to foreign deferred tax assets, excluding intangibles, foreign step-up in basis (1)
Other
Total deferred income tax liabilities
Net deferred income tax assets (1)
February 3, 2024
January 28, 2023
$
211,863 $
237,699
62,464
84,872
35,866
15,717
5,518
1,874
1,683
61,030
68,874
27,435
16,023
5,475
1,502
946
(146,973)
272,884 $
(130,622)
288,362
(192,020) $
(7,472)
(1,832)
(2,100)
(1,271)
(187)
(781)
(205,827)
(14,273)
(1,634)
(1,933)
(1,111)
(175)
(428)
(205,663) $
(225,381)
67,221 $
62,981
$
$
$
$
(1)
This table does not reflect deferred taxes classified within AOCL. As of February 3, 2024 and January 28, 2023, AOCL included deferred tax liabilities
of $0.1 million and deferred tax assets of $0.9 million, respectively.
As of February 3, 2024, the Company had deferred tax assets related to foreign and state NOL and credit carryforwards of $84.5
million and $0.2 million, respectively, that could be utilized to reduce future years’ tax liabilities. If not utilized, a portion of the
foreign NOL carryforwards will begin to expire in Fiscal 2025 and a portion of state NOL carryforwards will begin to expire in
Fiscal 2026. Some foreign NOLs have an indefinite carryforward period. As of February 3, 2024, the Company did not have any
deferred tax assets related to federal NOL and credit carryforwards that could be utilized to reduce future years’ tax liabilities.
The valuation allowances for Fiscal 2023 and 2022 were $147.0 million and $130.6 million, respectively. The valuation
allowances as of Fiscal 2023 have been established against deferred tax assets, primarily in Switzerland. All valuation
allowances have been reflected through the Consolidated Statements of Operations and Comprehensive Income (Loss). The
valuation allowances will remain until there is sufficient positive evidence to release them, such positive evidence would include
having positive income within the jurisdiction. In such case, the Company will record an adjustment in the period in which a
determination is made. The Company continues to review the need for valuation allowances on a quarterly basis.
Share-based Compensation
Refer to Note 13, “SHARE-BASED COMPENSATION,” for details on income tax benefits and charges related to share-based
compensation awards during Fiscal 2023, Fiscal 2022 and Fiscal 2021.
Other
The amount of uncertain tax positions as of February 3, 2024, January 28, 2023 and January 29, 2022, which would impact the
Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions,
excluding accrued interest and penalties, are as follows:
(in thousands)
Uncertain tax positions, beginning of the year
Gross addition for tax positions of the current year
Gross addition (reduction) for tax positions of prior years
Reductions of tax positions of prior years for:
Lapses of applicable statutes of limitations
Settlements during the period
Uncertain tax positions, end of year
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
2,293 $
1,114 $
572
75
(70)
(119)
339
907
(66)
(1)
$
2,751 $
2,293 $
995
490
(136)
(81)
(154)
1,114
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The IRS is currently conducting an examination of the Company’s U.S. federal income tax returns for Fiscal 2023 and 2022 as
part of the IRS’ Compliance Assurance Process program. The IRS examinations for Fiscal 2021 and prior years have been
completed. State and foreign returns are generally subject to examination for a period of three to five years after the filing of the
respective return. The Company typically has various state and foreign income tax returns in the process of examination,
administrative appeals or litigation. The outcome of the examinations is not expected to have a material impact on the
Company’s financial statements. The Company believes that some of these audits and negotiations will conclude within the next
12 months and that it is reasonably possible the amount of uncertain income tax positions, including interest, may change by an
immaterial amount due to settlement of audits and expiration of statues of limitations.
The Company does not expect material adjustments to the total amount of uncertain tax positions within the next 12 months, but
the outcome of tax matters is uncertain and unforeseen results can occur.
Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes,” for discussion regarding significant
accounting policies related to the Company’s income taxes.
12. BORROWINGS
Details on the Company’s long-term borrowings, net, as of February 3, 2024 and January 28, 2023 are as follows:
(in thousands)
Long-term portion of borrowings, gross at carrying amount
Unamortized fees
Long-term portion of borrowings, net
Senior Secured Notes
February 3, 2024
January 28, 2023
$
$
223,214 $
(1,095)
222,119 $
299,730
(2,878)
296,852
On July 2, 2020, Abercrombie & Fitch Management Co. (“A&F Management”), a wholly-owned indirect subsidiary of A&F,
completed the private offering of $350 million aggregate principal amount of senior secured notes (the “Senior Secured Notes”),
at an offering price of 100% of the principal amount thereof. The Senior Secured Notes will mature on July 15, 2025, and bear
interest at a rate of 8.75% per annum, with semi-annual interest payments, which began in January 2021. The Senior Secured
Notes were issued pursuant to an indenture, dated as of July 2, 2020, by and among A&F Management, A&F and certain of
A&F’s wholly-owned subsidiaries, as guarantors, and U.S. Bank National Association (now known as U.S. Bank Trust National
Association), as trustee, and as collateral agent. During Fiscal 2023, 2022, and 2021, A&F Management purchased
$76.5 million, $8.0 million and $42.3 million, respectively, of outstanding Senior Secured Notes and incurred a $2.0 million loss,
$0.1 million gain and $5.3 million loss, respectively, on extinguishment of debt, recognized in interest expense, net on the
Consolidated Statements of Operations and Comprehensive Income (Loss).
The Company used the net proceeds from the offering of the Senior Secured Notes to repay outstanding borrowings and
accrued interest of $223.6 million and $110.8 million under its prior term loan facility and the ABL Facility (defined below),
respectively, with the remaining net proceeds used towards fees and expenses in connection with such repayments and the
offering of the Senior Secured Notes.
The Company recorded deferred financing fees associated with the issuance of the Senior Secured Notes, which are being
amortized to interest expense over the contractual term of the Senior Secured Notes.
ABL Facility
On April 29, 2021, A&F Management, in A&F Management’s capacity as the lead borrower, and the other borrowers and
guarantors party thereto, amended and restated in its entirety the Credit Agreement, dated as of August 7, 2014, as amended on
September 10, 2015, and on October 19, 2017 (as amended and restated, the “Amended and Restated Credit Agreement”),
among A&F Management, the other borrowers and guarantors party thereto, the lenders party thereto, Wells Fargo Bank,
National Association, as administrative agent for the lenders, and the other parties thereto.
The Amended and Restated Credit Agreement continues to provide for a senior secured revolving credit facility of up to
$400.0 million (the “ABL Facility”), and (i) extended the maturity date of the ABL Facility to April 29, 2026; and (ii) modified the
required fee on undrawn commitments under the ABL Facility from 0.25% per annum to either 0.25% or 0.375% per annum (with
the ultimate amount dependent on the conditions detailed in the Amended and Restated Credit Agreement).
On March 15, 2023, the Company entered into the First Amendment to the Amended and Restated Credit Agreement to
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eliminate LIBO rate based loans and to use the current market definitions with respect to the Secured Overnight Financing Rate
(“SOFR”), as well as to reflect other conforming changes.
The Company did not have any borrowings outstanding under the ABL Facility as of February 3, 2024 or as of January 28, 2023.
The ABL Facility is subject to a borrowing base, consisting primarily of U.S. inventory, with a letter of credit sub-limit of $50 million
and an accordion feature allowing A&F to increase the revolving commitment by up to $100 million subject to specified
conditions. The ABL Facility is available for working capital, capital expenditures and other general corporate purposes.
As of February 3, 2024, the Company had availability under the ABL Facility of $332.5 million, net of $0.4 million in outstanding
stand-by letters of credit. As the Company must maintain excess availability equal to the greater of 10% of the loan cap or $30
million under the ABL Facility, borrowing capacity available to the Company under the ABL Facility was $299.2 million as of
February 3, 2024.
Obligations under the ABL Facility are unconditionally guaranteed by A&F and certain of A&F’s subsidiaries. The ABL Facility is
secured by a first-priority security interest in certain working capital of the borrowers and guarantors consisting of inventory,
accounts receivable and certain other assets. The ABL Facility is also secured by a second-priority security interest in certain
property and assets of the borrowers and guarantors, including certain fixed assets, intellectual property, stock of subsidiaries
and certain after-acquired material real property.
