Company Quick10K Filing
Abercrombie & Fitch
Price15.71 EPS1
Shares65 P/E18
MCap1,020 P/FCF-30
Net Debt-191 EBIT61
TEV829 TEV/EBIT14
TTM 2019-11-02, in MM, except price, ratios
10-Q 2020-10-31 Filed 2020-12-07
10-Q 2020-08-01 Filed 2020-09-08
10-Q 2020-05-02 Filed 2020-06-10
10-K 2020-02-01 Filed 2020-03-31
10-Q 2019-11-02 Filed 2019-12-11
10-Q 2019-08-03 Filed 2019-09-11
10-Q 2019-05-04 Filed 2019-06-12
10-K 2019-02-02 Filed 2019-04-01
10-Q 2018-11-03 Filed 2018-12-12
10-Q 2018-08-04 Filed 2018-09-10
10-Q 2018-05-05 Filed 2018-06-08
10-K 2018-02-03 Filed 2018-04-02
10-Q 2017-10-28 Filed 2017-12-04
10-Q 2017-07-29 Filed 2017-09-05
10-Q 2017-04-29 Filed 2017-06-05
10-K 2017-01-28 Filed 2017-03-27
10-Q 2016-10-29 Filed 2016-12-05
10-Q 2016-07-30 Filed 2016-09-06
10-Q 2016-04-30 Filed 2016-06-06
10-K 2016-01-30 Filed 2016-03-28
10-Q 2015-10-31 Filed 2015-12-07
10-Q 2015-08-01 Filed 2015-09-10
10-Q 2015-05-02 Filed 2015-06-08
10-K 2015-01-31 Filed 2015-03-30
10-Q 2014-11-01 Filed 2014-12-11
10-Q 2014-08-02 Filed 2014-09-05
10-Q 2014-05-03 Filed 2014-06-09
10-K 2014-02-01 Filed 2014-03-31
10-Q 2013-08-03 Filed 2013-09-09
10-Q 2013-05-04 Filed 2013-06-11
10-K 2013-02-02 Filed 2013-04-02
10-Q 2012-10-27 Filed 2012-12-04
10-Q 2012-07-28 Filed 2012-09-05
10-Q 2012-04-28 Filed 2012-06-05
10-K 2012-01-28 Filed 2012-03-27
10-Q 2011-10-29 Filed 2011-12-06
10-Q 2011-07-30 Filed 2011-09-07
10-Q 2011-04-30 Filed 2011-06-08
10-K 2011-01-29 Filed 2011-03-29
10-Q 2010-10-30 Filed 2010-12-07
10-Q 2010-07-31 Filed 2010-09-08
10-Q 2010-05-01 Filed 2010-06-08
10-K 2010-01-30 Filed 2010-03-29
8-K 2021-02-04 Officers, Other Events, Exhibits
8-K 2021-01-11 Regulation FD, Exhibits
8-K 2020-11-24
8-K 2020-08-28
8-K 2020-08-27
8-K 2020-07-02
8-K 2020-06-30
8-K 2020-06-18
8-K 2020-06-17
8-K 2020-05-28
8-K 2020-05-20
8-K 2020-05-06
8-K 2020-04-06
8-K 2020-03-26
8-K 2020-03-15
8-K 2020-03-04
8-K 2020-02-21
8-K 2020-01-13
8-K 2019-11-26
8-K 2019-11-13
8-K 2019-08-29
8-K 2019-08-22
8-K 2019-08-05
8-K 2019-06-12
8-K 2019-06-12
8-K 2019-05-22
8-K 2019-05-22
8-K 2019-05-13
8-K 2019-03-06
8-K 2019-02-22
8-K 2019-01-17
8-K 2019-01-14
8-K 2018-12-19
8-K 2018-11-29
8-K 2018-11-28
8-K 2018-11-20
8-K 2018-09-13
8-K 2018-08-30
8-K 2018-08-23
8-K 2018-07-25
8-K 2018-07-03
8-K 2018-06-14
8-K 2018-06-01
8-K 2018-05-22
8-K 2018-04-25
8-K 2018-03-07
8-K 2018-02-23
8-K 2018-02-23
8-K 2018-02-23
8-K 2018-01-22
8-K 2018-01-19

