# ABERCROMBIE & FITCH CO /DE/ (ANF) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from ABERCROMBIE & FITCH CO /DE/'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1018840/000101884024000019/anf-20240203.htm
Accession: 0001018840-24-000019
Filing date: 2024-04-01
Report date: 2024-02-03
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/ANF/
All MD&A years: /company/ANF/mda/
Previous year: /company/ANF/mda/fy2023/ (FY 2023)
Next year: /company/ANF/mda/fy2025/ (FY 2025)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) generally discusses our results of operations for Fiscal 2023 and Fiscal 2022 and provides comparisons between such fiscal years. For discussion and comparison of Fiscal 2022 and Fiscal 2021, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2022, filed with the SEC on March 27, 2023. This MD&A should be read together with the Company’s audited Consolidated Financial Statements and notes thereto included in this Annual Report on Form 10-K in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA,” to which all references to Notes in MD&A are made.

INTRODUCTION

MD&A is provided as a supplement to the accompanying Consolidated Financial Statements and notes thereto to help provide an understanding of the Company’s results of operations, financial condition, and liquidity. MD&A is organized as follows:

•Overview. A general description of the Company’s business and certain segment information, and an overview of key performance indicators reviewed by management in assessing the Company’s results.

•Current Trends and Outlook. A discussion of the Company’s long-term plans for growth and a summary of the Company’s performance over recent years, primarily Fiscal 2023 and Fiscal 2022.

•Results of Operations. An analysis of certain components of the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for Fiscal 2023 as compared to Fiscal 2022.

•Liquidity and Capital Resources. A discussion of the Company’s financial condition, changes in financial condition and liquidity as of February 3, 2024, which includes (i) an analysis of changes in cash flows for Fiscal 2023 as compared to Fiscal 2022, (ii) an analysis of liquidity, including availability under the Company’s credit facility, and outstanding debt and covenant compliance and (iii) a summary of contractual and other obligations as of February 3, 2024.

•Recent Accounting Pronouncements. The recent accounting pronouncements the Company has adopted or is currently evaluating, including the dates of adoption or expected dates of adoption, as applicable, and anticipated effects on the Company’s audited Consolidated Financial Statements, are included in Note 2 “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.”

•Critical Accounting Estimates. A discussion of the accounting estimates considered to be important to the Company’s results of operations and financial condition, which typically require significant judgment and estimation on the part of the Company’s management in their application.

•Non-GAAP Financial Measures. MD&A provides a discussion of certain financial measures that have been determined to not be presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). This section includes certain reconciliations between GAAP and non-GAAP financial measures and additional details on non-GAAP financial measures, including information as to why the Company believes the non-GAAP financial measures provided within MD&A are useful to investors.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","30","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

OVERVIEW

Business Summary

Abercrombie & Fitch Co. (“A&F”), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and its subsidiaries are referred to as the “Company”), is a global, digitally-led omnichannel retailer. The Company offers a broad assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its Company-owned stores and digital channels, as well as through various third-party arrangements.

During the second quarter of Fiscal 2023, to leverage the knowledge and experience of our regional teams to drive brand growth, the Company reorganized its structure and now primarily manages its business on a geographic basis, consisting of three reportable segments: Americas; Europe, the Middle East and Africa (EMEA); and Asia-Pacific (APAC). Corporate functions and other income and expenses are evaluated on a consolidated basis and are not allocated to the Company’s segments, and therefore are included as a reconciling item between segment and total operating income (loss). There was no impact on consolidated net sales, operating income (loss) or net income (loss) as a result of these changes. All prior periods presented are recast to conform to the new segment presentation.

The Company’s brands include Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister brands, which includes Hollister and Gilly Hicks. These brands share a commitment to offering unique products of enduring quality and exceptional comfort that allow customers around the world to express their own individuality and style.

The Company’s fiscal year ends on the Saturday closest to January 31. This typically results in a fifty-two-week year, but occasionally gives rise to an additional week, resulting in a fifty-three-week year, as is the case in Fiscal 2023. All references herein to the Company’s fiscal years are as follows:

[[GREPCENT_TABLE]]
[["Fiscal year","","Year ended/ ending","","Number of weeks"],["Fiscal 2021","","January 29, 2022","","52"],["Fiscal 2022","","January 28, 2023","","52"],["Fiscal 2023","","February 3, 2024","","53"],["Fiscal 2024","","February 1, 2025","","52"]]
[[/GREPCENT_TABLE]]

Seasonality

Historically, the Company’s operations have been seasonal in nature and consist of two principal selling seasons: the spring season, which includes the first and second fiscal quarters (“Spring”) and the fall season, which includes the third and fourth fiscal quarters (“Fall”). Due to the seasonal nature of the retail apparel industry, the results of operations for any current period are not necessarily indicative of the results expected for the full fiscal year and the Company could have significant fluctuations in certain asset and liability accounts. The Company historically experiences its greatest sales activity during the Fall season due to back-to-school and holiday sales periods, respectively.

Key Performance Indicators

The following measurements are among the key performance indicators reviewed by the Company’s management in assessing the Company’s results:

•Changes in net sales and comparable sales;

•Gross profit and gross profit rate;

•Cost of sales, exclusive of depreciation and amortization, as a percentage of net sales;

•Stores and distribution expense as a percentage of net sales;

•Marketing, general and administrative expense as a percentage of net sales;

•Operating income and operating income as a percentage of net sales (“operating margin”);

•Net income and net income attributable to A&F;

•Cash flow and liquidity measures, such as the Company’s working capital, operating cash flow, and free cash flow;

•Inventory metrics, such as inventory turnover;

•Return on invested capital and return on equity;

•Store metrics, such as net sales per gross square foot, and store four-wall operating margins; 

•Digital and omnichannel metrics, such as total shipping expense as a percentage of digital sales, and certain metrics related to our purchase-online-pickup-in-store and order-in-store programs;

•Transactional metrics, such as traffic and conversion, performance across key product categories, average unit retail (“AUR’), average unit cost (“AUC”), average units per transaction and average transaction values, return rates, shrink; and

•Customer-centric metrics such as customer satisfaction, customer retention and acquisition, and certain metrics related to the loyalty programs.