At the Company’s option, borrowings under the ABL Facility will bear interest at either (a) an adjusted LIBO rate plus a margin of
1.25% to 1.50% per annum, or (b) an alternate base rate plus a margin of 0.25% to 0.50% per annum. As of February 3, 2024,
the applicable margins with respect to LIBO rate loans and base rate loans, including swing line loans, under the ABL Facility
were 1.25% and 0.25% per annum, respectively, and are subject to adjustment each fiscal quarter based on average historical
availability during the preceding quarter. Following the March 15, 2023 amendment, borrowings under the ABL will bear interest
using the current market SOFR rate. Customary agency fees and letter of credit fees are also payable in respect of the ABL
Facility.
Representations, Warranties and Covenants
The agreements related to the Senior Secured Notes and the ABL Facility contain various representations, warranties and
restrictive covenants that, among other things and subject to specified exceptions, restrict the ability of the Company and its
subsidiaries to: grant or incur liens; incur, assume or guarantee additional indebtedness; sell or otherwise dispose of assets,
including capital stock of subsidiaries; make investments in certain subsidiaries; pay dividends, make distributions or redeem or
repurchase capital stock; change the nature of their business; and consolidate or merge with or into, or sell substantially all of the
assets of the Company or A&F Management to, another entity.
The Senior Secured Notes are guaranteed on a senior secured basis, jointly and severally, by A&F and each of the existing and
future wholly-owned domestic restricted subsidiaries of A&F that guarantee or will guarantee A&F Management’s ABL Facility or
certain future capital markets indebtedness.
The Company was in compliance with all debt covenants under the agreements related to the Senior Secured Notes and the ABL
Facility as of February 3, 2024.
13. SHARE-BASED COMPENSATION
Plans
As of February 3, 2024, the Company had two primary share-based compensation plans: (i) the 2016 Directors LTIP, with
900,000 shares of Common Stock authorized for issuance, under which the Company is authorized to grant restricted stock,
restricted stock units, stock appreciation rights, stock options and deferred stock awards to non-associate members of the Board
of Directors; and (ii) the 2016 Associates LTIP, with 10,965,000 shares of Common Stock authorized for issuance, under which
the Company is authorized to grant restricted stock, restricted stock units, performance share awards, stock appreciation rights
and stock options to associates of the Company. The Company also has outstanding shares from two other share-based
compensation plans under which the Company granted restricted stock units, performance share awards, stock appreciation
rights and stock options to associates of the Company and restricted stock units, stock options and deferred stock awards to
non-associate members of the Board of Directors in prior years. No new shares may be granted under these previously-
authorized plans and any outstanding awards continue in effect in accordance with their respective terms.
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The 2016 Directors LTIP, a stockholder-approved plan, permits the Company to annually grant awards to non-associate
directors, subject to the following limits:
•
•
•
For non-associate directors: awards with an aggregate fair market value on the date of the grant of no more than
$300,000;
For the non-associate director occupying the role of Non-Executive Chairperson of the Board (if any): additional awards
with an aggregate fair market value on the date of grant of no more than $500,000; and
For the non-associate director occupying the role of Executive Chairperson of the Board (if any): additional awards with
an aggregate fair market value on the date of grant of no more than $2,500,000.
Under the 2016 Directors LTIP, restricted stock units are subject to a minimum vesting period ending no sooner than the earlier of
(i) the first anniversary of the grant date or (ii) the date of the next regularly scheduled annual meeting of stockholders held after
the grant date. Any stock appreciation rights or stock options granted under this plan have the same minimum vesting period
requirements as restricted stock units and, in addition, must have a term that does not exceed a period of ten years from the
grant date, subject to forfeiture under the terms of the 2016 Directors LTIP.
The 2016 Associates LTIP, a stockholder-approved plan, permits the Company to annually grant one or more types of awards
covering up to an aggregate for all awards of 1.0 million underlying shares of the Common Stock to any associate of the
Company. Under the 2016 Associates LTIP, for restricted stock units that have performance-based vesting, performance must be
measured over a period of at least one year and for restricted stock units that do not have performance-based vesting, vesting in
full may not occur more quickly than in pro-rata installments over a period of three years from the date of the grant, with the first
installment vesting no sooner than the first anniversary of the date of the grant. In addition, any stock options or stock
appreciation rights granted under this plan must have a minimum vesting period of one year and a term that does not exceed a
period of ten years from the grant date, subject to forfeiture under the terms of the 2016 Associates LTIP.
Each of the 2016 Directors LTIP and the 2016 Associates LTIP provides for accelerated vesting of awards if there is a change of
control and certain other conditions specified in each plan are met.
Financial Statement Impact
The following table details share-based compensation expense and the related income tax benefit for Fiscal 2023, Fiscal 2022
and Fiscal 2021:
(in thousands)
Share-based compensation expense
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
40,122 $
28,995 $
29,304
Income tax benefit associated with share-based compensation expense recognized during
the period
4,350
3,515
3,338
The following table details discrete income tax benefits and charges related to share-based compensation awards during Fiscal
2023, Fiscal 2022 and Fiscal 2021:
(in thousands)
Fiscal 2023
Fiscal 2022
Fiscal 2021
Income tax discrete benefits realized for tax deductions related to the issuance of shares
during the period
Income tax discrete charges realized upon cancellation of stock appreciation rights during
the period
Total income tax discrete benefits related to share-based compensation awards
$
$
2,709 $
1,956 $
4,198
(101)
(226)
2,608 $
1,730 $
(204)
3,994
The following table details the amount of employee tax withheld by the Company upon the issuance of shares associated with
restricted stock units vesting and the exercise of stock appreciation rights for the Fiscal 2023, Fiscal 2022 and Fiscal 2021:
(in thousands)
Employee tax withheld upon issuance of shares (1)
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
29,485 $
14,464 $
13,163
(1) Classified within other financing activities on the Consolidated Statements of Cash Flows.
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Restricted Stock Units
Abercrombie & Fitch Co.
The following table summarizes activity for restricted stock units for Fiscal 2023:
Service-based Restricted
Stock Units
Performance-based Restricted
Stock Units
Market-based Restricted
Stock Units
Number of
Underlying
Shares
Weighted-
Average Grant
Date Fair
Value
Number of
Underlying
Shares (1)
Weighted-
Average Grant
Date Fair
Value
Number of
Underlying
Shares (1)
Weighted-
Average Grant
Date Fair
Value
Unvested at January 28, 2023
Granted
Change due to performance
criteria achievement
Vested
Forfeited
2,461,395 $
901,293
—
(1,315,618)
(160,985)
Unvested at February 3, 2024 (1)
1,886,085 $
21.30
29.11
—
17.73
26.50
27.12
336,549 $
222,144
—
—
(37,481)
521,212 $
31.08
28.36
—
—
29.52
30.03
662,137 $
111,077
493,854
(987,708)
(18,741)
260,619 $
23.68
41.20
16.24
16.24
42.55
43.90
(1) Unvested shares related to restricted stock units with performance-based and market-based vesting conditions are reflected at 100% of their target
vesting amount in the table above. Unvested shares related to restricted stock units with performance-based and market-based vesting conditions
can be achieved at up to 200% of their target vesting amount.
The following table details unrecognized compensation cost and the remaining weighted-average period over which these costs
are expected to be recognized for restricted stock units as of February 3, 2024:
(in thousands)
Service-based Restricted
Stock Units
Performance-based Restricted
Stock Units
Market-based Restricted
Stock Units
Unrecognized compensation cost
$
32,783 $
10,056 $
Remaining weighted-average period cost
is expected to be recognized (years)
1.0
1.2
4,107
1.2
Additional information pertaining to restricted stock units for Fiscal 2023, Fiscal 2022 and Fiscal 2021 follows:
(in thousands)
Service-based restricted stock units:
Total grant date fair value of awards granted
Total grant date fair value of awards vested
Total intrinsic value of awards vested
Performance-based restricted stock units:
Total grant date fair value of awards granted
Total grant date fair value of awards vested
Market-based restricted stock units:
Total grant date fair value of awards granted
Total grant date fair value of awards vested
Total intrinsic value of awards vested
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
26,237 $
28,878 $
23,326
44,110
16,794
28,037
6,300
—
4,576
16,040
24,890
5,600
4,482
3,852
4,105
3,768
23,959
13,360
36,507
5,059
—
3,966
3,390
3,335
The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during Fiscal
2023, Fiscal 2022 and Fiscal 2021 were as follows:
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Abercrombie & Fitch Co.