ANF 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.1 exhibit101q32020.htm
EX-31.1 exhibit311-ceocertq320.htm
EX-31.2 exhibit312-cfocertq320.htm
EX-32.1 exhibit321-peocfocertq.htm

Abercrombie & Fitch Earnings 2020-10-31

Balance SheetIncome StatementCash Flow
3.52.82.11.40.70.02012201420172020
Assets, Equity
1.51.20.90.50.2-0.12012201420172020
Rev, G Profit, Net Income
0.50.40.20.1-0.1-0.22012201420172020
Ops, Inv, Fin

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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
Form 10-Q 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-12107
Abercrombie & Fitch Co.
(Exact name of Registrant as specified in its charter)
Delaware31-1469076
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
6301 Fitch Path,New Albany,Ohio43054
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:
(614)283-6500
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 Par ValueANFNew York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    x  Yes    ¨  No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes    x  No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class A Common StockShares outstanding as of December 2, 2020
$0.01 Par Value62,390,672



Table of Contents
Table of Contents

Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

2

Table of Contents
PART I. FINANCIAL INFORMATION

Item 1.     Financial Statements (Unaudited)

Abercrombie & Fitch Co.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Thousands, except per share amounts)
(Unaudited)

Thirteen Weeks EndedThirty-nine Weeks Ended
October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Net sales$819,653 $863,472 $2,003,340 $2,438,522 
Cost of sales, exclusive of depreciation and amortization295,220 344,541 791,154 976,868 
Gross profit524,433 518,931 1,212,186 1,461,654 
Stores and distribution expense346,263 377,697 978,757 1,110,656 
Marketing, general and administrative expense121,000 114,075 326,509 341,716 
Flagship store exit (benefits) charges(8,063)285 (12,490)47,023 
Asset impairment, exclusive of flagship store exit charges6,329 12,610 57,340 14,987 
Other operating loss (income), net288 (215)(1,562)(465)
Operating income (loss)58,616 14,479 (136,368)(52,263)
Interest expense, net8,808 2,922 19,277 4,908 
Income (loss) before income taxes49,808 11,557 (155,645)(57,171)
Income tax expense (benefit)5,779 3,987 38,565 (16,931)
Net income (loss)44,029 7,570 (194,210)(40,240)
Less: Net income attributable to noncontrolling interests1,758 1,047 2,203 3,534 
Net income (loss) attributable to A&F$42,271 $6,523 $(196,413)$(43,774)
Net income (loss) per share attributable to A&F
Basic$0.68 $0.10 $(3.14)$(0.67)
Diluted$0.66 $0.10 $(3.14)$(0.67)
Weighted-average shares outstanding
Basic62,558 63,099 62,541 64,932 
Diluted63,877 63,911 62,541 64,932 
Other comprehensive (loss) income
Foreign currency translation, net of tax$2,142 $1,355 $5,477 $(5,219)
Derivative financial instruments, net of tax
(5,234)(3,654)1,224 (574)
Other comprehensive (loss) income (3,092)(2,299)6,701 (5,793)
Comprehensive income (loss)
40,937 5,271 (187,509)(46,033)
Less: Comprehensive income attributable to noncontrolling interests
1,758 1,047 2,203 3,534 
Comprehensive income (loss) attributable to A&F
$39,179 $4,224 $(189,712)$(49,567)

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
3

Table of Contents
Abercrombie & Fitch Co.
Condensed Consolidated Balance Sheets
(Thousands, except par value amounts)
(Unaudited)

