Financial Data and Key Metrics Changes - The company achieved a 9.6% adjusted annual operating margin, the highest in over a decade, significantly above the 5.8% target set in 2018 [5][16] - Full-year net sales reached 4.35, the highest since 2007 [16][30] Business Line Data and Key Metrics Changes - Hollister's net sales increased by 2% compared to 2020, while Abercrombie's net sales rose by 6% [25] - The gross profit rate for the full year was 62.3%, up 290 basis points compared to 2019 [29] - The company experienced a 19% sales growth from fiscal 2020 and a 2% growth from fiscal 2019 [16] Market Data and Key Metrics Changes - U.S. sales increased by 7%, while international sales decreased by 4% compared to the previous year [25] - The company noted stronger trends in the U.S. compared to EMEA and APAC regions, which faced ongoing COVID-related disruptions [26] Company Strategy and Development Direction - The company is transitioning to a net store opener for the first time since 2008, planning to open at least 50 new omni-enabled experiences in 2022 [10][32] - The focus remains on optimizing the global store network and enhancing digital capabilities, with a significant investment in marketing and digital fulfillment [5][11] - The company aims to maintain a disciplined approach to store openings, ensuring the right size, location, and economics [52] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the international business as COVID restrictions ease, while acknowledging potential headwinds from inflation and supply chain issues [23][33] - The company plans to offset freight and raw material inflation through higher average unit retail prices and reduced promotional activity [34][64] - Management highlighted strong customer engagement and a healthy target customer base, indicating readiness for growth despite near-term challenges [23][37] Other Important Information - The company repurchased 10.2 million shares for $377 million, reducing total shares outstanding by 15% [17][32] - The corporate culture has been enhanced, with recognition as one of Fortune's best places to work in retail [15] Q&A Session Summary Question: Can you provide more detail on sales guidance by geography or concept? - Management expects U.S. to outperform international regions, with both Abercrombie and Hollister contributing to growth, though Abercrombie is likely to outperform Hollister slightly [40] Question: What is the outlook for Gilly Hicks and its growth potential? - Gilly Hicks has seen strong acceptance and is expanding with new stores planned in the UK and Germany, with a focus on a test-and-learn culture [44][45] Question: How do you see the digital business evolving alongside store openings? - Digital sales are expected to continue growing, with both digital and store channels being important for the omni business strategy [51] Question: What are the freight assumptions for the year and their impact on margins? - Freight costs are expected to impact margins by 300 to 400 basis points, with hopes for moderation later in the year [61] Question: Will there be a return to promotions in 2022? - The company aims to hold AUR gains and reduce promotional activity, focusing on delivering great products and maintaining inventory control [64]
A&F(ANF) - 2022 Q4 - Earnings Call Transcript