Grant date market price
Fair value
Assumptions:
Price volatility
Expected term (years)
Risk-free interest rate
Dividend yield
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
28.36
$
30.24
$
41.20
41.60
63 %
2.9
4.6 %
—
66 %
2.8
2.5 %
—
31.78
49.81
66 %
2.9
0.3 %
—
Average volatility of peer companies
Average correlation coefficient of peer companies
66.0 %
72.3 %
72.0 %
0.5295
0.515
0.4694
Stock Appreciation Rights
The following table summarizes stock appreciation rights activity for Fiscal 2023:
Number of
Underlying
Shares
Weighted-
Average
Exercise Price
Aggregate
Intrinsic Value
Weighted-
Average
Remaining
Contractual Life
(years)
Outstanding at January 28, 2023
Granted
Exercised
Forfeited or expired
Outstanding at February 3, 2024
Stock appreciation rights exercisable at February 3, 2024
190,589 $
—
(141,289)
(23,700)
25,600 $
25,600 $
29.43
—
26.73
45.69
29.29 $
29.29 $
2,053
2,053
0.7
0.7
The following table provides additional information pertaining to grant date fair value of awards exercised during Fiscal 2023,
Fiscal 2022 and Fiscal 2021:
(in thousands)
Total grant date fair value of awards exercised
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
1,409 $
— $
1,069
No stock appreciation rights were exercised during Fiscal 2022.
Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share-Based Compensation,” for discussion
regarding significant accounting policies related to share-based compensation.
14. DERIVATIVE INSTRUMENTS
As of February 3, 2024, the Company had outstanding the following foreign currency exchange forward contracts that were
entered into to hedge either a portion, or all, of forecasted foreign-currency-denominated intercompany inventory transactions,
the resulting settlement of the foreign-currency-denominated intercompany accounts receivable, or both:
(in thousands)
Euro
British pound
Canadian dollar
Notional Amount (1)
$
45,315
37,253
14,239
(1)
Amounts reported are the U.S. Dollar notional amounts outstanding as of February 3, 2024.
As of February 3, 2024, foreign currency exchange forward contracts that were entered into to hedge foreign-currency-
denominated net monetary assets and liabilities were as follows:
(in thousands)
United Arab Emirates dirham
(1)
Amounts reported are the U.S. Dollar notional amounts outstanding as of February 3, 2024.
Notional Amount (1)
5,719
$
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Abercrombie & Fitch Co.
The fair value of derivative instruments is determined using quoted market prices of the same or similar instruments, adjusted for
counterparty risk. The location and amounts of derivative fair values of foreign currency exchange forward contracts on the
Consolidated Balance Sheets as of February 3, 2024, and January 28, 2023 were as follows:
(in thousands)
Location
February 3, 2024
January 28, 2023
Location
February 3, 2024
January 28, 2023
Derivatives designated as cash
flow hedging instruments
Other current
assets
Derivatives not designated as
hedging instruments
Other current
assets
Total
$
$
1,090 $
2
1,092 $
Accrued
expenses
Accrued
expenses
32
—
32
$
$
539 $
4,986
—
539 $
—
4,986
Refer to Note 4, “FAIR VALUE,” for further discussion of the determination of the fair value of derivative instruments. Additional
information pertaining to derivative gains or losses from foreign currency exchange forward contracts designated as cash flow
hedging instruments for Fiscal 2023, Fiscal 2022 and Fiscal 2021 follows:
(in thousands)
Gain recognized in AOCL (1)
(Loss) gain reclassified from AOCL into cost of sales, exclusive of depreciation and
amortization (2)
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
3,618 $
2,844 $
11,987
(1,846)
13,781
1,263
(1)
(2)
Amount represents the change in fair value of derivative instruments.
Amount represents gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of Operations and
Comprehensive Income (Loss) when the hedged item affected earnings, which was when merchandise was converted to cost of sales, exclusive of depreciation
and amortization.
Substantially all of the unrealized gains or losses related to foreign currency exchange forward contracts designated as cash flow
hedging instruments as of February 3, 2024 will be recognized within the Consolidated Statements of Operations and
Comprehensive Income (Loss) over the next 12 months.
Additional information pertaining to derivative gains or losses from foreign currency exchange forward contracts not designated
as hedging instruments for Fiscal 2023, Fiscal 2022 and Fiscal 2021 follows:
(in thousands)
Fiscal 2023
Fiscal 2022
Fiscal 2021
(Loss) gain recognized in other operating income, net
$
(1,206) $
1,226 $
1,205
Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivative Instruments,” for discussion regarding
significant accounting policies related to the Company’s derivative instruments.
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Abercrombie & Fitch Co.
15. ACCUMULATED OTHER COMPREHENSIVE LOSS
For Fiscal 2023, the activity in AOCL was as follows:
(in thousands)
Foreign Currency
Translation Adjustment
Fiscal 2023
Unrealized Gain (Loss)
on Derivative Financial
Instruments
Total
Beginning balance at January 28, 2023
$
(132,653) $
(4,874) $
(137,527)
Other comprehensive (loss) income before reclassifications
Reclassified loss from AOCL (1)
Tax effect
Other comprehensive (loss) income after reclassifications
(3,879)
—
—
(3,879)
3,618
1,846
(26)
5,438
(261)
1,846
(26)
1,559
Ending balance at February 3, 2024
$
(136,532) $
564 $
(135,968)
(1)
Amount represents loss reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of
Operations and Comprehensive Income (Loss).
For Fiscal 2022, the activity in AOCL was as follows:
(in thousands)
Beginning balance at January 29, 2022
Other comprehensive (loss) income before reclassifications
Reclassified gain from AOCL (1)
Tax effect
Other comprehensive loss after reclassifications
Ending balance at January 28, 2023
Foreign Currency
Translation Adjustment
Fiscal 2022
Unrealized Gain (Loss)
on Derivative Financial
Instruments
$
$
(120,689) $
(11,964)
—
—
(11,964)
(132,653) $
5,983 $
2,844
(13,781)
80
(10,857)
(4,874) $
Total
(114,706)
(9,120)
(13,781)
80
(22,821)
(137,527)
(1)
Amount represents gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of
Operations and Comprehensive Income (Loss).
For Fiscal 2021, the activity in AOCL was as follows:
(in thousands)
Beginning balance at January 30, 2021
Other comprehensive (loss) income before reclassifications
Reclassified gain from AOCL (1)
Tax effect
Other comprehensive (loss) income after reclassifications
Ending balance at January 29, 2022
Foreign Currency
Translation Adjustment
Fiscal 2021
Unrealized Gain (Loss)
on Derivative Financial
Instruments
$
$
(97,772) $
(22,917)
—
—
(22,917)
(120,689) $
(4,535) $
11,987
(1,263)
(206)
10,518
5,983 $
Total
(102,307)
(10,930)
(1,263)
(206)
(12,399)
(114,706)
(1)
Amount represents gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of
Operations and Comprehensive Income (Loss).
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Abercrombie & Fitch Co.
16. SAVINGS AND RETIREMENT PLANS
The Company maintains the Abercrombie & Fitch Co. Savings and Retirement Plan, a qualified plan. All U.S. associates are
eligible to participate in this plan if they are at least 21 years of age. In addition, the Company maintains the Abercrombie & Fitch
Nonqualified Savings and Supplemental Retirement Plan, comprised of two sub-plans (Plan I and Plan II). Plan I contains
contributions made through December 31, 2004, while Plan II contains contributions made on and after January 1, 2005.
Participation in these plans is based on service and compensation. The Company’s contributions to these plans are based on a
percentage of associates’ eligible annual compensation. The cost of the Company’s contributions to these plans was $16.9
million, $14.7 million and $15.4 million for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.
In addition, the Company maintains the Supplemental Executive Retirement Plan which provides retirement income to its former
Chief Executive Officer for life, based on averaged compensation before retirement, including base salary and cash incentive
compensation. As of February 3, 2024 and January 28, 2023, the Company has recorded $6.7 million and $7.2 million,
respectively, in other liabilities on the Consolidated Balance Sheets related to future Supplemental Executive Retirement Plan
distributions.
17. SEGMENT REPORTING
The Company’s reportable segments are based on the financial information the chief operating decision maker (“CODM”) uses to
allocate resources and assess performance of its business.