October 31, 2020February 1, 2020
Assets
Current assets:
Cash and equivalents$812,881 $671,267 
Receivables89,074 80,251 
Inventories545,548 434,326 
Other current assets73,776 78,905 
Total current assets1,521,279 1,264,749 
Property and equipment, net593,932 665,290 
Operating lease right-of-use assets955,781 1,230,954 
Other assets205,970 388,672 
Total assets$3,276,962 $3,549,665 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$334,775 $219,919 
Accrued expenses356,370 302,214 
Short-term portion of operating lease liabilities255,775 282,829 
Income taxes payable6,663 10,392 
Total current liabilities953,583 815,354 
Long-term liabilities:
Long-term portion of operating lease liabilities1,010,051 1,252,634 
Long-term borrowings, net343,559 231,963 
Other liabilities110,965 178,536 
Total long-term liabilities1,464,575 1,663,133 
Stockholders’ equity
Class A Common Stock - $0.01 par value: 150,000 shares authorized and 103,300 shares issued for all periods presented1,033 1,033 
Paid-in capital396,505 404,983 
Retained earnings2,067,521 2,313,745 
Accumulated other comprehensive loss, net of tax (“AOCL”)(102,185)(108,886)
Treasury stock, at average cost: 40,916 and 40,514 shares as of October 31, 2020 and February 1, 2020, respectively(1,513,495)(1,552,065)
Total Abercrombie & Fitch Co. stockholders’ equity849,379 1,058,810 
Noncontrolling interests9,425 12,368 
Total stockholders’ equity858,804 1,071,178 
Total liabilities and stockholders’ equity$3,276,962 $3,549,665 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
4

Table of Contents
Abercrombie & Fitch Co.
Condensed Consolidated Statements of Stockholders’ Equity
(Thousands, except per share amounts)
(Unaudited)

Thirteen Weeks Ended October 31, 2020
 Common StockPaid-in
capital
Non-controlling interestsRetained
earnings
AOCLTreasury stockTotal
stockholders’
equity
 Shares
outstanding
Par
value
SharesAt average
cost
Balance, August 1, 202062,365 $1,033 $392,272 $7,929 $2,025,911 $(99,093)40,935 $(1,514,442)$813,610 
Net income— — — 1,758 42,271 — — — 44,029 
Share-based compensation issuances and exercises19 — (436)— (661)— (19)947 (150)
Share-based compensation expense— — 4,669 — — — — — 4,669 
Derivative financial instruments, net of tax— — — — — (5,234)— — (5,234)
Foreign currency translation adjustments, net of tax— — — — — 2,142 — — 2,142 
Distributions to noncontrolling interests, net— — — (262)— — — — (262)
Ending balance at October 31, 202062,384 $1,033 $396,505 $9,425 $2,067,521 $(102,185)40,916 $(1,513,495)$858,804 
Thirteen Weeks Ended November 2, 2019
 Common StockPaid-in
capital
Non-controlling interestsRetained
earnings
AOCLTreasury stockTotal
stockholders’
equity
 Shares
outstanding
Par
value
SharesAt average
cost
Balance, August 3, 201963,146 $1,033 $394,694 $11,318 $2,251,032 $(105,946)40,154 $(1,548,836)$1,003,295 
Net income— — — 1,047 6,523 — — — 7,570 
Purchase of Common Stock(412)— — — — — 412 (5,730)(5,730)
Dividends ($0.20 per share)— — — — (12,574)— — — (12,574)
Share-based compensation issuances and exercises23 — (509)— (831)— (23)1,159 (181)
Share-based compensation expense— — 5,796 — — — — — 5,796 
Derivative financial instruments, net of tax— — — — — (3,654)— — (3,654)
Foreign currency translation adjustments, net of tax— — — — — 1,355 — — 1,355 
Distributions to noncontrolling interests, net— — — (1,511)— — — — (1,511)
Ending balance at November 2, 201962,757 $1,033 $399,981 $10,854 $2,244,150 $(108,245)40,543 $(1,553,407)$994,366 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
5

Table of Contents
Abercrombie & Fitch Co.
Condensed Consolidated Statements of Stockholders’ Equity
(Thousands, except per share amounts)
(Unaudited)

