Abercrombie & Fitch Co. (NYSE:ANF) Q3 2017 Earnings Conference Call Transcript

Nov 17, 2017 • 08:30 am ET

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Abercrombie & Fitch Co. (NYSE:ANF) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Abercrombie & Fitch Third Quarter Fiscal Year 2017 Earnings Call. Today's conference is being recorded.

(Operator Instructions)

At this time, I'd now like to turn the conference over to Brian Logan. Mr. Logan, please go ahead.

Executive
Brian Logan

Thank you. Good morning, and welcome to our third quarter earnings call. Earlier this morning, we released our third quarter sales and earnings, income statement, balance sheet, store opening and closing summary and an updated financial history. Please feel free to reference these materials, which are available on our website. Also available on our website is an investor presentation, which we will be referring to in our comments during this call.

Today's earnings call is being recorded, and a replay may be accessed at abercrombie.com under the Investors section. Joining me today are Fran Horowitz, CEO; Joanne Crevoiserat, COO; and Scott Lipesky, CFO. After our prepared remarks, we will be available to take questions.

(Operator Instructions)

(Forward-Looking Cautionary Statements)

With that, I turn the call over to Fran.

Executive
Fran Horowitz

Thanks, Brian. Good morning, everyone, and thank you for joining us. I am pleased to report another quarter of meaningful progress across all our brands, as we continue to execute against our strategic plan. We delivered another quarter of sequential comparable sales improvement and a return to positive comparable sales for the quarter. We maintain strategic investment, omni-channel and marketing by managing our expenses effectively, resulting in operating expense leverage and profit growth. Putting our customers at the center of every decision we make and everything we do remains a north star for us. That singular focus is reflected in our people, our processes and our product. And we see that focus translating into positive overall traffic and conversion trends across the brands.

We drove a particularly strong quarter at Hollister with sales growth across all channels and geographies. At Abercrombie, we drove further improvements and are seeing some early signs of stabilization. We continue to apply our playbook across the brands, which calls for a relentless focus on our customer. The results are clear. When we align our product, brand voice and brand experience, we see improved traffic and conversion as we did this quarter. Those areas in which we are investing our time and money are delivering and in a still promotional environment. This quarter's performance was a broad-based improvement across brands and genders' consolidation that our playbook is working. We had previously said that Hollister started its revitalization journey earlier. It is now gaining momentum and taking market share. At Abercrombie, we are encouraged that we are now seeing some of the same lead indicators that characterize the earlier part of Hollister's journey, mainly stabilizing the core US business and improving conversion.

We continue to make progress in DTC with an 11% increase in sales over last year. The shift to mobile continues, particularly with our customer. More than 2/3 of our DTC traffic comes from mobile. The investments we've made here are paying off, as phone and