During the second quarter of Fiscal 2023, to leverage the knowledge and experience of our regional teams to better drive brand
growth, the Company reorganized its structure and now manages its business on a geographic basis, consisting of three
reportable segments: Americas; Europe, the Middle East and Africa (EMEA); and Asia-Pacific (APAC). Corporate functions and
other income and expenses are evaluated on a consolidated basis and are not allocated to the Company’s segments, and
therefore are included as a reconciling item between segment and total operating income (loss). The Americas reportable
segment includes the results of operations in North America and South America. The EMEA reportable segment includes the
results of operations in Europe, the Middle East and Africa. The APAC reportable segment includes the results of operations in
the Asia-Pacific region, including Asia and Oceania. Intersegment sales and transfers are recorded at cost and are treated as a
transfer of inventory. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment
performance. All prior periods presented are recast to conform to the new segment presentation.
The group comprised of the Company’s (i) Chief Executive Officer and (ii) Chief Financial Officer and Chief Operating Officer
functions as the Company’s CODM. The Company’s CODM manages business operations and evaluates the performance of
each segment based on the net sales and operating income (loss) of the segment.
Net sales by segment are presented by attributing revenues on the basis of the segment that fulfills the order. Operating income
(loss) for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributed to the
segment. Corporate/other expenses include expenses incurred that are not directly attributed to a reportable segment and
primarily relate to corporate or global functions such as design, sourcing, brand management, corporate strategy, information
technology, finance, treasury, legal, human resources, and other corporate support services, as well as certain globally managed
components of the planning, merchandising, and marketing functions.
The Company reports inventories by segment as that information is used by the CODM in determining allocation of resources to
the segments. The Company does not report its other assets by segment as that information is not used by the CODM in
assessing segment performance or allocating resources.
The following tables provide the Company’s segment information as of February 3, 2024 and January 28, 2023, and for Fiscal
2023, Fiscal 2022 and Fiscal 2021.
(in thousands)
Net sales
Americas (1)
EMEA
APAC
Total
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
3,455,674 $
2,920,157 $
2,803,791
687,095
137,908
658,794
118,800
747,356
161,621
$
4,280,677 $
3,697,751 $
3,712,768
(1) Includes the U.S., Canada, and Latin America. Net sales in the U.S. were $3.3 billion, $2.8 billion, and $2.7 billion in Fiscal 2023, Fiscal 2022, and Fiscal 2021,
respectively.
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Abercrombie & Fitch Co.
(in thousands)
Depreciation and amortization
Americas
EMEA
APAC
Segment total
Depreciation and amortization not attributed to Segments
Total depreciation and amortization
Capital expenditures
Americas
EMEA
APAC
Segment total
Capital expenditures not attributed to Segments
Total capital expenditures
Operating Income
Americas
EMEA
APAC
Segment total
Operating (loss) income not attributed to Segments:
Stores and distribution expense
Marketing, general and administrative expense
Other operating (loss) income, net
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
$
$
$
$
$
$
73,779 $
75,231 $
26,782
5,921
21,497
8,123
106,482 $
104,851 $
34,622
27,392
141,104 $
132,243 $
78,062 $
102,030 $
26,019
4,331
32,206
1,249
108,412 $
135,485 $
49,385
29,081
157,797 $
164,566 $
940,292 $
483,445 $
81,216
(10,558)
45,185
(29,107)
$
1,010,950 $
499,523 $
(12,066)
(520,082)
5,869
(9,051)
(400,508)
2,684
79,189
23,276
10,892
113,357
30,678
144,035
40,774
20,727
6,210
67,711
29,268
96,979
637,308
118,235
(20,240)
735,303
(5,880)
(403,622)
17,283
343,084
Total operating income
$
484,671 $
92,648 $
(in thousands)
Assets
Inventories
Americas
EMEA
APAC
Total inventories
Assets not attributed to Segments
Total assets
February 03, 2024
January 28, 2023
$
$
$
372,371 $
77,125
19,970
469,466 $
2,504,767
2,974,233 $
404,040
80,447
21,134
505,621
2,207,479
2,713,100
The Company’s long-lived assets and intellectual property, which primarily relates to trademark assets associated with the
Company’s global operations, by geographic area as of February 3, 2024 and January 28, 2023 were as follows:
(in thousands)
Americas (1) (2)
EMEA (3)
APAC
Total
February 3, 2024
January 28, 2023
$
897,315 $
288,967
50,324
929,381
317,712
49,771
$
1,236,606 $
1,296,864
(1) Includes the U.S., Canada, and Latin America. Long-lived assets and intellectual property located in the U.S. were $880 million and $911 million as of February 3,
2024 and January 28, 2023, respectively.
(2) Includes intellectual property of $2.9 million and $3.4 million at February 3, 2024 and January 28, 2023, respectively.
(3) Includes intellectual property of $17.4 million and $18.3 million at February 3, 2024 and January 28, 2023, respectively.
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Brand Information
Abercrombie & Fitch Co.
The following table provides additional disaggregated revenue information, which is categorized by brand, for Fiscal 2023, Fiscal
2022 and Fiscal 2021 were as follows:
(in thousands)
Abercrombie (1)
Hollister (2)
Total
(1) Abercrombie brands includes Abercrombie & Fitch and abercrombie kids.
(2) Hollister brands includes Hollister and Gilly Hicks
18. CONTINGENCIES
Fiscal 2023
Fiscal 2022
Fiscal 2021
$
$
2,201,686 $
1,734,866 $
2,078,991
1,962,885
4,280,677 $
3,697,751 $
1,564,789
2,147,979
3,712,768
The Company and its affiliates are defendants in lawsuits and other adversary proceedings that may range from individual
actions involving a single plaintiff to class action lawsuits. The Company’s legal costs incurred in connection with the resolution of
claims and lawsuits are generally expensed as incurred, and the Company establishes estimated liabilities for the outcome of
litigation where losses are deemed probable and the amount of loss, or range of loss, is reasonably estimable. The Company
also determines estimates of reasonably possible losses or ranges of reasonably possible losses in excess of related accrued
liabilities, if any, when it has determined that a loss is reasonably possible and it is able to determine such estimates. Based on
currently available information, the Company cannot estimate a range of reasonably possible losses in excess of the accrued
charges for legal contingencies. In addition, the Company has not established accruals for certain claims and legal proceedings
pending against the Company where it is not possible to reasonably estimate the outcome or potential liability, and the Company
cannot estimate a range of reasonably possible losses for these legal matters.
Actual liabilities may differ from the amounts recorded, due to uncertainties regarding final settlement agreement negotiations,
court approvals and the terms of any approval by the courts, and there can be no assurance that final resolution of legal matters
will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company’s
assessment of the current exposure could change in the event of the discovery of additional facts.
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Abercrombie & Fitch Co.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Abercrombie & Fitch Co. and its subsidiaries (the
“Company”) as of February 3, 2024 and January 28, 2023, and the related consolidated statements of operations and
comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended
February 3, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). We also have
audited the Company's internal control over financial reporting as of February 3, 2024, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the
three years in the period ended February 3, 2024 in conformity with accounting principles generally accepted in the United States
of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of February 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in
Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control
over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment of Long-Lived Assets – Stores
As described in Notes 2, 6 and 8 to the consolidated financial statements, the Company’s consolidated property and equipment,
net balance was $538.0 million and consolidated operating lease right-of-use assets balance was $678.3 million as of
February 3, 2024. During the year ended February 3, 2024, the Company recognized long-lived asset store impairment charges
of $8.3 million. The Company’s long-lived assets, primarily operating lease right-of-use assets, leasehold improvements,
furniture, fixtures and equipment, are grouped with other assets and liabilities at the store level, which is the lowest level for
which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. On at least a quarterly
basis, management reviews the Company’s asset groups for indicators of impairment, which include, but are not limited to,
material declines in operational performance, a history of losses, an expectation of future losses, adverse market conditions,
store closure or relocation decisions, and any other events or changes in circumstances that would indicate the carrying amount
of an asset group might not be recoverable. If an asset group displays an indicator of impairment, it is tested for recoverability by
comparing the sum of the estimated future undiscounted cash flows attributable to the asset group to the carrying amount of the
asset group. This recoverability test requires management to make assumptions and judgments related, but not limited, to
management’s expectations for future cash flows from operating the store. The key assumption used in developing these
projected cash flows used in the recoverability test is estimated sales growth rate. If the sum of the estimated future
undiscounted cash flows attributable to an asset group is less than its carrying amount, and it is determined that the carrying
amount of the asset group is not recoverable, management determines if there is an impairment loss by comparing the carrying
amount of the asset group to its fair value. Fair value of an asset group is based on the highest and best use of the asset group,
often using a discounted cash flow model that utilizes Level 3 fair value inputs. The key assumptions used in the Company’s fair
value analysis are estimated sales growth rate and comparable market rents. An impairment loss is recognized based on the
excess of the carrying amount of the asset group over its fair value.