While not all of these metrics are disclosed publicly by the Company due to the proprietary nature of the information, the Company discusses many of these metrics within this MD&A.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","31","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

CURRENT TRENDS AND OUTLOOK

Focus Areas for Fiscal 2024

In June of Fiscal 2022, we announced our 2025 Always Forward Plan, which outlines our long-term strategy and goals, including growing shareholder value. The 2025 Always Forward Plan is anchored on our strategic growth principles, which are to:

•Execute focused growth plans;

•Accelerate an enterprise-wide digital revolution; and

•Operate with financial discipline

The 2025 Always Forward Plan growth principles serve as a framework for the Company achieving sustainable and profitable growth and profitability in Fiscal 2024. Below are some additional details specific to Fiscal 2024 objectives within the 2025 Always Forward Plan:

Execute focused growth plans by:

•driving sales growth across regions and brands primarily through marketing and store investment.

•using our playbooks globally to align the brands’ products, voices, and experiences with customers, both digitally and in-store; and

•using testing and chase strategies to deliver compelling assortments and product collections across genders.

Accelerate an enterprise-wide digital revolution to improve the customer and associate experience by:

•continuing to progress on our multi-year enterprise resource planning (“ERP”) transformation and cloud migration journey; and

•investing in digital and technology to improve experiences across key parts of the customer journey while delivering a consistent omnichannel experience.

Operate with financial discipline by:

•actively managing inventory levels and positioning Abercrombie brands and Hollister brands to chase inventory as appropriate throughout the year; and

•funding our growth strategies while properly balancing investments, impacts of inflation and efficiency efforts.

Current Macroeconomic Conditions

Macroeconomic conditions, including inflation, the geopolitical landscape, political uncertainty including elections in several countries, higher interest rates, foreign exchange rate fluctuations, and declines in consumer discretionary spending continue to negatively impact our business. While freight costs have decreased in Fiscal 2023 and cotton costs waned towards the end of Fiscal 2023, there continues to be pricing volatility with respect to freight, cotton and other raw materials. Continued inflationary pressures and pricing volatility could further impact expenses and have a long-term impact on the Company because increasing costs may impact its ability to maintain satisfactory margins.

In addition, these macroeconomic conditions may result in delays in merchandise fulfillment and deliveries, increased costs to meet consumer demand (which we may not be able to pass on to customers through average unit retail (“AUR”)), or reduced consumer confidence. In periods of perceived or actual unfavorable economic conditions, consumers may reallocate available discretionary spending, which may adversely impact demand for our products.

Global Events and Supply Chain Disruptions

As a global multi-brand omnichannel specialty retailer, with operations in North America, Europe, the Middle East, and Asia, among other regions, management is mindful of macroeconomic risks, global challenges and the changing global geopolitical environment, including the ongoing armed conflicts between Russia and Ukraine or Israel and Hamas, and conflict in the surrounding areas, which could adversely impact certain areas of the business. Starting in late Fiscal 2023, disruptions to ocean vessels in the Red Sea have resulted in delayed deliveries to the EMEA region. Such disruptions have also led to increased freight costs, which could impact the Company in Fiscal 2024. The Company has taken certain mitigating actions in response to these events, including increasing air freight usage where appropriate and prioritizing critical orders earlier to allow for longer lead times. Further mitigating actions may be needed as we continue in to Fiscal 2024, particularly if there is prolonged or escalating conflict in the Red Sea.

While freight costs decreased in Fiscal 2023, the recent disruptions in the Red Sea may offset anticipated future freight cost benefits.

Management continues to monitor global events and assess the potential impacts that these events and similar events may have on the business in future periods. Although management also develops and updates contingency plans to assist in mitigating potential impacts, it is possible that the Company’s preparations for such events are not adequate to mitigate their impact, and that these events could further adversely affect its business and results of operations.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","32","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

Global Store Network Optimization

The Company has a goal of finding the right size, right location and right economics for omni-enabled stores that cater to local customers. The Company continues to use data to inform its focus on aligning store square footage with digital penetration and the Company delivered new store experiences across brands during Fiscal 2023 and Fiscal 2022. Details related to these new store experiences follow:

[[GREPCENT_TABLE]]
[["Type of new store experience","","Fiscal 2023","","Fiscal 2022"],["New stores","","35","","59"],["Remodels","","13","","1"],["Right-sizes","","9","","8"],["Total","","57","","68"]]
[[/GREPCENT_TABLE]]

During Fiscal 2023, the Company opened 35 new stores, while closing 32 stores. This compares with 59 new stores and 26 closures during Fiscal 2022. Future closures could be completed through natural lease expirations, while certain other leases include early termination options that can be exercised under specific conditions. The Company may also elect to exit or modify other leases, and could incur charges related to these actions.

Additional details related to store count and gross square footage follow:

[[GREPCENT_TABLE]]
[["","Fifty-Three Weeks Ended February 3, 2024"],["","AMERICAS (1)","","EMEA (2)","","APAC (3)","","Total Company"],["","Abercrombie (4)","","Hollister (5)","","Abercrombie (4)","","Hollister (5)","","Abercrombie (4)","","Hollister (5)","","Abercrombie (4)","","Hollister (5)","","Total (6)"],["January 28, 2023","184","","","389","","","29","","","112","","","20","","","28","","","233","","","529","","","762"],["New","14","","","7","","","4","","","6","","","4","","","\u2014","","","22","","","13","","","35"],["Permanently closed","(4)","","","(12)","","","(4)","","","(10)","","","\u2014","","","(2)","","","(8)","","","(24)","","","(32)"],["February 3, 2024","194","","","384","","","29","","","108","","","24","","","26","","","247","","","518","","","765"],["Gross square footage (in thousands):"],["January 28, 2023","1,176","","","2,487","","","181","","","907","","","132","","","185","","","1,489","","","3,579","","","5,068"],["February 3, 2024","1,188","","","2,459","","","187","","","828","","","149","","","169","","","1,524","","","3,456","","","4,980"]]
[[/GREPCENT_TABLE]]

(1)The Americas segment includes the results of operations in North America and South America.

