Financial Data and Key Metrics Changes - For Q3 2022, the company reported net sales of $880 million, down 3% compared to the previous year on a reported basis, but flat on a constant currency basis [22] - The gross profit rate decreased to 59.2% from 63.7% the previous year, impacted by adverse exchange rates and higher product costs [24] - Operating income was approximately $21 million, significantly lower than $79 million in the previous year, with net income per diluted share dropping to $0.01 from $0.86 [26][27] Business Line Data and Key Metrics Changes - Abercrombie brands, including Kids, saw net sales grow 10% compared to 2021, and 13% on a constant currency basis, while Hollister's sales declined 12% or 9% on a constant currency basis [22][23] - Abercrombie adults achieved its best Q3 sales since 2014, with women's assortments delivering the highest Q3 sales levels since 2007 [8][9] - Hollister's performance improved slightly, but the brand continues to face challenges with lower conversion rates and basket sizes compared to 2021 [11][12] Market Data and Key Metrics Changes - Net sales increased 3% in the U.S. but declined 18% internationally, with EMEA down 22% and APAC down 26% on a reported basis [23] - The company noted significant inflation impacting global consumers, particularly affecting the Hollister customer base [5][6] Company Strategy and Development Direction - The company is focused on three strategic pillars: focused brand growth, digital evolution, and financial discipline, aiming to leverage these for the holiday season [7][20] - Plans to open approximately 60 new stores globally, marking a net store opening for the first time in over a decade, with a focus on enhancing customer experience [15][28] - The company is committed to managing inventory tightly and adjusting forward receipt plans to align with sales trends [20][25] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the holiday season, with sales running consistent with Q3 levels and healthy inventory on hand [21][29] - The company anticipates continued inflationary pressures on consumer demand but expects to see significant relief on product costs in 2023 [31] - Management highlighted the importance of digital transformation and omnichannel experience as pivotal for future growth [30] Other Important Information - The company repurchased 510,000 shares for approximately $8 million during the quarter, with a remaining authorization of approximately $230 million [27][28] - The company expects to see a benefit from lower cotton prices in the latter half of 2023, while freight costs are anticipated to provide a tailwind in Q4 [24][38] Q&A Session Summary Question: Can you expand on the enhancements that you've been making to Hollister and how you expect the brand to unfold in progress going forward? - Management noted sequential improvement in Hollister and emphasized the importance of adjusting inventories and focusing on categories that are performing well [35] Question: How do you see product cost opportunities with supply chain in the first half of '23 compared to the second half? - Management indicated that while cotton prices will remain a pressure in the first half, they expect benefits from lower freight costs throughout the year [38] Question: Can you talk about the health of the inventory going into the holiday? - Management confirmed that 92% of the inventory is current and expressed confidence in the inventory strategy set for the holiday season [42] Question: How do you think about the promotional environment as we head into the holiday? - Management stated that their promotional strategy is based on internal performance rather than competitors, and they expect promotions to be consistent with last year [44] Question: What about A&F men's performance? - Management reported growth in the men's segment, indicating positive consumer response to Abercrombie's offerings [67]

Financial Data and Key Metrics Changes - Total company sales declined 7% year-over-year, down 4% on a constant currency basis [9][26] - Gross profit rate decreased to 57.9% from 65.2% last year, impacted by higher product costs and adverse exchange rates [28] - Net loss per share was $0.30 compared to net income per diluted share of $1.70 last year [30] Business Line Data and Key Metrics Changes - Abercrombie brands, including kids, grew 5% year-over-year, or 7% on a constant currency basis, while Hollister brands declined 15% or 12% on a constant currency basis [26][27] - Abercrombie Adults achieved its best Q2 sales since 2015, with the highest Q2 average unit retail (AUR) since 2005 [9] - Women's category at Abercrombie delivered its best Q2 sales in AUR since 2008, while men's results showed the highest Q2 AUR since 2013 [10] Market Data and Key Metrics Changes - Net sales decreased 4% in the U.S. and declined 14% internationally, with EMEA down 13% and APAC down 33% on