Thirty-nine Weeks Ended October 31, 2020
 Common StockPaid-in
capital
Non-controlling interestsRetained
earnings
AOCLTreasury stockTotal
stockholders’
equity
 Shares
outstanding
Par
value
SharesAt average
cost
Balance, February 1, 202062,786 $1,033 $404,983 $12,368 $2,313,745 $(108,886)40,514 $(1,552,065)$1,071,178 
Net loss— — — 2,203 (196,413)— — — (194,210)
Purchase of Common Stock(1,397)— — — — — 1,397 (15,172)(15,172)
Dividends ($0.20 per share)— — — — (12,556)— — — (12,556)
Share-based compensation issuances and exercises995 — (22,053)— (37,255)— (995)53,742 (5,566)
Share-based compensation expense— — 13,575 — — — — — 13,575 
Derivative financial instruments, net of tax— — — — — 1,224 — — 1,224 
Foreign currency translation adjustments, net of tax— — — — — 5,477 — — 5,477 
Distributions to noncontrolling interests, net— — — (5,146)— — — — (5,146)
Ending balance at October 31, 202062,384 $1,033 $396,505 $9,425 $2,067,521 $(102,185)40,916 $(1,513,495)$858,804 
Thirty-nine Weeks Ended November 2, 2019
 Common StockPaid-in
capital
Non-controlling interestsRetained
earnings
AOCLTreasury stockTotal
stockholders’
equity
 Shares
outstanding
Par
value
SharesAt average
cost
Balance, February 2, 201966,227 $1,033 $405,379 $9,721 $2,418,544 $(102,452)37,073 $(1,513,604)$1,218,621 
Impact from adoption of the new lease accounting standard— — — — (75,165)— — — (75,165)
Net loss— — — 3,534 (43,774)— — — (40,240)
Purchase of Common Stock(3,957)— — — — — 3,957 (63,542)(63,542)
Dividends ($0.60 per share)— — — — (38,959)— — — (38,959)
Share-based compensation issuances and exercises487 — (13,862)— (16,496)— (487)23,739 (6,619)
Share-based compensation expense— — 8,464 — — — — — 8,464 
Derivative financial instruments, net of tax— — — — — (574)— — (574)
Foreign currency translation adjustments, net of tax— — — — — (5,219)— — (5,219)
Distributions to noncontrolling interests, net— — — (2,401)— — — — (2,401)
Ending balance at November 2, 201962,757 $1,033 $399,981 $10,854 $2,244,150 $(108,245)40,543 $(1,553,407)$994,366 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
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Abercrombie & Fitch Co.
Condensed Consolidated Statements of Cash Flows
(Thousands)
(Unaudited)
 Thirty-nine Weeks Ended
 October 31, 2020November 2, 2019
Operating activities
Net loss$(194,210)$(40,240)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Depreciation and amortization127,248 124,910 
Asset impairment57,340 18,216 
Loss on disposal7,586 5,326 
Provision for (benefit from) deferred income taxes27,432 (20,631)
Share-based compensation13,575 8,464 
Changes in assets and liabilities:
Inventories(109,665)(154,791)
Accounts payable and accrued expenses186,806 34,752 
Operating lease right-of-use assets and liabilities(41,976)42,990 
Income taxes(7,168)(2,264)
Other assets30,403 (47,138)
Withdrawal of funds from Rabbi Trust assets50,000  
Other liabilities11,523 (3,433)
Net cash provided by (used for) operating activities158,894 (33,839)
Investing activities
Purchases of property and equipment(91,748)(154,373)
Net cash used for investing activities(91,748)(154,373)
Financing activities
Proceeds from issuance of senior secured notes350,000  
Proceeds from borrowings under the senior secured asset-based revolving credit facility210,000  
Repayment of borrowings under the term loan facility(233,250)(10,000)
Repayment of borrowings under the senior secured asset-based revolving credit facility(210,000) 
Payment of debt issuance costs and fees(7,151) 
Purchases of Common Stock(15,172)(63,542)
Dividends paid(12,556)(38,959)
Other financing activities(11,742)(10,407)
Net cash provided by (used for) financing activities70,129 (122,908)
Effect of foreign currency exchange rates on cash2,269 (2,686)
Net increase (decrease) in cash and equivalents, and restricted cash and equivalents139,544 (313,806)
Cash and equivalents, and restricted cash and equivalents, beginning of period692,264 745,829 
Cash and equivalents, and restricted cash and equivalents, end of period$831,808 $432,023 
Supplemental information related to non-cash activities
Purchases of property and equipment not yet paid at end of period$26,554 $36,951 
Operating lease right-of-use assets additions, net of terminations, impairments and other reductions$(41,305)$293,281 
Supplemental information related to cash activities
Cash paid for interest $9,182 $12,022 
Cash paid for income taxes$10,412 $18,697 
Cash received from income tax refunds$4,001 $8,570 
Cash paid for amounts included in measurement of operating lease liabilities$224,827 $311,275 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
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Abercrombie & Fitch Co.
Index for Notes to Condensed Consolidated Financial Statements (Unaudited)