The principal considerations for our determination that performing procedures relating to the impairment of long-lived assets -
stores is a critical audit matter are (i) the significant judgment by management when developing the future undiscounted cash
flows attributable to an asset group when testing for recoverability and when determining the fair value of the asset groups to
measure for impairment; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating
management’s significant assumptions related to estimated sales growth rate when developing the future undiscounted cash
flows, and comparable market rents when estimating the fair value; and (iii) the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
management’s long-lived assets - stores recoverability test and determination of the fair value of the asset groups. These
procedures also included, among others (i) testing management’s process for developing the future undiscounted cash flows
attributable to an asset group when testing for recoverability and when determining the fair value of the asset groups to measure
for impairment; (ii) evaluating the appropriateness of the models used by management in determining the fair value of the asset
groups; (iii) testing the completeness and accuracy of underlying data used in the models; and (iv) evaluating the
reasonableness of the significant assumptions related to estimated sales growth rate when developing the future undiscounted
cash flows and comparable market rents when estimating the fair value. Evaluating management’s assumptions related to
estimated sales growth rate and comparable market rents involved evaluating whether the assumptions used by management
were reasonable considering the current and past performance of the asset groups, the consistency with evidence obtained in
other areas of the audit as it relates to estimated sales growth rate, and consistency with external market data as it relates to
estimated sales growth rate and comparable market rents. Professionals with specialized skill and knowledge were used to
assist in evaluating of the reasonableness of the comparable market rents significant assumption.
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
April 1, 2024
We have served as the Company’s auditor since 1996.
Abercrombie & Fitch Co.
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Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Item 9A. Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
A&F maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be
disclosed in the reports that A&F files or submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to
A&F’s management, including A&F’s Principal Executive Officer and A&F’s Principal Financial Officer and Principal Accounting
Officer, as appropriate, to allow timely decisions regarding required disclosure. Because of inherent limitations, disclosure
controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance
that the objectives of disclosure controls and procedures are met.
A&F’s management, including the Chief Executive Officer of A&F (who serves as Principal Executive Officer of A&F) and the
Executive Vice President, Chief Financial Officer and Chief Operating Officer of A&F (who serves as Principal Financial Officer
and Principal Accounting Officer of A&F), evaluated the effectiveness of A&F’s disclosure controls and procedures as of
February 3, 2024. The Chief Executive Officer of A&F (in such individual’s capacity as the Principal Executive Officer of A&F) and
the Executive Vice President, Chief Financial Officer and Chief Operating Officer of A&F (in such individual’s capacity as the
Principal Financial Officer of A&F) concluded that A&F’s disclosure controls and procedures were effective at a reasonable level
of assurance as of February 3, 2024, the end of the period covered by this Annual Report on Form 10-K.
MANAGEMENT’S ANNUAL REPORT ON
REPORTING
INTERNAL CONTROL OVER FINANCIAL
The management of A&F is responsible for establishing and maintaining adequate internal control over financial reporting. A&F’s
internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
With the participation of the Chief Executive Officer of A&F and the Executive Vice President and Chief Financial Officer of A&F,
management evaluated the effectiveness of A&F’s internal control over financial reporting as of February 3, 2024 using criteria
established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). Based on the assessment of A&F’s internal control over financial reporting, under the criteria
described in the preceding sentence, management has concluded that, as of February 3, 2024, A&F’s internal control over
financial reporting was effective.
The effectiveness of A&F’s internal control over financial reporting as of February 3, 2024 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included in
“ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in A&F’s internal control over financial reporting during the quarter ended February 3, 2024 that have
materially affected, or are reasonably likely to materially affect, A&F’s internal control over financial reporting.
Abercrombie & Fitch Co.
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Item 9B. Other Information
Rule 10b5-1 Trading Plans
During the fourteen weeks ended February 3, 2024, no director or officer of the Company adopted a new “Rule 10b5-1 trading
arrangement ” or “non-Rule 10b5-1 trading arrangement,” and no director or officer of the Company modified or terminated an
existing “Rule 10b5-1 trading arrangement ” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of
Regulation S-K under the Exchange Act, other than as follows:
•
On November 22, 2023, Fran Horowitz, our Chief Executive Officer, adopted a trading plan intended to satisfy the
conditions under Rule 10b5-1(c) of the Exchange Act. Ms. Horowitz’s plan is for the sale of up to 400,000 shares of our
common stock in amounts and prices determined in accordance with plan terms and terminates on the earlier of the
date all the shares under the plan are sold or November 22, 2024.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
Not applicable.
Abercrombie & Fitch Co.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
DIRECTORS, EXECUTIVE OFFICERS AND PERSONS NOMINATED OR CHOSEN TO
BECOME DIRECTORS OR EXECUTIVE OFFICERS
Information concerning directors will be included under the caption “Proposal 1 — Election of Directors” in A&F’s definitive Proxy
Statement for the 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”) and is incorporated by reference herein.
Information concerning executive officers is included under the caption “INFORMATION ABOUT OUR EXECUTIVE OFFICERS”
within “ITEM 1. BUSINESS” in this Annual Report on Form 10-K and is incorporated by reference herein.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Information concerning beneficial ownership reporting compliance under Section 16(a) of the Exchange Act will be included
under the caption “Ownership of our Shares — Delinquent Section 16(a) Reports” in the 2024 Proxy Statement and is
incorporated by reference herein.
CODE OF BUSINESS CONDUCT AND ETHICS
The Board of Directors has adopted the Abercrombie & Fitch Co. Code of Business Conduct and Ethics, which applies to all
associates and directors worldwide and incorporates an additional Code of Ethics applicable to our Chief Executive Officer, our
Chief Financial Officer, and other designated financial associates. The Code of Business Conduct and Ethics is available on the
“Corporate Governance” page of the Company’s corporate website at corporate.abercrombie.com.
AUDIT AND FINANCE COMMITTEE
Information concerning the Audit and Finance Committee of the Board of Directors (the “Audit and Finance Committee”) will be
included under the captions “Corporate Governance — Committees of the Board and Meeting Attendance — Committees of the
Board” and “Audit and Finance Committee Matters” in the 2024 Proxy Statement and is incorporated by reference herein.
PROCEDURES BY WHICH STOCKHOLDERS MAY RECOMMEND NOMINEES TO THE
BOARD OF DIRECTORS
Information concerning changes in the procedures by which stockholders of A&F may recommend nominees to the Board of
Directors will be included under the captions “Corporate Governance — Director Nominations — Stockholder Recommendations
and Nominations for Director Candidates,” “Corporate Governance — Director Qualifications and Consideration of Director
Candidates,” “Stockholder Proposals and Nominations for 2025 Annual Meeting” and “Additional Information About Our Annual
Meeting and Voting — How do I nominate a director using the ‘Proxy Access’ provisions under the Company’s Bylaws?” in the
2024 Proxy Statement and is incorporated by reference herein.
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Item 11. Executive Compensation
Information regarding executive compensation will be included under the captions “Corporate Governance — Board Role in Risk
Oversight,” “Compensation of Directors,” “Compensation Discussion and Analysis,” “Report of the Compensation and Human
Capital Committee on Executive Compensation,” and “Executive Compensation Tables” in the 2024 Proxy Statement and is
incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Information concerning the security ownership of certain beneficial owners and management will be included under the caption
“Ownership of Our Shares” in the 2024 Proxy Statement and is incorporated by reference herein.
Information regarding Common Stock authorized for issuance under A&F’s equity compensation plans will be included under the
caption “Equity Compensation Plans” in the 2024 Proxy Statement and is incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions, and Director
Independence
Information concerning relationships and transactions with related persons will be included under the caption “Corporate
Governance — Director Independence and Related Person Transactions” in the 2024 Proxy Statement and is incorporated by
reference herein.
