What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-12-06 compared with 2021-09-08 · 176 added, 174 removed, 541 unchanged (39% of the section changed)

3 unchanged sentences

(Thousands, except per share amounts)

Thirteen Weeks Ended Twenty-six Weeks Ended

July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Thirteen Weeks Ended Thirty-nine Weeks Ended

October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Net sales $ 905,160 $ 819,653 $ 2,551,415 $ 2,003,340

3 unchanged sentences

Marketing, general and administrative expense 146,269 121,000 391,129 326,509

Flagship store exit benefits ( 88 ) ( 3,884 ) ( 1,188 ) ( 4,427 )

Flagship store exit charges (benefits) 11 ( 8,063 ) ( 1,177 ) ( 12,490 )

Asset impairment 6,749 6,329 10,199 57,340

Other operating income, net ( 1,848 ) ( 2,356 ) ( 3,266 ) ( 1,850 )

Other operating (income) loss, net ( 1,320 ) 288 ( 4,586 ) ( 1,562 )

Operating income (loss) 72,731 58,616 244,951 ( 136,368 )

1 unchanged sentence

Income (loss) before income taxes 65,461 49,808 217,800 ( 155,645 )

Income tax (benefit) expense ( 6,944 ) 1,253 ( 823 ) 32,786

Income tax expense 16,383 5,779 15,560 38,565

Net income (loss) 49,078 44,029 202,240 ( 194,210 )

7 unchanged sentences

Diluted 61,465 63,877 63,770 62,541

Other comprehensive income (loss)

Foreign currency translation, net of tax $ ( 1,986 ) $ 8,734 $ ( 3,260 ) $ 3,335

Other comprehensive (loss) income

Foreign currency translation $ ( 5,629 ) $ 2,142 $ ( 8,889 ) $ 5,477

Derivative financial instruments, net of tax 4,416 ( 5,234 ) 9,718 1,224

Other comprehensive income 717 6,327 2,042 9,793

Other comprehensive (loss) income ( 1,213 ) ( 3,092 ) 829 6,701

Comprehensive income (loss) 47,865 40,937 203,069 ( 187,509 )

6 unchanged sentences

(Thousands, except par value amounts)

July 31, 2021 January 30, 2021

October 30, 2021 January 30, 2021

Current assets:

27 unchanged sentences

Treasury stock, at average cost:

43,609 and 40,901 shares as of July 31, 2021 and January 30, 2021, respectively

46,263 and 40,901 shares as of October 30, 2021 and January 30, 2021, respectively

( 1,717,726 ) ( 1,512,851 )

8 unchanged sentences

(Thousands, except per share amounts)

Thirteen Weeks Ended July 31, 2021

Thirteen Weeks Ended October 30, 2021

Common Stock Paid-in

4 unchanged sentences

value Shares At average

Balance, May 1, 2021 61,935 $ 1,033 $ 395,277 $ 8,776 $ 2,169,748 $ ( 100,982 ) 41,365 $ ( 1,523,902 ) $ 949,950

Balance, July 31, 2021 59,691 $ 1,033 $ 399,891 $ 10,367 $ 2,275,009 $ ( 100,265 ) 43,609 $ ( 1,619,102 ) $ 966,933

Net income — — — 1,845 47,233 — — — 49,078

5 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 2,817 ) — — — — ( 2,817 )

Ending balance at July 31, 2021 59,691 $ 1,033 $ 399,891 $ 10,367 $ 2,275,009 $ ( 100,265 ) 43,609 $ ( 1,619,102 ) $ 966,933

Thirteen Weeks Ended August 1, 2020

Ending balance at October 30, 2021 57,037 $ 1,033 $ 406,305 $ 9,395 $ 2,320,800 $ ( 101,478 ) 46,263 $ ( 1,717,726 ) $ 918,329

Thirteen Weeks Ended October 31, 2020

Common Stock Paid-in

4 unchanged sentences

value Shares At average

Balance, May 2, 2020 62,284 $ 1,033 $ 389,904 $ 7,827 $ 2,022,366 $ ( 105,420 ) 41,016 $ ( 1,517,644 ) $ 798,066

Balance, August 1, 2020 62,365 $ 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

4 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 262 ) — — — — ( 262 )

Ending balance at August 1, 2020 62,365 $ 1,033 $ 392,272 $ 7,929 $ 2,025,911 $ ( 99,093 ) 40,935 $ ( 1,514,442 ) $ 813,610