(2)The EMEA segment includes the results of operations in Europe, the Middle East and Africa.

(3)The APAC segment includes the results of operations in the Asia-Pacific region, including Asia and Oceania.

(4)Abercrombie brands includes Abercrombie & Fitch and abercrombie kids.

(5)Hollister brands includes Hollister and Gilly Hicks.

(6)This store count excludes temporary and international franchise stores.

Pillar Two Model Rules

In 2021, the Organization for Economic Cooperation and Development (“OECD”) released Pillar Two Global Anti-Base Erosion model rules (“Pillar Two Rules”), designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. Although the U.S. has not yet enacted legislation implementing Pillar Two Rules, other countries where the Company does business, including the U.K. and Germany, have enacted legislation implementing Pillar Two Rules which are effective from January 1, 2024. The Company does not expect the implementation of the Pillar Two Rules in each jurisdiction in which it operates will have a material impact on the Company’s effective tax rate. The Company will continue to evaluate the impact as jurisdictions implement legislation and provide further guidance.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","33","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

Summary of Results

A summary of results for Fiscal 2023 and Fiscal 2022 follows:

[[GREPCENT_TABLE]]
[["","GAAP","","Non-GAAP (1)"],["(in thousands, except change in net sales, gross profit rate, operating income margin and per share amounts)","Fiscal 2023","","Fiscal 2022","","Fiscal 2023","","Fiscal 2022"],["Net sales","$","4,280,677","","","$","3,697,751"],["Change in net sales from the prior fiscal year","16","%","","\u2014","%"],["Comparable sales (2)","","","","","13","%","","\u2014","%"],["Gross profit rate (3)","62.9","%","","56.9","%"],["Operating income","$","484,671","","","$","92,648","","","$","489,107","","","$","106,679"],["Operating income margin","11.3","%","","2.5","%","","11.4","%","","2.9","%"],["Net income attributable to A&F","$","328,123","","","$","2,816","","","$","331,328","","","$","13,045"],["Net income per diluted share attributable to A&F","$","6.22","","","$","0.05","","","$","6.28","","","$","0.25"]]
[[/GREPCENT_TABLE]]

(1)    Refer to “RESULTS OF OPERATIONS” for details on excluded items. A reconciliation of each non-GAAP financial measure presented in this Annual Report on Form 10-K to the most directly comparable financial measure calculated in accordance with GAAP, as well as a discussion as to why the Company believes that these non-GAAP financial measures are useful to investors, is provided below under “NON-GAAP FINANCIAL MEASURES.”

(2)    Comparable sales are calculated on a constant currency basis and exclude revenue other than store and digital sales. Refer to the discussion below in “NON-GAAP FINANCIAL MEASURES,” for further details on the comparable sales calculation. In light of store closures related to COVID-19, comparable sales for periods prior to Fiscal 2023 included in this Annual Report on Form 10-K are not disclosed.

(3)    Gross profit is derived from cost of sales, exclusive of depreciation and amortization. Gross profit rate is is derived from cost of sales, exclusive of depreciation and amortization as a percentage of total net sales.     

Certain components of the Company’s Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023 and Consolidated Statements of Cash Flows for Fiscal 2023 and Fiscal 2022 were as follows:

[[GREPCENT_TABLE]]
[["(in thousands)"],["Balance Sheets data","February 3, 2024","","January 28, 2023"],["Cash and equivalents","$","900,884","","","$","517,602"],["Gross borrowings outstanding, carrying amount","223,214","","","299,730"],["Inventories","469,466","","","505,621"],["Statements of Cash Flows data","Fiscal 2023","","Fiscal 2022"],["Net cash provided by (used for) operating activities","$","653,422","","","$","(2,343)"],["Net cash used for investing activities","(157,182)","","","(140,675)"],["Net cash used for financing activities","(111,201)","","","(155,329)"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","34","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

RESULTS OF OPERATIONS

The estimated basis point (“BPS”) changes disclosed throughout this Results of Operations have been rounded based on the change in the percentage of net sales.

Net Sales

Net sales by segment are presented by attributing revenues on the basis of the segment that fulfills the order. The Company’s net sales by reportable segment for Fiscal 2023 and Fiscal 2022 were as follows:

[[GREPCENT_TABLE]]
[["(in thousands)","Fiscal 2023","","Fiscal 2022","","$ Change","","% Change","","Comparable Sales (1)"],["Americas","$","3,455,674","","","$","2,920,157","","","$","535,517","","","18%","","13%"],["EMEA","687,095","","","658,794","","","28,301","","","4%","","7%"],["APAC","137,908","","","118,800","","","19,108","","","16%","","26%"],["Total Company","$","4,280,677","","","$","3,697,751","","","$","582,926","","","16%","","13%"]]
[[/GREPCENT_TABLE]]

(1)Comparable sales are calculated on a constant currency basis. Refer to “NON-GAAP FINANCIAL MEASURES,” for further details on the comparable sales calculation.

For Fiscal 2023, net sales increased 16%, as compared to Fiscal 2022, primarily due to an increase in units sold and AUR. The additional week in fiscal 2023 benefited net sales by approximately $50 million. The year-over-year increase in net sales reflects positive comparable sales of 13%, as compared to Fiscal 2022, with comparable sales growth in the Americas, EMEA, and APAC segments.