 Page No.
Note 1.
Note 2.
Note 3.
Note 4.
Note 5.
Note 6.
Note 7.
Note 8.
Note 9.
Note 10.
Note 11.
Note 12.
Note 13.
Note 14.
Note 15.
Note 16.
Note 17.

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Abercrombie & Fitch Co.
Notes to Condensed Consolidated Financial Statements (Unaudited)


1. NATURE OF BUSINESS

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 “Abercrombie & Fitch” or the “Company”), is a global multi-brand omnichannel specialty retailer, whose products are sold primarily through its Company-owned store and digital channels, as well as through various third-party wholesale, franchise and licensing arrangements. The Company offers a broad assortment of apparel, personal care products and accessories for men, women and kids under the Hollister, Abercrombie & Fitch and abercrombie kids brands. The 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 primarily has operations in North America, Europe and Asia, among other regions.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The accompanying Condensed Consolidated Financial Statements include historical financial statements of, and transactions applicable to, the Company and reflect its financial position, results of operations and cash flows.

The Company has interests in an Emirati business venture and in a Kuwaiti business venture with Majid al Futtaim Fashion L.L.C. (“MAF”), each of which meets the definition of a variable interest entity (“VIE”). The Company is deemed to be the primary beneficiary of these VIEs; therefore, the Company has consolidated the operating results, assets and liabilities of these VIEs, with MAF’s portion of net income presented as net income attributable to noncontrolling interests (“NCI”) on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and MAF’s portion of equity presented as NCI on the Condensed Consolidated Balance Sheets.

Fiscal year

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. Fiscal years are designated in the Condensed Consolidated Financial Statements and notes, as well as the remainder of this Quarterly Report on Form 10-Q, by the calendar year in which the fiscal year commences. All references herein to the Company’s fiscal years are as follows:
Fiscal yearYear endedNumber of weeks
Fiscal 2019February 1, 202052
Fiscal 2020January 30, 202152

Interim financial statements

The Condensed Consolidated Financial Statements as of October 31, 2020, and for the thirteen and thirty-nine week periods ended October 31, 2020 and November 2, 2019, are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, the Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto contained in A&F’s Annual Report on Form 10-K for Fiscal 2019 filed with the SEC on March 31, 2020. The February 1, 2020 consolidated balance sheet data, included herein, were derived from audited consolidated financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).

In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly, in all material respects, the financial position, results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for Fiscal 2020.

Use of estimates

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Due to the inherent uncertainty involved with estimates, actual results may differ. The extent to which the current outbreak of coronavirus disease (“COVID-19”) impacts the Company’s business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of the COVID-19 pandemic and its impact on the length or frequency of store closures, and the extent to
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which COVID-19 will impact worldwide macroeconomic conditions including interest rates, the speed of the economic recovery, and governmental, business and consumer reactions to the pandemic. The Company’s assessment of these, as well as other factors, could impact management's estimates and result in material impacts to the Company’s consolidated financial statements in future reporting periods.