Ending balance at October 31, 2020 62,384 $ 1,033 $ 396,505 $ 9,425 $ 2,067,521 $ ( 102,185 ) 40,916 $ ( 1,513,495 ) $ 858,804

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

2 unchanged sentences

(Thousands, except per share amounts)

Twenty-six Weeks Ended July 31, 2021

Thirty-nine Weeks Ended October 30, 2021

Common Stock Paid-in

12 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 8,028 ) — — — — ( 8,028 )

Ending balance at July 31, 2021 59,691 $ 1,033 $ 399,891 $ 10,367 $ 2,275,009 $ ( 100,265 ) 43,609 $ ( 1,619,102 ) $ 966,933

Twenty-six Weeks Ended August 1, 2020

Ending balance at October 30, 2021 57,037 $ 1,033 $ 406,305 $ 9,395 $ 2,320,800 $ ( 101,478 ) 46,263 $ ( 1,717,726 ) $ 918,329

Thirty-nine Weeks Ended October 31, 2020

Common Stock Paid-in

13 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 5,146 ) — — — — ( 5,146 )

Ending balance at August 1, 2020 62,365 $ 1,033 $ 392,272 $ 7,929 $ 2,025,911 $ ( 99,093 ) 40,935 $ ( 1,514,442 ) $ 813,610

Ending balance at October 31, 2020 62,384 $ 1,033 $ 396,505 $ 9,425 $ 2,067,521 $ ( 102,185 ) 40,916 $ ( 1,513,495 ) $ 858,804

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Twenty-six Weeks Ended

July 31, 2021 August 1, 2020

Thirty-nine Weeks Ended

October 30, 2021 October 31, 2020

Operating activities

56 unchanged sentences

SEGMENT REPORTING

FLAGSHIP STORE EXIT BENEFITS

FLAGSHIP STORE EXIT CHARGES ( BENEFITS )

SUBSEQUENT EVENTS

Abercrombie & Fitch Co.

11 unchanged sentences

The Company has interests in an Emirati business venture and in a Kuwaiti business venture with Majid al Futtaim Fashion L.L.C.

(“MAF”) and in a U.S.

business venture with Dixar L.L.C.

(“MAF”) and in a United States of America (the “U.S.”) business venture with Dixar L.L.C.

(“Dixar”), each of which meets the definition of a variable interest entity (“VIE”).

11 unchanged sentences

Interim financial statements

The Condensed Consolidated Financial Statements as of July 31, 2021, and for the thirteen and twenty-six week periods ended July 31, 2021 and August 1, 2020, are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim consolidated financial statements.

The Condensed Consolidated Financial Statements as of October 30, 2021, and for the thirteen and thirty-nine week periods ended October 30, 2021 and October 31, 2020, are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim consolidated financial statements.

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 2020 filed with the SEC on March 29, 2021.

The January 30, 2021 consolidated balance sheet data, included herein, was 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”).

The January 30, 2021 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 U.S.

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 2021.

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.

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”) continues to impact the Company’s business and financial results will depend on numerous evolving factors including, but not limited to:

the duration and spread of COVID-19 and the emergence of new variants, such as the Delta variant, of the coronavirus, the availability and acceptance of effective vaccines, boosters or medical treatments, the impact of COVID-19 on the length or frequency of store closures, and the extent to which COVID-19 impacts worldwide macroeconomic conditions including interest rates, the speed of the economic recovery, and governmental, business and consumer reactions to the pandemic.

the duration and spread of COVID-19 and the emergence of new variants, such as the Delta and Omicron variants, of coronavirus, the availability and acceptance of effective vaccines, boosters or medical treatments, the impact of COVID-19 on the length or frequency of store closures, and the extent to which COVID-19 impacts 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.

8 unchanged sentences

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of A&F’’s Fiscal 2020 Form 10-K.

The effects of the classification error on the Condensed Consolidated Statement of Cash Flow for the twenty-six weeks ended August 1, 2020 is shown in the table below.

Twenty-six Weeks Ended

The effects of the classification error on the Condensed Consolidated Statement of Cash Flows for the thirty-nine weeks ended October 31, 2020 is shown in the table below.