The Company’s net sales by brand for Fiscal 2023 and Fiscal 2022 were as follows:

[[GREPCENT_TABLE]]
[["(in thousands)","Fiscal 2023","","Fiscal 2022","","$ Change","","% Change","","Comparable Sales (1)"],["Abercrombie (2)","$","2,201,686","","","$","1,734,866","","","$","466,820","","","27%","","23%"],["Hollister (3)","2,078,991","","","1,962,885","","","116,106","","","6%","","4%"],["Total Company","$","4,280,677","","","$","3,697,751","","","$","582,926","","","16%","","13%"]]
[[/GREPCENT_TABLE]]

(1)Comparable sales are calculated on a constant currency basis. Refer to “NON-GAAP FINANCIAL MEASURES,” for further details on the comparable sales calculation.

(2)Abercrombie brands includes Abercrombie & Fitch and abercrombie kids.

(3)Hollister brands includes Hollister and Gilly Hicks.

Cost of Sales, Exclusive of Depreciation and Amortization

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022"],["(in thousands)","","","% of Net Sales","","","","% of Net Sales","","BPS Change"],["Cost of sales, exclusive of depreciation and amortization","$","1,587,265","","","37.1%","","$","1,593,213","","","43.1%","","(600)"]]
[[/GREPCENT_TABLE]]

For Fiscal 2023, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales decreased approximately 600 basis points as compared to Fiscal 2022. The decrease was primarily attributable to approximately 340 basis points of higher average unit retail and approximately 300 basis points from the combination of lower freight costs and higher raw materials compared to Fiscal 2022. These benefits were partially offset by approximately 30 basis points from the adverse impact of exchange rates.

Gross Profit, Exclusive of Depreciation and Amortization

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022"],["","","","% of Net Sales","","","","% of Net Sales","","BPS Change"],["Gross profit, exclusive of depreciation and amortization","$","2,693,412","","","62.9%","","$","2,104,538","","","56.9%","","600"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","35","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

Stores and Distribution Expense

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022"],["(in thousands)","","","% of Net Sales","","","","% of Net Sales","","BPS Change"],["Stores and distribution expense","$","1,571,737","","","36.7%","","$","1,496,962","","","40.5%","","(380)"]]
[[/GREPCENT_TABLE]]

For Fiscal 2023, stores and distribution expense, as a percentage of net sales, decreased 380 basis points as compared to Fiscal 2022. The decrease was primarily driven by expense leverage as a result of net sales growth, slightly offset by an increase of $18 million in store occupancy expense compared to Fiscal 2022.

Marketing, General and Administrative Expense

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022"],["(in thousands)","","","% of Net Sales","","","","% of Net Sales","","BPS Change"],["Marketing, general and administrative expense","$","642,877","","","15.0%","","$","517,602","","","14.0%","","100"]]
[[/GREPCENT_TABLE]]

For Fiscal 2023, marketing, general and administrative expense, as a percentage of net sales increased 100 basis points as compared to Fiscal 2022, primarily due to an increase in incentive compensation, marketing, the 53rd reporting week and digital and technology expenses.

Other Operating Income, Net

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022"],["(in thousands)","","","% of Net Sales","","","","% of Net Sales","","BPS Change"],["Other operating income, net","$","5,873","","","0.1%","","$","2,674","","","0.1%","","\u2014"]]
[[/GREPCENT_TABLE]]

For Fiscal 2023, other operating income, net, increased as compared to Fiscal 2022, primarily due to $0.9 million foreign currency gain recognized in Fiscal 2023.

Operating Income

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022"],["(in thousands)","","","% of Net Sales","","","","% of Net Sales","","BPS Change"],["Operating income","$","484,671","","","11.3%","","$","92,648","","","2.5%","","880"],["Excluded items:"],["Asset impairment charges (1)","4,436","","","0.1%","","14,031","","","0.4%","","(30)"],["Adjusted non-GAAP operating income","$","489,107","","","11.4%","","$","106,679","","","2.9%","","850"]]
[[/GREPCENT_TABLE]]

(1)    Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.

Interest Expense, Net

[[GREPCENT_TABLE]]
[["","","Fiscal 2023","","Fiscal 2022"],["(in thousands)","","","","% of Net Sales","","","","% of Net Sales","","BPS Change"],["Interest expense","","$","30,352","","","0.7%","","$","30,236","","","0.8%","","(10)"],["Interest income","","(29,980)","","","(0.7)%","","(4,604)","","","(0.1)%","","(60)"],["Interest expense, net","","$","372","","","\u2014%","","$","25,632","","","0.7%","","(70)"]]
[[/GREPCENT_TABLE]]

For Fiscal 2023, interest expense, net, decreased 70 basis points as compared to Fiscal 2022. The net decrease can be attributable to higher interest income due to the increase in balance and rates received on deposits and money market accounts as compared to Fiscal 2022.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","36","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

Income Tax Expense

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022"],["(in thousands, except ratios)","","","Effective Tax Rate","","","","Effective Tax Rate"],["Income tax expense","$","148,886","","","30.7%","","$","56,631","","","84.5%"],["Excluded items:"],["Tax effect of pre-tax excluded items (1)","1,231","","","","","3,802"],["Adjusted non-GAAP income tax expense","$","150,117","","","30.7%","","$","60,433","","","74.6%"]]
[[/GREPCENT_TABLE]]

(1)    Refer to “Operating Income” for details of pre-tax excluded items. The tax effect of pre-tax excluded items is the difference between the tax provision calculation on a GAAP basis and an adjusted non-GAAP basis. Refer to “NON-GAAP FINANCIAL MEASURES” for further details.

The increase in income tax expense compared to Fiscal 2022 can be attributed to higher domestic income resulting from higher sales volume and higher AURs.

During Fiscal 2023, the Company did not recognize income tax benefits on $103.0 million of pre-tax losses, primarily in Switzerland, resulting in adverse tax impacts of $15.6 million. The primary driver relates to expense deleverage within the APAC and EMEA regions, although to a lesser extent than in the prior year.

