Abercrombie & Fitch Co. (ANF: chart)
Q2 2009 Earnings Call Transcript
August 14, 2009 8:30 a.m. ET

Executives

Eric Cerny - Manager of Investor Relations
Michael S. Jeffries – Chairman and Chief Executive Officer
Jonathan E. Ramsden – Executive Vice President and Chief Financial Officer
Brian Logan – Principal Accounting Officer

Analysts

Michelle Tan - Goldman Sachs
Christine Chen - Needham & Company
Janet Kloppenburg - JJK Research
Jeffrey Klinefelter - Piper Jaffray & Co.
Edward Yruma - KeyBanc Capital Markets
Linda Tsai – MKM Partners
Paul Lejuez - Credit Suisse
Kimberly Greenberger – Citigroup
Adrienne Tennant – FBR Capital Markets
Jennifer Black - Jennifer Black & Associates
Liz Dunn - Thomas Weisel Partners
Dana Telsey - Telsey Advisory Group
Laura Champine - Cowen & Company
Stacy Pak - SP Research
Jeffrey Black – Barclays Capital
Richard Jaffe - Stifel Nicolaus & Co.
Randal Konik - Jefferies & Company
Lorraine Hutchinson – Bank of America/Merrill Lynch
Eric Beder - Brean Murray, Carret & Co.
Marni Shapiro – The Retail Tracker
Josh Schwartz - Flatbush Watermill LLC
Roxanne Meyer - UBS
Howard Tubin - RBC Capital Markets
Meghna Patwa - Markit

Presentation

Operator

Good day, everyone and welcome to the Abercrombie & Fitch second quarter earnings results conference call. Today’s conference is being recorded. If you have a question at any time during today’s conference, you may signal us by pressing star one on your touchtone telephone. We will open the call to take your questions at the end of the presentation and we ask that you limit yourself to one question during the question-and-answer session. At this time, I would like to turn the conference over to Mr. Eric Cerny. Mr. Cerny, please go ahead, sir.

Eric Cerny

Good morning and welcome to our second quarter earnings call. Earlier this morning we released our second quarter sales and earnings, balance sheet, statement of operations and an updated financial history. Please feel free to reference these materials available on our website.

This call is being recorded and the replay may be accessed through the Internet at Abercrombie.com.

Before we begin, I remind you that any forward-looking statements we may make today are subject to the Safe Harbor statement found in our SEC filings.

Today’s earnings call will be limited to one hour. We will begin the call with a few brief remarks from Mike, followed by a review of the financial performance for the quarter from Jonathan Ramsden and Brian Logan. After our prepared comments, we will be available to take your questions for as long as time permits. Please limit yourself to one question so that we can speak with as many callers as possible. Now, to Mike.

Michael S. Jeffries

Good morning, everyone. Thank you for joining us today. We continue to be confronted with very challenging conditions during the second quarter. We believe we are doing the right things to address those challenges and improve our domestic business. In the meantime, we remain very encouraged by our prospects for international growth.

As a company that stands for optimism, confidence, and aspiration, we sell the best of America and we think that the world has a growing appreciation of these values. However, consumer spending patterns domestically continue to be dictated by cost and value propositions and this is clearly a headwind for our premium brands.

We find ourselves working to affect the things that are within our control and remain confident that we will be better positioned as a result of our actions to take advantage of the eventual turnaround.

Jonathan and Brian will provide more detail on our financial results in a moment but I would like to share with you some of the key points regarding our strategy, as well as some of the things we are seeing today that allow us to look to the future with optimism.

First, as many of you have heard me say before, our future is tied to the international expansion of our brands. We increasingly see this opportunity, which will drive the future growth and profitability of our business, pointing in a positive direction. Our performance in the U.K. proves that there is a strong demand for our brands overseas. The Abercrombie & Fitch flagship in London, having opened its doors two-and-a-half years ago, continues to comp significantly positively. We currently have five Hollister mall-based stores in the U.K. and are extremely pleased with the reception the brand has received as we have opened each location. We are clearly offering the international customer a shopping experience unlike anything they currently have.

Second, we feel very good about the progress we have made on our product offering. We are always pushing ourselves to offer classic, casual, trend right exceptional quality product but have admittedly missed some of the fashion opportunities that drove the business in the spring. e feel like we have corrected those fashion misses and have been increasingly adding fashion elements to the assortment throughout the quarter in preparation for back-to-school and Christmas shopping, particularly for the female business.