Financial Data and Key Metrics Changes - The company reported net sales of 60 million, marking the best first quarter operating income since 2008 [30] Business Line Data and Key Metrics Changes - Hollister's net sales increased by 62%, while Abercrombie's net sales rose by 60% [26] - Digital sales grew 45% year-over-year, accounting for 52% of total sales [9][26] - Gilly Hicks experienced a 90% increase in sales, indicating strong performance in the brand [56] Market Data and Key Metrics Changes - U.S. sales were up 72% year-over-year, with an 18% increase compared to Q1 2019 [27] - EMEA sales rose 41% year-over-year but were down 9% compared to Q1 2019 due to COVID-related restrictions [27] - APAC sales increased by 42% year-over-year but decreased by 30% compared to Q1 2019 [28] Company Strategy and Development Direction - The company is focused on transitioning to a digital-first global omni-channel retailer, enhancing customer engagement through digital platforms [13][24] - There is a commitment to global store network optimization, reducing larger format locations in favor of smaller, omni-enabled stores [23] - The launch of the Social Tourist brand aims to tap into the power of social selling and attract a younger customer base [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for Q2, anticipating benefits from lifted COVID restrictions and a more normalized back-to-school season [25] - The company plans to maintain lean inventory levels and continue to manage expenses tightly while investing in growth opportunities [34][54] - There is an expectation of ongoing inflation in transportation and labor costs, but the company believes it can absorb these shocks [41][42] Other Important Information - The company ended the quarter with inventories down 9% year-over-year, reflecting disciplined inventory management [11][29] - A share buyback program was resumed, with approximately 1.1 million shares repurchased for $35 million [32] Q&A Session Summary Question: What are the expectations for the Social Tourist brand and denim sales? - Management is excited about Social Tourist, noting significant early engagement and views, and sees a strong denim opportunity for back-to-school [39][40] Question: Can you provide insights on Q2 trends and brand performance? - Q2 has shown continued momentum, with both brands performing well in the U.S., while European performance remains inconsistent due to ongoing restrictions [45][46] Question: How are you planning for labor and transportation cost inflation? - The company anticipates inflation in transportation and labor costs but believes it can manage these through effective supply chain strategies [41][42] Question: What are the expectations for back-to-school and the impact of the child tax credit? - Management is cautiously optimistic about a normalized back-to-school season and hopes to see a positive impact from the child tax credit [50][52] Question: How do you view the sustainability of EBIT margins moving forward? - The company remains committed to its EBIT margin target and believes that controlling expenses and maintaining gross margins will support this goal [48][59]
A&F(ANF) - 2021 Q1 - Earnings Call Transcript