During Fiscal 2022, the Company did not recognize income tax benefits on $136.5 million of pre-tax losses, primarily in Switzerland, resulting in adverse tax impacts of $20.0 million. The primary driver relates to lower sales volume, higher AUC and overall expense deleverage within the APAC and EMEA regions.

Refer to Note 11, “INCOME TAXES,” for further discussion on factors that impacted the effective tax rate in Fiscal 2023 and Fiscal 2022.

Net Income Attributable to A&F

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022"],["(in thousands)","","","% of Net Sales","","","","% of Net Sales","","BPS Change"],["Net income attributable to A&F","$","328,123","","","7.7%","","$","2,816","","","0.1%","","760"],["Excluded items, net of tax (1)","3,205","","","0.1%","","10,229","","","0.3%","","(20)"],["Adjusted non-GAAP net income attributable to A&F (2)","$","331,328","","","7.7%","","$","13,045","","","0.4%","","730"]]
[[/GREPCENT_TABLE]]

(1)    Excludes items presented above under “Operating Income,” and “Income Tax Expense.”

(2)    Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.

Net Income Per Diluted Share Attributable to A&F

[[GREPCENT_TABLE]]
[["","Fiscal 2023","","Fiscal 2022","","$ Change"],["Net income per diluted share attributable to A&F","$","6.22","","","$","0.05","","","$6.17"],["Excluded items, net of tax (1)","0.06","","","0.20","","","(0.14)"],["Adjusted non-GAAP net income per diluted share attributable to A&F","$","6.28","","","$","0.25","","","$6.03"],["Impact from changes in foreign currency exchange rates","\u2014","","","(0.13)","","","0.13"],["Adjusted non-GAAP net income per diluted share attributable to A&F on a constant currency basis(2)","$","6.28","","","$","0.12","","","$6.16"]]
[[/GREPCENT_TABLE]]

(1)    Excludes items presented above under “Operating Income,” and “Income Tax Expense.”

(2)    Refer to “NON-GAAP FINANCIAL MEASURES,” for further details.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","37","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company’s capital allocation strategy and priorities are reviewed by the A&F’s Board of Directors quarterly considering both liquidity and valuation factors. The Company believes that it will have adequate liquidity to fund operating activities for the next twelve months. The Company monitors financing market conditions and may in the future determine whether and when to amend, modify, repurchase, or restructure its ABL Facility and/or the Senior Secured Notes. For a discussion of the Company’s share repurchase activity and suspended dividend program, please see below under “Share repurchases and dividends.”

Primary Sources and Uses of Cash

The Company’s business has two principal selling seasons: the spring season, which includes the first and second fiscal quarters (“Spring”) and the fall season, which includes the third and fourth fiscal quarters (“Fall”). The Company generally experiences its greatest sales activity during the Fall season, due to the back-to-school and holiday sales periods. The Company relies on excess operating cash flows, which are largely generated in Fall, to fund operations throughout the year and to reinvest in the business to support future growth. The Company also has the ABL Facility available as a source of additional funding, which is described further below under “Credit Facility and Senior Secured Notes”.

Over the next twelve months, the Company expects its primary cash requirements to be directed towards prioritizing investments in the business and continuing to fund operating activities, including the acquisition of inventory, and obligations related to compensation, marketing, data and technology, leases and any lease buyouts or modifications it may exercise, taxes and other operating activities. In addition, the Company continuously evaluates potential opportunities to strategically deploy excess cash and/or deleverage the balance sheet, depending on various factors, such as market and business conditions, including the Company’s ability to accelerate investments in the business. Such opportunities may include, but are not limited to, purchasing outstanding Senior Secured Notes or share repurchases.

The Company evaluates opportunities for investments in the business that are in line with initiatives that position the business for sustainable long-term growth that align with its strategic pillars as described within “ITEM 1. BUSINESS - STRATEGY AND KEY BUSINESS PRIORITIES.” Examples of potential investment opportunities include, but are not limited to, new store experiences, and investments in the Company’s digital revolution initiatives. Historically, the Company has utilized free cash flow generated from operations to fund any discretionary capital expenditures, which have been prioritized towards new store experiences, as well as marketing, digital and omnichannel investments, information technology, and other projects. For Fiscal 2023, the Company used $157.8 million towards capital expenditures, down from $164.6 million of capital expenditures in Fiscal 2022. Total capital expenditures for Fiscal 2024 are expected to be approximately $170 million.

Share Repurchases and Dividends

In November 2021, A&F’s Board of Directors approved a $500 million share repurchase authorization. During Fiscal 2023, the Company did not repurchase any shares of its common stock pursuant to this share repurchase authorization. The Company has $232 million in share repurchase authorization remaining under the authorization approved in November 2021.

Historically, the Company has repurchased shares of its Common Stock from time to time, dependent on excess liquidity, market conditions, and business conditions, with the objectives of returning excess cash to shareholders and offsetting dilution from issuances of Common Stock associated with the exercise of employee stock appreciation rights and the vesting of restricted stock units. Shares may be repurchased in the open market, including pursuant to trading plans established in accordance with Rule 10b5-1 of the Exchange Act through privately negotiated transactions or other transactions or by a combination of such methods. Refer to “ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES” of this Annual Report on Form 10-K for the amount remaining available for purchase under the Company’s publicly announced share repurchase authorization.

