Abercrombie & Fitch Co Class A ANF
Q1 2013 Earnings Call Transcript

Transcript Call Date 05/24/2013

Operator: Good day, and welcome to the Abercrombie & Fitch First Quarter 2013 Earnings Results Conference Call. Today's call is being recorded. We will open the call to take your questions at the end of the presentation. We ask that you limit yourself to one question during the question-and-answer session.

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

Brian Logan - VP, IR and Controller: Good morning, and welcome to our first quarter earnings call. Earlier today, we released our first 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 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 the replay may be accessed through the Internet at under the Investors section. The call is scheduled for one hour.

Joining me today are Mike Jeffries and Jonathan Ramsden.

Before we begin, I'll remind you that any forward-looking statements we may make today are subject to the Safe Harbor statements found in our SEC filings.

In addition, due to the 53rd week in fiscal 2012 retail year, first quarter comparable sales are compared to the 13-week period ended May 05, 2012. Also, as a reminder, the Company changed its method of accounting for inventory to the cost method effective February 02, 2013. As a result, prior year figures have been restated to reflect the change in accounting method.

We will now begin the call with a few remarks from Mike, followed by a review of the financial performance for the quarter from Jonathan and me. After our prepared comments, we will be available to take your questions for as long as time permits.

With that, I will turn the call over to Mike.

Michael S. Jeffries - Chairman and CEO: Good morning, everyone. Our results for the first quarter reflect a $0.16 improvement in earnings per share versus last year, including better-than-expected gross margin rate improvement and tight expense management. The first quarter proved to be more difficult than expected on the top line due to more significant inventory shortage issues than anticipated, which were added to by external pressures.

However, as we moved through the quarter, our inventory position progressively improved and our comp sales trends improved accordingly. With the inventory headwinds largely behind us, we expect to see continued sequential improvement in the second quarter.

For the quarter as a whole, we believe inventory accounted for approximately 10% of the comp sales decline due to both lower levels of fall carryover and delays in spring deliveries. Beyond that, it is clear that the environment in Europe became more difficult again and first quarter weather issues had been well documented in both the U.S. and Europe.

With that said, we're taking a modestly more cautious top line view for the remainder of this year. Going forward, we continue to see significant upside, particularly from our cross-functional initiatives.

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