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.

Condensed Consolidated Statements of Cash Flows reconciliation

The following table provides a reconciliation of cash and equivalents and restricted cash and equivalents to the amounts shown on the Condensed Consolidated Statements of Cash Flows:
(in thousands)LocationOctober 31, 2020February 1, 2020November 2, 2019February 2, 2019
Cash and equivalentsCash and equivalents$812,881 $671,267 $410,775 $723,135 
Long-term restricted cash and equivalentsOther assets14,633 18,696 18,698 22,694 
Short-term restricted cash and equivalentsOther current assets4,294 2,301 2,550  
Cash and equivalents and restricted cash and equivalents$831,808 $692,264 $432,023 $745,829 


3. IMPACT OF COVID-19

Recent developments

The Company has seen, and may continue to see, material adverse impacts as a result of COVID-19. The extent of future impacts of COVID-19 on the Company’s business, including the duration and impact on overall customer demand, are uncertain as current circumstances are dynamic and depend on future developments, including, but not limited to, the duration and spread of COVID- 19 and the availability and acceptance of an effective vaccine or medical treatments.

In January 2020, the Company began to experience business disruptions in the Asia-Pacific (“APAC”) region as a result of COVID-19. In February 2020, the situation escalated as the scope of COVID-19 worsened beyond the APAC region, with the United States (the “U.S.”) and the Europe, Middle East and Africa (“EMEA”) region experiencing significant outbreaks. In March 2020, the COVID-19 outbreak was declared to be a global pandemic by the World Health Organization. In response to COVID-19, certain governments have imposed travel restrictions and local statutory quarantines and the Company has recommended associates who are able to perform their role remotely continue to do so. The Company is reacting to COVID-19 on a daily basis, including by conforming to local government guidance and monitoring developments in government legislation or other government actions in response to the COVID-19 outbreak. The Company has also implemented a range of precautionary health and safety measures with the well-being of the Company’s customers, associates and business partners in mind.

As a result of COVID-19, in January 2020, the Company temporarily closed the majority of its stores in the APAC region and in March 2020, the Company temporarily closed its stores across brands in North America and the EMEA region. The majority of APAC stores were reopened during March 2020, and the Company began to reopen stores in North America and the EMEA region on a rolling basis in late April 2020. As of October 31, 2020, approximately 97% of Company-operated stores had reopened for in-store service, although many with modified operating hours. The Company plans to follow the guidance of local governments to determine when it can reopen stores that have been closed due to COVID-19 and to evaluate whether further store closures will be necessary.

The Company’s digital operations across brands have continued to serve the Company’s customers during this unprecedented period of temporary store closures as the Company’s distribution centers implemented enhanced cleaning and social distancing measures in order to remain operational. In response to elevated digital demand during this period, the Company has increased its omnichannel capabilities by continuing to offer Purchase-Online-Pickup-in-Store, including curbside pick-up at a majority of U.S. locations, and by utilizing ship-from-store capabilities. In addition, to prepare for the Fiscal 2020 holiday season, the Company has entered into a short-term lease for an additional distribution center and has partnered with incremental carriers.

Impact of COVID-19

The Company has seen, and may continue to see, material reductions in sales across brands and regions as a result of COVID-19. Total net sales decreased approximately 5% and 18% for the thirteen and thirty-nine weeks ended October 31, 2020
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as compared to the comparable periods ended November 2, 2019, respectively. The year-over-year decrease in total net sales was primarily driven by temporary widespread store closures and a decline in traffic as compared to the previous year as a result of COVID-19. The year-over-year decline in store sales was partially offset by digital sales growth of approximately 43% and 42% for the thirteen and thirty-nine weeks ended October 31, 2020 as compared to the comparable periods ended November 2, 2019, respectively.