In May 2020, the Company announced that it had suspended its dividend program in order to preserve liquidity and maintain financial flexibility in light of COVID-19. The Company may in the future review its dividend program to determine, in light of facts and circumstances at that time, whether and when to reinstate. Any dividends are declared at the discretion of A&F’s Board of Directors. A&F’s Board of Directors reviews and establishes a dividend amount, if at all, based on A&F’s financial condition, results of operations, capital requirements, current and projected cash flows, business prospects and other factors, including any restrictions under the Company’s agreements related to the Senior Secured Notes and the ABL Facility. There can be no assurance that the Company will declare and pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","38","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

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Credit Facility and Senior Secured Notes

As of February 3, 2024, the Company had $223.2 million of gross indebtedness outstanding under the Senior Secured Notes. During Fiscal 2023, A&F Management purchased $76.5 million of outstanding Senior Secured Notes and incurred a $2.0 million loss on extinguishment of debt, recognized in interest expense, net on the Consolidated Statements of Operations and Comprehensive Income (Loss).

In addition, the Amended and Restated Credit Agreement, as amended by the First Amendment, provides for the ABL Facility, which is a senior secured asset-based revolving credit facility of up to $400 million. On March 15, 2023, the Company entered into the First Amendment to the Amended and Restated Credit Agreement to eliminate LIBO rate based loans and to use the current market definitions with respect to the Secured Overnight Financing Rate (“SOFR”)”, as well as to make other conforming changes.

The Company did not have any borrowings outstanding under the ABL Facility as of February 3, 2024 or as of January 28, 2023.

Details regarding the remaining borrowing capacity under the ABL Facility as of February 3, 2024 follow:

[[GREPCENT_TABLE]]
[["(in thousands)","February 3, 2024"],["Loan cap","$","332,891"],["Less: Outstanding stand-by letters of credit","(440)"],["Borrowing capacity","332,451"],["Less: Minimum excess availability (1)","(33,289)"],["Borrowing capacity available","$","299,162"]]
[[/GREPCENT_TABLE]]

(1)    The Company must maintain excess availability equal to the greater of 10% of the loan cap or $30 million under the ABL Facility.

Refer to Note 12, “BORROWINGS,” for additional information.

Income Taxes

The Company’s earnings and profits from its foreign subsidiaries could be repatriated to the U.S., without incurring additional federal income tax. The Company determined that the balance of the Company’s undistributed earnings and profits from its foreign subsidiaries as of February 2, 2019, are considered indefinitely reinvested outside of the U.S., and if these funds were to be repatriated to the U.S., the Company would expect to incur an insignificant amount of state income taxes and foreign withholding taxes. The Company accrues for both state income taxes and foreign withholding taxes with respect to earnings and profits earned after February 2, 2019, in such a manner that these funds may be repatriated without incurring additional tax expense.

As of February 3, 2024, $247.3 million of the Company’s $900.9 million of cash and equivalents were held by foreign affiliates.

Refer to Note 11, “INCOME TAXES,” for additional details regarding the impact certain events related to the Company’s income taxes had on the Company’s Consolidated Financial Statements.

Analysis of Cash Flows

The table below provides certain components of the Company’s Consolidated Statements of Cash Flows for Fiscal 2023 and Fiscal 2022:

[[GREPCENT_TABLE]]
[["(in thousands)","Fiscal 2023","","Fiscal 2022"],["Cash and equivalents, and restricted cash and equivalents, beginning of period","$","527,569","","","$","834,368"],["Net cash provided by (used for) operating activities","653,422","","","(2,343)"],["Net cash used for investing activities","(157,182)","","","(140,675)"],["Net cash used for financing activities","(111,201)","","","(155,329)"],["Effects of foreign currency exchange rate changes on cash","(2,923)","","","(8,452)"],["Net increase (decrease) in cash and equivalents, and restricted cash and equivalents","$","382,116","","","$","(306,799)"],["Cash and equivalents, and restricted cash and equivalents, end of period","$","909,685","","","$","527,569"]]
[[/GREPCENT_TABLE]]

Operating activities - For Fiscal 2023 net cash provided by operating activities included increased cash receipts as a result of the 16% year-over-year increase in net sales partially offset by increased payments to vendors, including additional rent payments made during the period due to fiscal calendar shifting relative to monthly rent due dates.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","39","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

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Investing activities - For Fiscal 2023, net cash used for investing activities was primarily attributable to capital expenditures of $157.8 million as compared to net cash used for investing activities of $164.6 million in Fiscal 2022, primarily attributable to capital expenditures, partially offset by the proceeds from the withdrawal of $12.0 million of excess funds from Rabbi Trust assets and the sale of property and equipment of $11.9 million.

Financing activities - For Fiscal 2023, net cash used for financing activities primarily consisted of the purchase of $76.5 million of outstanding Senior Secured Notes for $78.0 million as well as amounts related to shares of Common Stock withheld (repurchased) to cover tax withholdings upon vesting of share-based compensation awards. For Fiscal 2022, net cash used for financing activities primarily consisted of the repurchase of approximately 4.8 million shares of Common Stock in the open market with a market value of approximately $126 million as well as the purchase of $8.0 million of outstanding Senior Secured Notes at a slight discount to par.

Contractual Obligations

As of February 3, 2024, the Company’s contractual obligations were as follows:

[[GREPCENT_TABLE]]
[["","","Payments due by period"],["(in thousands)","","Total","","Less than 1 year","","1-3 years","","3-5 years","","More than 5 years"],["Operating lease obligations (1)","","$","968,725","","","$","228,719","","","$","396,245","","","$","247,000","","","$","96,761"],["Purchase obligations (2)","","289,241","","","242,469","","","32,110","","","4,438","","","10,224"],["Long-term debt obligations (3)","","223,214","","","\u2014","","","223,214","","","\u2014","","","\u2014"],["Other obligations (4)","","119,975","","","49,546","","","21,064","","","20,123","","","29,242"],["Total","","$","1,601,155","","","$","520,734","","","$","672,633","","","$","271,561","","","$","136,227"]]
[[/GREPCENT_TABLE]]

(1)Operating lease obligations consist of the Company’s future undiscounted operating lease payments. Operating lease obligations do not include variable payments related to both lease and nonlease components, such as contingent rent payments made by the Company based on performance, and payments related to taxes, insurance, and maintenance costs. Total variable lease cost was $168.9 million in Fiscal 2023. Refer to Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Leases,” and Note 7, “LEASES,” for further discussion.

