Abercrombie & Fitch Co. (NYSE:ANF) Q2 2020 Earnings Conference Call - Final Transcript
Aug 27, 2020 • 08:30 am ET
Good day and welcome to the Abercrombie & Fitch Second Quarter Fiscal Year 2020 Earnings Call. [Operator Instructions] Thank you.
At this time, I'll turn the conference over to Pam Quintiliano. Please go ahead.
Thank you. Good morning and welcome to our second quarter 2020 earnings call. Joining me today on the call are Fran Horowitz, Chief Executive Officer; and Scott Lipesky, Chief Financial Officer. Earlier this morning, we issued our second quarter earnings release which is available on our website at corporate.abercrombie.com under the Investors section. Also available on our website is an investor presentation. Please keep in mind that any forward-looking statements made on the call are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions we mention today.
A detailed discussion of these factors and uncertainties is contained in the Company's filings with the Securities and Exchange Commission. In addition, we will be referring to certain non-GAAP financial measures during the call. Additional details and reconciliation of GAAP to adjusted non-GAAP financial measures are included in the release issued earlier this morning.
With that, I will turn the call over to Fran.
Good morning, everyone. I hope you and your loved are healthy and safe. Before discussing second quarter results, I would like to start by thanking our global teams and partners. Despite unique challenges they've all faced, they continue to team up, build up and get it done. From our DC store and home office associates, to our vendor partners around the world, together, we continue to successfully navigate this unprecedented period of uncertainty. I am so proud and humble to be a part of this amazing organization.
Due to the hard work, patience, ingenuity and perseverance of our team, we have been able to quickly react to changing customer demand of fortifying our position for the future. Our total Q2 Company revenues were down 17% as compared to last year. Throughout this quarter, we remain nimble. We utilized our lean and agile inventory management strategy while authentically speaking to our customer and providing them with relevant products aligned with their lifestyle needs. Our customers respond favorably with our gross profit rate expanding 140 basis points fueled by lower promotions and clearance and improved AUR. We also tightly manage expenses, leading to operating expense leverage on our best Q2 operating income in six years.
Of this unwavering focus on maintaining strong liquidity, we generated a $187 million operating cash flow, ending the quarter with $767 million of cash and equivalents and approximately $1.1 billion of liquidity. This empowered to make quick and strategic near term decisions while continuing to fund critical long-term investments for future growth. Over the last several years we strengthened our foundation as we executed against our key transformation initiatives, including reducing square footage and updating our in-store experiences, investing in digital omnichannel capabilities, increasing the