Primarily as a result of COVID-19 and the temporary closure of the Company’s stores, the Company recognized $14.8 million of charges to reduce the carrying value of inventory in cost of sales, exclusive of depreciation and amortization on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) during the thirteen weeks ended May 2, 2020.

During the thirty-nine weeks ended October 31, 2020, reductions in revenue have not been offset by proportional decreases in expense, as the Company continued to incur store occupancy costs such as operating lease costs, net of rent abatements agreed upon during the period, depreciation expense, and certain other costs such as compensation, net of government payroll relief, and administrative expenses resulting in a negative effect on the relationship between the Company’s costs and revenues. During this period, the Company suspended rent payments for a significant number of stores that were closed, and continues to engage with its landlords to find a mutually beneficial and agreeable path forward. The Company has elected to account for all qualifying lease concessions, those that are a direct consequence of COVID-19 and that result in revised lease consideration that is substantially the same or less than the original consideration, as if the enforceable rights and obligations associated with the concession existed in the original lease agreement. Rent abatements associated with such concessions are recognized in variable lease cost. Lease concessions granted as part of an agreement that substantially increases the total consideration as a result of the inclusion of additional terms, such as rent payments associated with a lease term extension, are treated as lease modifications. For stores where the Company suspended payments, the Company reclassified related amounts from operating lease liability to accrued expenses in the period during which rent was due, while continuing to recognize operating lease cost in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which among other things, provides refundable employee retention tax credits for wages paid to employees who are unable to work during the COVID-19 outbreak and the deferral of the employer–paid portion of social security taxes. Similar relief programs have also been established throughout the EMEA and APAC regions. Based on the Company's evaluation of the CARES Act and legislation across regions, the Company qualifies for certain payroll tax credits, and such government subsidies have been treated as offsets to the related operating expenses when recognized. During the thirteen and thirty-nine weeks ended October 31, 2020, the Company recognized qualified payroll tax credits reducing payroll expenses by approximately $2.8 million and $14.7 million, respectively, on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), The Company intends to continue to defer qualified payroll and other tax payments as permitted by the CARES Act and other regional legislation.

The Company also recognized asset impairment charges related to the Company’s right-of-use assets and property and equipment of $6.3 million and $57.3 million during the thirteen and thirty-nine weeks ended October 31, 2020, respectively, which were principally the result of the impact of COVID-19 on store cash flows. Refer to Note 9, “ASSET IMPAIRMENT,” for additional information.

In addition, the Company has also experienced other material impacts as a result of COVID-19, such as deferred tax valuation allowances and other tax charges during the thirty-nine weeks ended October 31, 2020, adversely impacting results by $77.4 million. Refer to Note 11, “INCOME TAXES,” for additional information.

Balance sheet, cash flow and liquidity

During the thirty-nine weeks ended October 31, 2020, the Company has taken various actions to preserve liquidity and manage cash flows in order to best position the business for key stakeholders, including (i) partnering with merchandise and non-merchandise vendors in regards to payment terms; (ii) tightly managing inventory receipts to align inventory with expected market demand; (iii) significantly reducing expenses to better align operating costs with sales; and (iv) temporarily suspending its share repurchase program in March 2020 and its dividend program in May 2020. In addition, despite the Company's recent history of partnering with its vendors regarding payment terms, certain payment term extensions were temporary and certain previously deferred payments have since been made. There can be no assurance that the Company will be able to maintain extended payment terms or continue to defer payments, which may result in incremental operating cash outflows in future periods.

As a precautionary measure in response to COVID-19, in March 2020, the Company borrowed $210.0 million under its senior secured asset-based revolving credit facility (the “ABL Facility”) to improve its near-term cash position and withdrew the majority of excess funds from the overfunded Rabbi Trust assets, providing the Company with $50.0 million of additional cash. In July 2020, the Company completed a private offering of $350.0 million aggregate principal amount of senior secured notes (the “Senior Secured Notes”) and used the net proceeds to repay all outstanding borrowings under the Company’s term loan facility (the “Term Loan Facility”), to repay a portion of the outstanding borrowings under the ABL Facility and to pay fees and expenses in connection with such repayments and the offering. Refer to Note 12, “BORROWINGS,” and Note 10, “ RABBI TRUST ASSETS,” for additional information.

