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Market Update : 
Abercrombie & Fitch Q1 Earnings Call
Author: 123jump.com Staff
123jump.com
Last Update: 7:12 AM ET May 19 2009


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I think that is exactly right. As the year progresses we will see the benefits of the lower average unit cost, that''s where we''re directing ourselves. We are directing ourselves to that formula. Traditional IMU protecting the quality and lower AUR, we are able to achieve that as the year progresses. We still have a pressure on that line for second quarter because we haven''t been as aggressive on the average unit cost reduction as we are going forward.

Jonathan Ramsden

Adrienne it''s progressive but you''re looking out to spring next year. I mean, that''s obviously far enough out that we can be actively planning to have it fully cycle through by then in terms of the reductions we''re going to be able to achieve.

Operator

For our next question we go to Barbara Wyckoff with Guerrilla Capital Management.

Barbara Wyckoff - Guerrilla Capital Management

Hi everyone. I guess it is a question, Mike, do you see any change in the shopping habits of the casual weekend female shopper and what is doing with the skirt and accessory business in all three brands?

Mike Jeffries

Okay we had seen a greater percentage fallout on weekend than during the week and that continues, which indicates to us that the casual shopper is shopping or shopping as the weekend activity is down. I think that will abate over time. Our skirt business is not good. And it''s a bet we made for first quarter as opposed to dresses. So as I said, I was wrong, the fashion miss in dresses, our bet was that the skirt business was going to emerge. It has not. And we are selling printed skirts, pattern skirts but that''s about it. The accessory business is in line with the total business. The cloth business is highly weather related. The tote business is not particularly strong but we anticipate the accessory business improving for back-to-school.

Operator

We go next to Dana Telsey with Telsey Advisory Group.

Dana Telsey - Telsey Advisory Group

Good morning everybody. Mike, can you talk a little bit about Europe and the U.S? What do you see as compare and contrast the difference in product acceptance? What you''re seeing at Hollister and Abercrombie versus what you''re seeing here and as you expand to Milan and also Tokyo, will there be differences there, and also any difference in price point and IMU over there? Thank you.

Mike Jeffries

What we''re seeing in the U.K. is just an overwhelming acceptance of our offering. It''s quality, style of merchandise and store environment, store experience. This gives us great optimism for where we''re going. We are testing a store in Germany as we stated, we''re testing a mall-based store in Germany. We''re testing a mall-based store in Italy this fall and based upon the European business that we''re doing in all of our brands, in all of our stores, we''re highly optimistic of those results. I think the short answer is that there is an appreciation for what we do and we are not going to over saturate the world with what we''re offering. What do we expect in Milan and Tokyo? The same thing. Looking at the Italian business that we''re doing currently, and the Japanese business that we are doing, we''re highly optimistic about the results in those two stores. The third part of the question, price difference, the prices in Milan and Tokyo are related to the Abercrombie & Fitch flagship prices in London.

Operator

We go next to Christine Chen with Needham & Company.

Christine Chen - Needham & Company

Thank you. Mike, I was just wondering if you could comment, we certainly see more fashion in the stores as the year has progressed and I expect there will be more for back-to-school. What percentage of the mix would that be second half of the year versus what it''s been first half of the year and which concept do you think has made the most progress? Thank you.

Mike Jeffries


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