(2)Purchase obligations primarily consist of non-cancelable purchase orders for merchandise to be delivered during Fiscal 2024 and commitments for fabric expected to be used during upcoming seasons. In addition, purchase obligations include agreements to purchase goods or services, including, but not limited to, information technology, digital and marketing contracts, as well as estimated obligations related to the Company’s 13-year, 100% renewable energy supply agreement for its global home office and Company-owned distribution centers.

(3)Long-term debt obligations consist of principal payments under the Senior Secured Notes. Refer to Note 12, “BORROWINGS,” for further discussion.

(4)Other obligations consists of: interest payments related to the Senior Secured Notes assuming normally scheduled principal payments; estimated asset retirement obligations; known and scheduled payments related to the Company’s deferred compensation and supplemental retirement plans; tax payments associated with the provisional, mandatory one-time deemed repatriation tax on accumulated foreign earnings, net payable over eight years pursuant to the The Tax Cuts and Jobs Act; and minimum contractual obligations related to leases signed but not yet commenced, primarily related to the Company’s stores. Refer to Note 7, “LEASES,” Note 11, “INCOME TAXES,” Note 12, “BORROWINGS,” and Note 16, “SAVINGS AND RETIREMENT PLANS,” for further discussion.

Due to uncertainty as to the amounts and timing of future payments, tax related to uncertain tax positions, including accrued interest and penalties, of $3.0 million as of February 3, 2024, is excluded from the contractual obligations table. Deferred taxes are also excluded in the contractual obligations table. For further discussion, refer to Note 11, “INCOME TAXES.”

As of February 3, 2024, the Company had recorded $4.7 million and $39.6 million of obligations related to its deferred compensation and supplemental retirement plans in accrued expenses and other liabilities on the Consolidated Balance Sheet, respectively. Amounts payable with known payment dates of $16.4 million have been classified in the contractual obligations table based on those scheduled payment dates. However, it is not reasonably practicable to estimate the timing and amounts for the remainder of these obligations, therefore, those amounts have been excluded in the contractual obligations table.

A&F had historically paid quarterly dividends on Common Stock prior to the suspension of the dividend program in May 2020. Because the dividend program remains suspended and the payment of future dividends is subject to determination and approval by the Board of Directors, there are no amounts included in the contractual obligations table related to dividends.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company describes its significant accounting policies in Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent accounting pronouncements.” The Company reviews recent accounting pronouncements on a quarterly basis and has excluded discussion of those not applicable to the Company and those that did not have, or are not expected to have, a material impact on the Company’s consolidated financial statements.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","40","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

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CRITICAL ACCOUNTING ESTIMATES

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts. Since actual results may differ from those estimates, the Company revises its estimates and assumptions as new information becomes available. Note 2, “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,” describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. The estimates and assumptions discussed below include those that the Company believes are the most critical to the portrayal of the Company’s financial condition and results of operations.

[[GREPCENT_TABLE]]
[["Policy","","Effect if Actual Results Differ from Assumptions"],["Inventory Valuation"],["The Company reviews inventories on a quarterly basis. The Company reduces the inventory valuation when the carrying cost of specific inventory items on hand exceeds the amount expected to be realized from the ultimate sale or disposal of the goods, through a lower of cost and net realizable value (\u201cLCNRV\u201d) adjustment. The LCNRV adjustment reduces inventory to its net realizable value based on the Company\u2019s consideration of multiple factors and assumptions, expected sell-off activity, composition and aging of inventory, historical recoverability experience and risk of obsolescence from changes in economic conditions or customer preferences.","","The Company does not expect material changes to the underlying assumptions used to measure the LCNRV estimate as of February 3, 2024. However, actual results could vary from estimates and could significantly impact the ending inventory valuation at cost, as well as gross profit. An increase or decrease in the LCNRV adjustment of 10% would have affected pre-tax loss by approximately $3.1 million for Fiscal 2023."],["Income Taxes"],["The provision for income taxes is determined using the asset and liability approach. Tax laws often require items to be included in tax filings at different times than the items are being reflected in the financial statements. A current liability is recognized for the estimated taxes payable for the current year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes are adjusted for enacted changes in tax rates and tax laws. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.","","The Company does not expect material changes in the judgments, assumptions or interpretations used to calculate the tax provision for Fiscal 2024. However, changes in these judgments, assumptions or interpretations may occur and should those changes be significant, they could have a material impact on the Company\u2019s income tax provision. As of the end of Fiscal 2023, the Company had recorded valuation allowances of $147.0 million"],["Long-lived Assets"],["Long-lived assets, primarily operating lease right-of-use assets, leasehold improvements, furniture, fixtures and equipment, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset group might not be recoverable. These include, but are not limited to, material declines in operational performance, a history of losses, an expectation of future losses, adverse market conditions and store closure or relocation decisions. On at least a quarterly basis, the Company reviews for indicators of impairment at the individual store level, the lowest level for which cash flows are identifiable. Stores that display an indicator of impairment are subjected to an impairment assessment. The Company\u2019s impairment assessment requires management to make assumptions and judgments related, but not limited, to management\u2019s expectations for future operations and projected cash flows. The key assumption used in the Company\u2019s undiscounted future store cash flow models is estimated sales growth rate. An impairment loss may be recognized when these undiscounted future cash flows are less than the carrying amount of the asset group. In the circumstance of impairment, any loss would be measured as the excess of the carrying amount of the asset group over its fair value. Fair value of the Company\u2019s store-related assets is determined at the individual store level based on the highest and best use of the asset group. The key assumptions used in the Company\u2019s fair value analysis are estimated sales growth and comparable market rents.","","Store assets that were tested for impairment as of February 3, 2024 and not impaired, had long-lived assets with a net book value of $11.8 million, which included $7.0 million of operating lease right-of-use assets as of February 3, 2024. Store assets that were previously impaired as of February 3, 2024, had a remaining net book value of $63.5 million, which included $53.8 million of operating lease right-of-use assets, as of February 3, 2024. If actual results are not consistent with the estimates and assumptions used in assessing impairment or measuring impairment losses, there may be a material impact on the Company\u2019s financial condition or results of operation."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","41","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