As of October 31, 2020, the Company had liquidity of $1.158 billion as compared to $913.8 million as of February 1, 2020, comprised of cash and equivalents and actual incremental borrowing available to the Company under the ABL Facility.
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4. REVENUE RECOGNITION

Disaggregation of revenue

All revenues are recognized in net sales in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). For information regarding the disaggregation of revenue, refer to Note 16, “SEGMENT REPORTING.

Contract liabilities

The following table details certain contract liabilities representing unearned revenue as of October 31, 2020, February 1, 2020, November 2, 2019 and February 2, 2019:
(in thousands)October 31, 2020February 1, 2020November 2, 2019February 2, 2019
Gift card liability$22,910 $28,844 $19,855 $26,062 
Loyalty program liability$19,640 $23,051 $21,396 $19,904 

The following table details recognized revenue associated with the Company’s gift card program and loyalty programs for the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019:
Thirteen Weeks EndedThirty-nine Weeks Ended
(in thousands)October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Revenue associated with gift card redemptions and gift card breakage$11,717 $12,653 $32,792 $40,729 
Revenue associated with reward redemptions and breakage related to the Company’s loyalty programs$9,686 $9,249 $23,377 $23,795 


5. NET INCOME (LOSS) PER SHARE

Net income (loss) per basic and diluted share attributable to A&F is computed based on the weighted-average number of outstanding shares of Class A Common Stock (“Common Stock”). Additional information pertaining to net income (loss) per share attributable to A&F follows:
 Thirteen Weeks EndedThirty-nine Weeks Ended
(in thousands)October 31, 2020November 2, 2019October 31, 2020November 2, 2019
Shares of Common Stock issued103,300 103,300 103,300 103,300 
Weighted-average treasury shares(40,742)(40,201)(40,759)(38,368)
Weighted-average — basic shares62,558 63,099 62,541 64,932 
Dilutive effect of share-based compensation awards1,319 812   
Weighted-average — diluted shares63,877 63,911 62,541 64,932 
Anti-dilutive shares (1)
1,828 2,912 1,988 1,572 

(1)Reflects the total number of shares related to outstanding share-based compensation awards that have been excluded from the computation of net income (loss) per diluted share because the impact would have been anti-dilutive. Unvested shares related to restricted stock units with performance-based and market-based vesting conditions can achieve up to 200% of their target vesting amount and are reflected at the maximum vesting amount less any dilutive portion.
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6. FAIR VALUE

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are prioritized based on a three-level hierarchy. The three levels of inputs to measure fair value are as follows:
Level 1—inputs are unadjusted quoted prices for identical assets or liabilities that are available in active markets that the Company can access at the measurement date.
Level 2—inputs are other than quoted market prices included within Level 1 that are observable for assets or liabilities, directly or indirectly.
Level 3—inputs to the valuation methodology are unobservable.

The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. The three levels of the hierarchy and the distribution of the Company’s assets and liabilities that are measured at fair value on a recurring basis, as of October 31, 2020 and February 1, 2020 were as follows:
Assets at Fair Value as of October 31, 2020
(in thousands)Level 1Level 2Level 3Total
Assets:
Cash equivalents (1)
$68,271 $43,596 $ $111,867 
Derivative instruments (2)
 461  461 
Rabbi Trust assets (3)
1 60,418  60,419 
Restricted cash equivalents (4)
6,670 7,918  14,588 
Total assets$74,942 $112,393 $ $187,335 
Liabilities:
Derivative instruments (2)
$ $367 $ $367 
Total liabilities$ $367 $ $367 
 Assets and Liabilities at Fair Value as of February 1, 2020
(in thousands)Level 1Level 2Level 3Total
Assets:
Cash equivalents (1)
$225 $58,447 $