Information concerning director independence will be included under the captions “Corporate Governance — Board Leadership
Structure,” “Corporate Governance — Committees of the Board and Meeting Attendance,” and “Corporate Governance —
Director Independence and Related Person Transactions” in the 2024 Proxy Statement and is incorporated by reference herein.
Item 14. Principal Accountant Fees and Services
Information concerning pre-approval policies and procedures of the Audit and Finance Committee and fees for services rendered
by the Company’s principal independent registered public accounting firm will be included under the caption “Audit and Finance
Committee Matters — Audit Fees” in the 2024 Proxy Statement and is incorporated by reference herein.
Abercrombie & Fitch Co.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as a part of this Annual Report on Form 10-K:
(1) Consolidated Financial Statements:
Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended
February 3, 2024, January 28, 2023 and January 29, 2022.
Consolidated Balance Sheets at February 3, 2024 and January 28, 2023.
Consolidated Statements of Stockholders’ Equity for the fiscal years ended February 3, 2024, January 28,
2023 and January 29, 2022.
Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2024, January 28, 2023 and
January 29, 2022.
Notes to Consolidated Financial Statements.
Report of Independent Registered Public Accounting Firm — PricewaterhouseCoopers LLP. (PCAOB ID 238)
(2) Consolidated Financial Statement Schedules:
All financial statement schedules for which provision is made in the applicable accounting regulations of the SEC are
omitted because the required information is either not applicable or not material.
(3) Exhibits:
The documents listed in the Index to Exhibits that immediately precedes the Signatures page of this Annual Report on
Form 10-K are filed or furnished with this Annual Report on Form 10-K as exhibits or incorporated into this Annual
Report on Form 10-K by reference as noted. Each management contract or compensatory plan or arrangement is
identified as such in the Index to Exhibits.
(b) The documents listed in the Index to Exhibits that immediately precedes the Signatures page of this Annual Report on
Form 10-K are filed or furnished with this Annual Report on Form 10-K as exhibits or incorporated into this Annual
Report on Form 10-K by reference.
(c) Financial Statement Schedules
None
Item 16. Form 10-K Summary
None.
Abercrombie & Fitch Co.
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Index to Exhibits
Exhibit
Document
3.1
3.2
4.1
4.2
4.3
4.4
4.5
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11
10.12
10.13
Amended and Restated Certificate of Incorporation of Abercrombie & Fitch Co., reflecting amendments through the date of this
Quarterly Report on Form 10-Q, incorporated herein by reference to Exhibit 3.2 to A&F’s Quarterly Report on Form 10-Q for the
quarterly period ended July 30, 2011 (File No. 001-12107). [This document represents the Amended and Restated Certificate of
Incorporation of Abercrombie & Fitch Co. in compiled form incorporating all amendments. This compiled document has not been
filed with the Delaware Secretary of State.]
Amended and Restated Bylaws of Abercrombie & Fitch Co. reflecting amendments through the date of this Annual Report on Form
10-K, incorporated herein by reference to Exhibit 3.1 to A&F's Current Report on Form 8-K dated and filed November 22, 2022
(File No. 001-12107). [This document represents the Amended and Restated Bylaws of Abercrombie & Fitch Co. in compiled form
incorporating all amendments.]
Agreement to furnish instruments and agreements defining rights of holders of long-term debt.
Description of Abercrombie & Fitch Co.’s Securities Registered under Section 12 of the Securities Exchange Act of 1934.
Indenture, dated as of July 2, 2020, by and among Abercrombie & Fitch Management Co., Abercrombie & Fitch Co., as Parent, the
other Guarantors party thereto and U.S. Bank National Association, as Trustee, Registrar, Paying Agent, and Notes Collateral
Agent, incorporated herein by reference to Exhibit 4.1 to A&F’s Current Report on Form 8-K dated and filed on July 9, 2020 (File
No. 001-12107).
Form of 8.75% Senior Secured Notes due 2025 (included in Exhibit 4.3), incorporated herein by reference to Exhibit 4.2 (which is
in turn included in Exhibit 4.1) to A&F’s Current Report on Form 8-K dated and filed on July 9, 2020 (File No. 001-12107).
Intercreditor Agreement, dated as of July 2, 2020, among Wells Fargo Bank, National Association, as ABL Agent, U.S. Bank
National Association, as First Lien Notes Collateral Agent, and each other Additional Notes Agent from time to time party thereto,
incorporated herein by reference to Exhibit 4.5 to A&F’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021
(File No. 001-12107).
1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock Plan for Non-Associate Directors, incorporated herein by reference
to Exhibit 10.3 to A&F’s Annual Report on Form 10-K for the fiscal year ended February 1, 2003 (File No. 001-12107).
Amended and Restated Employment Agreement, entered into as of August 15, 2005, by and between A&F and Michael S. Jeffries,
including (as Exhibit A thereto) the Abercrombie & Fitch Co. Supplemental Executive Retirement Plan (Michael S. Jeffries),
effective February 2, 2003, incorporated herein by reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed
August 26, 2005 (File No. 001-12107). [NOTE: Only the Abercrombie & Fitch Co. Supplemental Executive Retirement Plan
(Michael S. Jeffries) is still in effect.]
Abercrombie & Fitch Co. Directors’ Deferred Compensation Plan (Plan I) (prior to January 1, 2005, known as the Abercrombie &
Fitch Co. Directors’ Deferred Compensation Plan), as amended and restated May 22, 2003, incorporated herein by reference to
Exhibit 10.7 to A&F’s Quarterly Report on Form 10-Q for the quarterly period ended May 3, 2003 (File No. 001-12107).
Abercrombie & Fitch Co. Directors’ Deferred Compensation Plan (Plan II), effective January 1, 2005, incorporated herein by
reference to Exhibit 10.50 to A&F’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (File No. 001-12107).
Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan I (prior to January 1, 2009, known as the
Abercrombie & Fitch Nonqualified Savings and Supplemental Retirement Plan), as amended and restated effective January 1,
2001, incorporated herein by reference to Exhibit 10.9 to A&F’s Annual Report on Form 10-K for the fiscal year ended February 1,
2003 (File No. 001-12107).
First Amendment to the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan (Plan I) (January 1,
2001 Restatement), effective as of January 1, 2009, incorporated herein by reference to Exhibit 10.13 to A&F’s Quarterly Report
on Form 10-Q for the quarterly period ended August 2, 2008 (File No. 001-12107).
Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan (Plan II), as amended and restated effective as
of January 1, 2014, incorporated herein by reference to Exhibit 10.3 to A&F’s Current Report on Form 8-K dated and filed October
19, 2015 (File No. 001-12107).
First Amendment to the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan (Plan II), dated as of
October 14, 2015, incorporated herein by reference to Exhibit 10.4 to A&F’s Current Report on Form 8-K dated and filed October
19, 2015 (File No. 001-12107).
Second Amendment to the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan (Plan II), dated as of
December 16, 2019, incorporated herein by reference to Exhibit 10.33 to A&F's Annual Report on Form 10-K for the fiscal year
ended February 1, 2020 (File No. 001-12107).
Trust Agreement, made as of October 16, 2006, between A&F and Wilmington Trust Company, incorporated herein by reference to
Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed October 17, 2006 (File No. 001-12107).
Amended and Restated Credit Agreement, dated as of April 29, 2021, among Abercrombie & Fitch Management Co., as Lead
Borrower; the other Borrowers and Guarantors party thereto; Wells Fargo Bank, National Association, as administrative agent for
the lenders, a L/C Issuer and Swing Line Lender; the other lenders party thereto; Citizens Business Capital, as a L/C Issuer;
Citizens Bank, N.A., as Syndication Agent; JPMorgan Chase Bank, N.A., as Documentation Agent and a L/C Issuer; and Wells
Fargo Bank, National Association, Citizens Bank, N.A. and JPMorgan Chase Bank, N.A., as Joint Lead Arrangers and Joint
Bookrunners, incorporated herein by reference to Exhibit 10.3 to A&F’s Quarterly Report on Form 10 Q for the quarterly period
ended May 1, 2021 (File No. 001 12107).†
First Amendment to Amended and Restated Credit Agreement and First Amendment to Security Agreement, dated as of March 15,
2023, among Abercrombie & Fitch Management Co., as Lead Borrower; the other Borrowers and Guarantors party thereto, and
Wells Fargo Bank, National Association, as administrative agent for the Lenders, incorporated herein by reference to Exhibit 10.12
to A&F's Annual Report on Form 10-K for the fiscal year ended January 28, 2023 (File No. 001-12107).