a reported basis [27] - In EMEA, strength in the U.K. and Middle East was offset by softness in Western Europe, particularly Germany and France [50] Company Strategy and Development Direction - The company is focused on three strategic principles: brand growth, digital revolution, and financial discipline [6][21] - Plans to open around 60 new stores in 2022, with a focus on smaller formats and updated store designs [17][32] - The company aims to achieve sales of $4.1 billion to $4.3 billion and a sustainable operating margin rate at or above 8% by the end of fiscal 2025 [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing inflationary pressures impacting consumer behavior, particularly for the Hollister brand [21][23] - There is cautious optimism regarding the moderation of inflation and product costs in the future [35] - The company is committed to executing its long-term goals despite current challenges [25][35] Other Important Information - Inventory levels increased by 70% year-over-year, with 92% classified as current [14][29] - The company repurchased 1 million shares for approximately $18 million during the quarter [31] Q&A Session Summary Question: How are you planning for inventory levels and product costs? - Management highlighted that 92% of inventory is current, with significant in-transit units due to last year's low inventory levels [38][39] Question: Can you discuss trends in back-to-school shopping? - Abercrombie is seeing growth in key categories like jeans and dresses, while Hollister has shifted from bottoms to tops [42] Question: What is the outlook for the Hollister brand? - Management acknowledged the brand's recent underperformance due to macro pressures and a shift in consumer behavior, but remains confident in its future [48][49] Question: How are you addressing inventory management going forward? - The company plans to reduce receipts and focus on trending categories to ensure inventory turns appropriately [58] Question: What are your thoughts on freight costs and sales progression? - Management is optimistic about freight costs becoming a tailwind and noted consistent strength in Abercrombie sales throughout the quarter [63][65]

Financial Data and Key Metrics Changes - Total company revenues rose 4% year-over-year, exceeding expectations for a low single-digit increase, marking the best Q1 revenues since 2014 [9][22] - Net sales reached $813 million, with Abercrombie brand sales increasing by 13% while Hollister brand sales declined by 3% [22][23] - Gross profit margin decreased to 55.3% from 63.4% last year, primarily due to higher freight costs and promotional activities [23][24] - Operating loss of $6 million compared to an operating income of $60 million last year, with a net loss per share of $0.27 [28] Business Line Data and Key Metrics Changes - Abercrombie adults achieved its best first-quarter sales since 2014, with significant growth in women's denim, dresses, and knits [11][12] - Hollister's North American sales were the second-best since 2012, but international sales remained below pre-pandemic levels, declining 3% overall [15][16] - The launch of the YPB (Your Personal Best) line exceeded expectations, selling out over 25% of SKUs within weeks [12][13] Market Data and Key Metrics Changes - U.S. market sales increased by 6%, while international sales were flat, with EMEA showing improvement due to lifted COVID restrictions [22][23] - APAC faced challenges, particularly in China, due to ongoing COVID-related lockdowns [9][23] - The company noted inflationary pressures affecting consumer confidence, particularly in the U.S. and EMEA regions [19][20] Company Strategy and Development Direction - The company aims to double its operating margin from 2017 levels, having already tripled it as of the latest report [7] - Focus on maintaining inventory levels and managing expenses to offset rising freight and raw material costs while supporting long-term growth strategies [10][20] - Plans to open approximately 60 new stores this year, marking a shift to being a net store opener for the first time in over a decade [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current inflationary environment while focusing on customer engagement and product offerings [21][19] - The outlook for Q2 anticipates low single-digit sales declines, with operating margins expected to be between 3% to 4% [32][33] - The company remains committed to long-term investments in digital capabilities and store experiences despite short-term challenges [34] Other Important Information - The company repurchased approximately 3.3 million shares for $100 million during the quarter, reducing outstanding shares by 19% [28][29] - The company is focused on strategic promotions and maintaining a compelling product offering to drive consumer engagement [20][21] Q&A Session Summary Question: What is the game plan for Hollister and how are you