Abercrombie & Fitch Co. (NYSE:ANF) Q3 2020 Earnings Conference Call - Final Transcript

Nov 24, 2020 • 08:30 am ET


Abercrombie & Fitch Co. (NYSE:ANF) Q3 2020 Earnings Conference Call - Final Transcript


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Good day and welcome to the Abercrombie & Fitch Third Quarter Fiscal Year 2020 Earnings Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Pam Quintiliano. Please go ahead.

Pamela Quintiliano

Thank you. Good morning and welcome to our third 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 third 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.

Fran Horowitz

Good morning and thank you for joining us today. I hope you and your loved ones are safe and healthy and that no matter how you are planning to celebrate this holiday weekend that you find some time to take care of yourself and relax. Before discussing earnings, I would like to take a moment to thank our global team and vendor partners. Due to your ongoing hard work and tireless commitment, we achieved better-than-expected third quarter results.

Total Company revenues declined 5%, above our forecast for a 15% to 20% decline shared on our second quarter earnings call. Our balanced merchandise assortments resonated with our target customers with all brands, regions, and channels, exceeding internal sales expectations. Our performance was achieved on reduced promotional and clearance activity, driving improved margins.

At the time of our August call, there was still a significant amount of uncertainty around back-to-school for many students in the United States, and roughly 80% of our stores were closed in California, which is one of our largest markets. Due to this uncertainty, we expect that the summer and back-to-school selling season to be extended and to recoup some, but not all, of the lost back-to-school sales in our traditional August peak. We saw this play out with omni sales in September and October exceeding our internal expectations.

Digital revenues rose 43% to a third quarter Company record of $382 million. We registered meaningful year-over-year improvements in traffic to our websites and apps and conversion and new customer acquisition. We realized record Q3 digital sales in over two-thirds of our categories, including the majority of our high-margin, must win, must grow classifications. Importantly, we achieved these records on reduced