Guaranty, dated as of August 7, 2014, made by Abercrombie & Fitch Co., as guarantor, and certain of its wholly-owned
subsidiaries, each as a guarantor, in favor of Wells Fargo Bank, National Association, as administrative agent and collateral agent
for its own benefit and the benefit of the other Credit Parties, and the Credit Parties, incorporated herein by reference to Exhibit
10.5 to A&F’s Quarterly Report on Form 10-Q for the quarterly period ended August 2, 2014 (File No. 001-12107).
Abercrombie & Fitch Co.
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2023 Form 10-K
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10.14
10.15
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
10.35*
10.36*
10.37*
10.38*
Security Agreement, dated as of August 7, 2014, made by Abercrombie & Fitch Management Co., as lead borrower for itself and
the other Borrowers, Abercrombie & Fitch Co. and certain of its wholly-owned subsidiaries, in their respective capacities as a
guarantor, and the other borrowers and guarantors from time to time party thereto, in favor of Wells Fargo Bank, National
Association, as administrative agent and collateral agent for the Credit Parties, incorporated herein by reference to Exhibit 10.7 to
A&F’s Quarterly Report on Form 10-Q for the quarterly period ended August 2, 2014 (File No. 001-12107).††
Confirmation, Ratification and Amendment of Ancillary Loan Documents, made as of April 29, 2021, among Abercrombie & Fitch
Co., for itself and as Lead Borrower; the other Borrowers from time to time party thereto; the Guarantors from time to time party
thereto; and Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent , incorporated herein by
reference to Exhibit 10.19 to A&F’s Annual Report on 10-K for the fiscal year ended January 29, 2022 (File No. 001-12107).†
Retirement Agreement, dated December 8, 2014, between Michael S. Jeffries and A&F, incorporated herein by reference to Exhibit
10.1 to A&F’s Current Report on Form 8-K dated and filed December 9, 2014 (File No. 001-12107).
Employment Offer, dated October 8, 2014, between Fran Horowitz and A&F, incorporated herein by reference to Exhibit 10.1 to
A&F’s Current Report on Form 8-K dated and filed October 15, 2014 (File No. 001-12107).
Letter, dated December 16, 2015, between A&F Management and Fran Horowitz setting forth terms of employment as President
and Chief Merchandising Officer, incorporated herein by reference to Exhibit 10.74 to A&F’s Annual Report on Form 10-K for the
fiscal year ended January 30, 2016 (File No. 001-12107).
Form of Agreement entered into between A&F Management and Fran Horowitz as of May 10, 2017, incorporated herein by
reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed May 12, 2017 (File No. 001-12107).
Non-Compete Amendment entered into between A&F Management and Fran Horowitz as of November 5, 2021 (including a
schedule identifying executive officers of A&F party to substantially identical Non-Compete Agreements with A&F Management,
incorporated herein by reference to Exhibit 10.1 to A&F’s Quarterly Report on Form 10-Q for the quarterly period ended October
30, 2021 (File No. 001-12107).
Employment Offer, dated May 6, 2016, between Kristin Scott and A&F, incorporated herein by reference to Exhibit 10.3 to A&F’s
Current Report on Form 8-K dated and filed May 23, 2016 (File No. 001-12107).
Form of Agreement entered into between A&F Management and Kristin Scott as of May 10, 2017, incorporated herein by reference
to Exhibit 10.2 to A&F’s Current Report on Form 8-K dated and filed May 12, 2017 (File No. 001-12107).
Separation Agreement entered into by and between A&F Management and Kristin Scott, effective February 13, 2024 (filed
herewith), incorporated herein by reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K/A dated and filed February 16,
2024 (File No. 001-12107).
Employment Offer, dated August 17, 2017, between Scott Lipesky and A&F, incorporated herein by reference to Exhibit 10.1 to
A&F's Current Report on Form 8-K dated and filed September 6, 2017 (File No. 001-12107).
Form of Agreement entered into between A&F Management and Scott Lipesky as of September 7, 2017, incorporated herein by
reference to Exhibit 10.2 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended October 28, 2017 (File No.
001-12107).
Employment Offer, dated August 24, 2018, between Gregory J. Henchel and A&F, incorporated herein by reference to Exhibit 10.1
to A&F's Quarterly Report on Form 10-Q for the quarterly period ended November 3, 2018 (File No. 001-12107).
Agreement entered into between A&F Management and Gregory J. Henchel as of September 13, 2018, incorporated herein by
reference to Exhibit 10.2 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended November 3, 2018 (File No.
001-12107).
Form of Retention Restricted Stock Unit Award Agreement, effective as of August 28, 2020, between A&F and each of Scott
Lipesky, Kristin Scott and Gregory J. Henchel, incorporated herein by reference to Exhibit 10.1 to A&F’s Current Report on Form 8-
K dated and filed on September 2, 2020 (File No. 001-12107).
Employment Offer, dated May 20, 2021, between Samir Desai and A&F (including, as Exhibit A, the Agreement entered into
between A&F Management and Samir Desai as of May 20, 2021), incorporated herein by reference to Exhibit 10.2 to A&F’s
Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2021 (File No. 001-12107).
Agreement entered into between A&F Management and Jay Rust as of May 9, 2023, the execution date by A&F Management and
Mr. Rust, incorporated herein by reference to Exhibit 10.2 to A&F's Quarterly Report on Form 10-Q dated and filed September 1,
2023 for the quarterly period ended July 29, 2023 (File No. 001-12107).
Form of Director and Officer Indemnification Agreement, incorporated herein by reference to Exhibit 10.3 to A&F's Quarterly Report
on Form 10-Q/A for the quarterly period ended April 29, 2017 (File No. 001-12107).
Abercrombie & Fitch Co. 2005 Long-Term Incentive Plan, incorporated herein by reference to Exhibit 10.1 to A&F’s Current Report
on Form 8-K dated and filed June 17, 2005 (File No. 001-12107).
Certificate regarding Approval of Amendment of Section 3(b) of the Abercrombie & Fitch Co. 2005 Long-Term Incentive Plan by
Board of Directors of Abercrombie & Fitch Co. on August 20, 2014, incorporated herein by reference to Exhibit 10.11 to A&F’s
Quarterly Report on Form 10-Q for the quarterly period ended July 30, 2016 (File No. 001-12107).
Amended and Restated Abercrombie & Fitch Co. 2007 Long-Term Incentive Plan, incorporated herein by reference to Exhibit 10.1
to A&F’s Current Report on Form 8-K dated and filed June 17, 2011 (File No. 001-12107).
Certificate regarding Approval of Amendment of Section 3(b) of the Abercrombie & Fitch Co. Amended and Restated 2007 Long-
Term Incentive Plan by Board of Directors of Abercrombie & Fitch Co. on August 20, 2014, incorporated herein by reference to
Exhibit 10.12 to A&F’s Quarterly Report on Form 10-Q for the quarterly period ended July 30, 2016 (File No. 001-12107).
Form of Stock Appreciation Right Award Agreement used for grants of awards after August 20, 2013 and prior to June 16, 2016
under the Amended and Restated Abercrombie & Fitch Co. 2007 Long-Term Incentive Plan, incorporated herein by reference to
Exhibit 10.2 to A&F’s Quarterly Report on Form 10-Q for the quarterly period ended November 2, 2013 (File No. 001-12107).
Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates (as amended on June 8, 2022), incorporated herein by
reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed on June 14, 2023 (File No. 001-12107).
Form of Restricted Stock Unit Award Agreement used to evidence the grant of restricted stock units to associates (employees) of
Abercrombie & Fitch Co. and its subsidiaries under the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates on
and after March 26, 2019 and prior to March 7, 2023, (3-year vesting), incorporated herein by reference to Exhibit 10.1 to A&F’s
Quarterly Report on Form 10-Q for the quarterly period ended May 2, 2020 (File No. 001-12107).
Abercrombie & Fitch Co.