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NON-GAAP FINANCIAL MEASURES

This Annual Report on Form 10-K includes discussion of certain financial measures on both a GAAP and a non-GAAP basis. The Company believes that each of the non-GAAP financial measures presented in this “ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” is useful to investors as it provides a meaningful basis to evaluate the Company’s operating performance excluding the effect of certain items that the Company believes do not reflect its future operating outlook, such as certain asset impairment charges, therefore supplementing investors’ understanding of comparability of operations across periods. Management used these non-GAAP financial measures during the periods presented to assess the Company’s performance and to develop expectations for future operating performance. These non-GAAP financial measures should be used as a supplement to, and not as an alternative to, the Company’s GAAP financial results, and may not be calculated in the same manner as similar measures presented by other companies.

Comparable sales

At times, the Company provides comparable sales, defined as the year-over-year percentage change in the aggregate of (1) sales for stores that have been open as the same brand at least one year and whose square footage has not been expanded or reduced by more than 20% within the past year, with the prior year’s net sales converted at the current year’s foreign currency exchange rates to remove the impact of foreign currency exchange rate fluctuations, and (2) digital sales with the prior year’s net sales converted at the current year’s foreign currency exchange rates to remove the impact of foreign currency exchange rate fluctuations. Comparable sales exclude revenue other than store and digital sales. Management uses comparable sales to understand the drivers of year-over-year changes in net sales and believes comparable sales can be a useful metric as it can assist investors in distinguishing the portion of the Company’s revenue attributable to existing locations from the portion attributable to the opening or closing of stores. The most directly comparable GAAP financial measure is change in net sales. In light of store closures related to COVID-19, comparable sales for periods prior to Fiscal 2023 included in this Annual Report on Form 10-K are not disclosed.

Excluded Items

The following financial measures are disclosed on a GAAP basis and on an adjusted non-GAAP basis excluding the following items, as applicable:

[[GREPCENT_TABLE]]
[["Financial measures (1)","","Excluded items"],["Asset impairment","","Certain asset impairment charges"],["Operating income","","Certain asset impairment charges"],["Income tax expense (2)","","Tax effect of pre-tax excluded items"],["Net income and net income per share attributable to A&F (2)","","Pre-tax excluded items and the tax effect of pre-tax excluded items"]]
[[/GREPCENT_TABLE]]

(1)    Certain of these financial measures are also expressed as a percentage of net sales.

(2)    The tax effect of excluded items is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","42","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

Table of Contents

Financial Information on a Constant Currency Basis

The Company provides certain financial information on a constant currency basis to enhance investors’ understanding of underlying business trends and operating performance by removing the impact of foreign currency exchange rate fluctuations. Management also uses financial information on a constant currency basis to award employee performance-based compensation. The effect from foreign currency exchange rates, calculated on a constant currency basis, is determined by applying the current period’s foreign currency exchange rates to the prior year’s results and is net of the year-over-year impact from hedging. The per diluted share effect from foreign currency exchange rates is calculated using a 26% effective tax rate.

A reconciliation of financial metrics on a constant currency basis to GAAP for Fiscal 2023 and Fiscal 2022 is as follows:

[[GREPCENT_TABLE]]
[["(in thousands, except change in net sales, gross profit rate, operating margin and per share data)"],["Net sales","Fiscal 2023","","Fiscal 2022","","% Change"],["GAAP","$","4,280,677","","","$","3,697,751","","","16%"],["Impact from changes in foreign currency exchange rates","\u2014","","","6,500","","","0%"],["Net sales on a constant currency basis","$","4,280,677","","","$","3,704,251","","","16%"],["Gross profit","Fiscal 2023","","Fiscal 2022","","BPS Change (1)"],["GAAP","$","2,693,412","","","$","2,104,538","","","600"],["Impact from changes in foreign currency exchange rates","\u2014","","","(8,969)","","","30"],["Gross profit on a constant currency basis","$","2,693,412","","","$","2,095,569","","","630"],["Operating income","Fiscal 2023","","Fiscal 2022","","BPS Change (1)"],["GAAP","$","484,671","","","$","92,648","","","880"],["Excluded items (2)","(4,436)","","","(14,031)","","","(30)"],["Adjusted non-GAAP","$","489,107","","","$","106,679","","","850"],["Impact from changes in foreign currency exchange rates","\u2014","","","(9,608)","","","30"],["Adjusted non-GAAP on a constant currency basis","$","489,107","","","$","97,071","","","880"],["Net income per diluted share attributable to A&F","Fiscal 2023","","Fiscal 2022","","$ Change"],["GAAP","$","6.22","","","$","0.05","","","$6.17"],["Excluded items, net of tax (2)","(0.06)","","","(0.20)","","","(0.14)"],["Adjusted non-GAAP","$","6.28","","","$","0.25","","","$6.03"],["Impact from changes in foreign currency exchange rates","\u2014","","","(0.13)","","","0.13"],["Adjusted non-GAAP on a constant currency basis","$","6.28","","","$","0.12","","","$6.16"]]
[[/GREPCENT_TABLE]]

(1)    The estimated basis point change has been rounded based on the percentage of net sales change.

(2)    Refer to “RESULTS OF OPERATIONS,” for details on excluded items. The tax effect of excluded items is calculated as the difference between the tax provision on a GAAP basis and an adjusted non-GAAP basis.

[[GREPCENT_TABLE]]
[["Abercrombie & Fitch Co.","43","2023 Form 10-K"]]
[[/GREPCENT_TABLE]]

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