Financial Data and Key Metrics Changes - Total company sales grew by 3% year-over-year, reaching 38 million compared to an operating loss of 0.39 compared to a net loss per share of 436 million, accounting for 52% of total company sales, up 14% year-over-year [7][10] - Hollister brands experienced a sales decline of 7%, consistent with internal expectations, but improved gross profit rate due to lower freight costs and higher AUR [11][12] Market Data and Key Metrics Changes - U.S. sales increased by 9%, with a 4% comparable sales growth, while international sales declined by 12% overall but were flat on a comparable basis [16] - APAC region saw a 22% comp sales growth due to the reopening of China [16][59] Company Strategy and Development Direction - The company is focused on brand growth as part of its 2025 Always Forward Plan, emphasizing digital engagement and financial discipline [12][13] - The strategy includes managing inventory tightly and leveraging customer insights to evolve product assortments [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second quarter and beyond, citing strong first-quarter execution despite macroeconomic challenges [14][20] - The company plans for net sales growth of 2% to 4% for the full year, reflecting an increase from previous guidance [20][21] Other Important Information - Inventory levels were down 20% compared to the previous year, allowing for better management of promotions and costs [18][19] - The company expects to open 35 to 40 new stores while closing 20 to 25, with a focus on the U.S. market [21] Q&A Session Summary Question: Insights on Hollister's performance and back half of the year - Management noted that Hollister met internal expectations for Q1, with a focus on evolving assortments and positive trends in non-denim categories [26][27] Question: Gross margin dynamics and promotional environment - Management highlighted improvements in gross margin due to lower freight costs and better AUR performance, while acknowledging the dynamic promotional environment [28][29] Question: Customer behavior and sales trends for Abercrombie - Management reported strong customer engagement and sales growth, particularly in the women's segment, with positive trends in men's business as well [32][33] Question: Inventory management and chasing capabilities - Management confirmed the ability to chase inventory effectively due to improved supply chain conditions, allowing for a leaner inventory approach [33][41] Question: Fashion trends and AUR growth across brands - Management indicated that both brands experienced AUR growth, with Abercrombie evolving into a lifestyle brand catering to diverse consumer needs [66][67] Question: Operating expenses and inflation impact - Management expects moderate deleverage on operating expenses due to ongoing investments in digital and technology, alongside inflationary pressures [68][69]
A&F(ANF) - 2023 Q1 - Earnings Call Transcript