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2023 Form 10-K
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10.39*
10.40*
10.41*
10.42*
10.43*
10.44*
10.45*
10.46*
10.47*
10.48*
10.49*
10.50
21.1
23.1
24.1
31.1
31.2
32.1
Form of Restricted Stock Unit Award Agreement used to evidence the grant of restricted stock units to associates (employees) of
Abercrombie & Fitch Co. and its subsidiaries under the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates
after June 16, 2016 (4-year vesting) incorporated herein by reference to Exhibit 10.6 to A&F’s Quarterly Report on Form 10-Q for
the quarterly period ended July 30, 2016 (File No. 001-12107).
Form of Restricted Stock Unit Award Agreement used to evidence the grant of restricted stock units to associates (employees) of
Abercrombie & Fitch Co. and its subsidiaries under the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates on
and after March 7, 2023, incorporated herein by reference to Exhibit 10.38 to A&F’s Annual Report on Form 10-K for the fiscal year
ended January 28, 2023 (File No. 001-12107).
Form of Performance Share Award Agreement used to evidence the grant of performance share awards to associates (employees)
of A&F and its subsidiaries under the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates on or after March 23,
2021 and prior to March 24, 2022, incorporated herein by reference to Exhibit 10.2 to A&F’s Quarterly Report on Form 10 Q for the
quarterly period ended May 1, 2021 (File No. 001-12107).
Form of Performance Share Award Agreement used to evidence the grant of performance share awards to associates (employees)
of A&F and its subsidiaries under the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates on or after March 24,
2022 and prior to March 7, 2023, incorporated herein by reference to Exhibit 10.1 to A&F’s Quarterly Report on Form 10 Q for the
quarterly period ended April 30, 2022 (File No. 001-12107).
Form of Performance Share Award Agreement used to evidence the grant of performance share awards to associates (employees)
of A&F and its subsidiaries under the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates on or after March 12,
2024.
Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Directors (as amended on May 20, 2020), incorporated herein by
reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed on May 21, 2020 (File No. 001-12107).
Form of Restricted Stock Unit Award Agreement used to evidence the grant of restricted stock units to non-associate directors of
A&F under the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Directors on and after June 16, 2016, incorporated
herein by reference to Exhibit 10.10 to A&F’s Quarterly Report on Form 10-Q for the quarterly period ended July 30, 2016 (File No.
001-12107).
Form of Restricted Stock Unit Award Agreement used to evidence the grant of restricted stock units to non-associate chairperson
of the board of A&F under the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Directors on and after June 16, 2016.
Amended and Restated Abercrombie & Fitch Co. Short-Term Cash Incentive Compensation Performance Plan, incorporated
herein by reference to Exhibit 10.1 to A&F's Current Report on Form 8-K dated and filed March 13, 2024 (File No. 001-12107).
Abercrombie & Fitch Co. Long-Term Cash Incentive Compensation Performance Plan, incorporated herein by reference to Exhibit
10.2 to A&F's Current Report on Form 8-K dated and filed June 15, 2017 (File No. 001-12107).
First Amendment to the Abercrombie & Fitch Co. Long-Term Cash Incentive Compensation Performance Plan, dated as of August
16, 2023, incorporated herein by reference to Exhibit 10.2 to A&F's Quarterly Report on Form 10-Q dated and filed December 4,
2023 for the quarterly period ended October 28, 2023 (File No. 001-12107).
Abercrombie & Fitch Co. Associate Stock Purchase Plan (October 1, 2007 Restatement, incorporated herein by reference to
Exhibit 10.6 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended October 28, 2017 (File No. 001-12107)
List of Subsidiaries of A&F.
Consent of Independent Registered Public Accounting Firm — PricewaterhouseCoopers LLP.
Powers of Attorney.
Certifications by Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certifications by Executive Vice President and Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) or
Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certifications by Chief Executive Officer (Principal Executive Officer) and Executive Vice President and Chief Financial Officer
(Principal Financial Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.**
97.1
Abercrombie & Fitch Co. Compensation Recoupment Policy, effective as of December 1, 2023
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits
101).
* Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to
Item 15(a)(3) and Item 15(b) of this Annual Report on Form 10-K.
These certifications are furnished.
**
† Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
†† Certain portions of this exhibit have been omitted based upon a request for confidential treatment filed with the SEC. The non-public information
has been separately filed with the SEC in connection with that request.
Abercrombie & Fitch Co.
87
2023 Form 10-K
Table of Contents
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 1, 2024
By:
/s/ Scott D. Lipesky
ABERCROMBIE & FITCH CO.
Scott D. Lipesky
Executive Vice President, Chief Financial Officer and Chief
Operating Officer
(Principal Financial Officer, Principal Accounting Officer and
Authorized Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on April 1, 2024.
*
Nigel Travis
Chairperson of the Board and Director
/s/ Fran Horowitz
Fran Horowitz
*
Chief Executive Officer and Director (Principal Executive Officer)
Kerrii B. Anderson
Director
Susie Coulter
*
*
Director
Sarah M. Gallagher
Director
*
James A. Goldman
Director
/s/ Scott D. Lipesky
Scott D. Lipesky
Executive Vice President, Chief Financial Officer and Chief Operating Officer (Principal
Financial Officer, Principal Accounting Officer and Authorized Officer)
*
Helen E. McCluskey
Director
*
Arturo Nuñez
Director
Kenneth B. Robinson
Director
Helen Vaid
*
*
Director
*
The undersigned, by signing his name hereto, does hereby sign this Annual Report on Form 10-K on behalf of each of
the above-named directors of the Registrant pursuant to powers of attorney executed by such directors, which powers
of attorney are filed with this Annual Report on Form 10-K as Exhibit 24.1.
By:
/s/ Scott D. Lipesky
Scott D. Lipesky
Attorney-in-fact
Abercrombie & Fitch Co.
88
2023 Form 10-K
2023 ANNUAL REPORT
CORPORATE INFORMATION
CORPORATE INFORMATION
Abercrombie & Fitch Co.
6301 Fitch Path
New Albany, Ohio 43054
(614) 283-6500
corporate.abercrombie.com
STOCK EXCHANGE LISTING
New York Stock Exchange, Trading Symbol “ANF”
ANNUAL MEETING
The Annual Meeting of Stockholders scheduled for 10:00 a.m., Eastern Time, on June 12, 2024, will be held as a virtual meeting of
stockholders, to be conducted exclusively online via live webcast at:
www.virtualshareholdermeeting.com/ANF2024.
STOCK TRANSFER AGENT, REGISTRAR AND DIVIDEND AGENT
Equiniti Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
Columbus, Ohio
INVESTOR RELATIONS
For further information about Abercrombie & Fitch Co. or additional copies of this report, contact:
Investor Relations
Abercrombie & Fitch Co.
P.O. Box 182168
Columbus, Ohio 43218
Investor_Relations@anfcorp.com
MEDIA RELATIONS
Media Relations
Public_Relations@anfcorp.com
(614) 283-6192
Abercrombie & Fitch Co.
6
2023 Annual Report
2023 ANNUAL REPORT
EXECUTIVE OFFICERS
& BOARD OF DIRECTORS
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FRAN HOROWITZ Chief Executive Officer
SCOTT LIPESKY Executive Vice President, Chief Financial Officer and Chief Operating Officer
SAMIR DESAI Executive Vice President, Chief Digital and Technology Officer
GREG HENCHEL Executive Vice President, General Counsel and Corporate Secretary
JAY RUST Executive Vice President, Global Human Resources
NIGEL TRAVIS Chairperson of the Board; Chair of the Executive Committee
KERRII B. ANDERSON Chair of the Audit and Finance Committee; member of the Nominating and Board Governance Committee
and Executive Committee
SUSIE COULTER Chair of the ESG Committee
SARAH M. GALLAGHER Member of the Nominating and Board Governance Committee; member of the ESG Committee
JAMES A. GOLDMAN Chair of the Nominating and Board Governance Committee; member of the Compensation and Human
Capital Committee and Executive Committee
FRAN HOROWITZ Chief Executive Officer; member of the Executive Committee of the Board
HELEN MCCLUSKEY Chair of the Compensation and Human Capital Committee; member of the Audit and Finance Committee
and Executive Committee
ARTURO NUŇEZ
KENNETH B. ROBINSON Member of the Audit and Finance Committee; member of the ESG Committee
HELEN VAID Member of the Compensation and Human Capital Committee
Abercrombie & Fitch Co.
7
2023 Annual Report