addressing inflationary impacts on demand? - Management acknowledged the expected decline in Hollister sales but noted strong U.S. performance and consumer acceptance of products [35][39] Question: Can you discuss cost-saving initiatives to mitigate margin pressures? - Management indicated a focus on reducing non-customer facing expenses while maintaining key investments in marketing and digital capabilities [40][41] Question: How is the pricing environment across regions and the ability to pass through higher prices? - Management reported successful AUR growth and less promotional activity compared to pre-pandemic levels, indicating a positive pricing environment [44][45] Question: What are the expectations for inventory levels and AUR pressure from competition? - Management expects inventory levels to remain elevated in the near term, with AUR growth continuing despite competitive pressures [46][48] Question: How did sales perform in stores versus digital? - Management noted a return to normalized traffic patterns, with a balanced performance between digital and in-store sales [62][64]

Financial Data and Key Metrics Changes - Total net sales for Q3 2021 were $905 million, up 10% year-over-year and up 5% compared to Q3 2019, marking the highest Q3 sales since 2014 [24][7] - Operating income reached $79 million, compared to $65 million last year and $27 million in 2019, representing the best third quarter operating income since 2012 [29] - Net income per diluted share on an adjusted non-GAAP basis was $0.86, compared to $0.76 last year [30] Business Line Data and Key Metrics Changes - Hollister sales, including Gilly Hicks and Social Tourist, rose 10% year-over-year and 1% compared to Q3 2019 [25] - Abercrombie sales, including Kids, increased 12% year-over-year and 10% compared to Q3 2019, representing the highest sales volume since 2015 [18][25] - Digital sales grew 8% year-over-year and 55% compared to 2019, accounting for 46% of total sales [24][8] Market Data and Key Metrics Changes - U.S. sales increased 17% year-over-year and 12% compared to 2019, outperforming other markets [7][26] - EMEA sales were down 6% year-over-year and 7% compared to Q3 2019, with the U.K. showing sequential sales improvements [26] - APAC sales decreased 12% year-over-year and 32% compared to 2019, impacted by ongoing COVID cases and geopolitical issues [27] Company Strategy and Development Direction - The company is focused on digital and omni-channel enhancements, with a commitment to customer engagement and product quality [6][10] - Strategic investments in marketing, technology, and fulfillment are aimed at driving business growth [6] - The company plans to continue optimizing its store fleet and enhancing its digital presence, including same-day delivery options [13][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver an operating margin between 9% and 10% for the fiscal year, the best since 2008 [22][30] - The company anticipates ongoing AUR (Average Unit Retail) opportunities and plans to leverage insights from customer engagement to drive future growth [9][12] - Management acknowledged supply chain challenges but highlighted the team's efforts to navigate these issues effectively [22][28] Other Important Information - The company repurchased approximately 2.7 million shares for $100 million during the quarter, with a new share repurchase authorization of $500 million approved by the Board [30] - The company opened 5 new stores and closed 3, maintaining a flat store count year-to-date [30] Q&A Session Summary Question: What are the AUR assumptions for Q4 and how do they compare to Q3? - Management indicated that Q4 will see accelerated pressure on gross margin due to higher unit flows and Vietnam reopening impacts, but they expect AUR improvements to offset some of the freight cost pressures [36] Question: Can you provide an update on denim sales? - Management reported that denim sales are at an all-time high, with expectations for continued strength in the category due to consumer demand for new styles [42] Question: What are the long-term EBIT margin goals? - Management expressed confidence in sustainable margin gains due to a fundamental shift in the operating model and digital acceleration [47][48] Question: What are the expectations for international business in Q4? - Management expects strong performance in the U.S. to continue, with the U.K. showing positive trends, while acknowledging challenges in other international markets [50][51] Question: How is the company managing occupancy expenses? - Management noted progress in reducing occupancy costs and plans to continue repositioning the store fleet to maintain profitability [54] Question: What is the status of price increases and promotional strategies? - Management confirmed that they have not raised prices this year and have focused on reducing promotions, leading to AUR growth [56]