Thirty-nine Weeks Ended

As Originally Reported As Restated

(in thousands) August 1, 2020 Adjustment August 1, 2020

(in thousands) October 31, 2020 Adjustment October 31, 2020

Net cash provided by operating activities $ 158,894 $ ( 50,000 ) $ 108,894

5 unchanged sentences

Cash and equivalents, and restricted cash and equivalents, end of period $ 831,808 — $ 831,808

The Company’s Condensed Consolidated Statement of Cash Flows for the twenty-six weeks ended August 1, 2020 included within this Quarterly Report on Form 10-Q has been restated to reflect the correction of this error.

The Company’s Condensed Consolidated Statement of Cash Flows for the thirty-nine weeks ended October 31, 2020 included within this Quarterly Report on Form 10-Q has been restated to reflect the correction of this error.

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) Location July 31, 2021 January 30, 2021 August 1, 2020 February 1, 2020

(in thousands) Location October 30, 2021 January 30, 2021 October 31, 2020 February 1, 2020

Cash and equivalents Cash and equivalents $ 865,622 $ 1,104,862 $ 812,881 $ 671,267

6 unchanged sentences

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, the emergence of new variants of the coronavirus, such as the Delta variant, and the availability and acceptance of effective vaccines, boosters or medical treatments.

During the thirteen and twenty-six weeks ended August 1, 2020, the Company experienced a material adverse impact to net sales across brands and regions as a result of widespread temporary store closures in response to COVID-19, which was not offset by year-over-year digital sales growth.

During the thirteen and twenty-six weeks ended July 31, 2021, the vast majority of Company-operated stores were fully open for in-store service, but temporary store closures remained in the EMEA region during this period.

As of July 31, 2021, all of the Company-operated stores were open for in-store service.

During periods of temporary store closures, reductions in revenue were not 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.

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, the emergence of new variants of coronavirus, such as the Delta and Omicron variants, and the availability and acceptance of effective vaccines, boosters or medical treatments.

During the thirteen and thirty-nine weeks ended October 31, 2020, the Company experienced a material adverse impact to net sales across brands and regions as a result of widespread temporary store closures in response to COVID-19, which was not offset by year-over-year digital sales growth.

During the thirteen and thirty-nine weeks ended October 30, 2021, the vast majority of Company-operated stores were fully open for in-store service.

As of October 30, 2021, there were no COVID-19 related store closures of Company-operated stores, although additional temporary store closures have subsequently been mandated in certain parts of the Europe, Middle East and Africa (“EMEA”) region in response to COVID-19.

During periods of temporary store closures, reductions in revenue have not been offset by proportional decreases in expense, as the Company continues 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 the thirteen weeks ended May 2, 2020, the Company recognized $ 14.8 million of charges to reduce the carrying value of inventory, primarily as a result of COVID-19 and the temporary closure of the Company’s stores, in cost of sales, exclusive of depreciation and amortization on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

During the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020, the Company suspended rent payments for a number of stores that were closed, and continues to engage with its landlords to find a mutually beneficial and agreeable path forward.

The Company obtained rent abatements of $ 5.2 million and $ 13.0 million, respectively, during the thirteen and twenty-six weeks ended July 31, 2021 and recognized all of the benefits related to these abatements within variable lease cost during the applicable periods.

Rent abatements obtained during the thirteen and twenty-six weeks ended August 1, 2020 were not significant.

As of July 31, 2021 and January 30, 2021, the Company had $ 22.2 million and $ 24.2 million, respectively, related to suspended payments classified within accrued expenses on the Condensed Consolidated Balance Sheets.

During the thirteen weeks ended July 31, 2021 and August 1, 2020, the Company recognized qualified payroll-related credits reducing payroll expenses by approximately $ 0.5 million and $ 3.1 million, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

During the twenty-six weeks ended July 31, 2021 and August 1, 2020, the Company recognized qualified payroll-related credits reducing payroll expenses by approximately $4.8 million and $11.8 million, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Further negative developments in the COVID-19 pandemic could result in additional charges to reduce the carrying value of inventory.

As a result of COVID-19, the Company has suspended certain rent payments for periods of store closures, and continues to engage with its landlords to find a mutually beneficial and agreeable path forward.

As of October 30, 2021 and January 30, 2021, the Company had $ 16.5 million and $ 24.2 million, respectively, related to suspended rent payments classified within accrued expenses on the Condensed Consolidated Balance Sheets.

The Company obtained rent abatements of $ 1.7 million and $ 14.6 million, respectively, during the thirteen and thirty-nine weeks ended October 30, 2021, and $ 1.9 million and $ 18.9 million, respectively, during the thirteen and thirty-nine weeks ended October 31, 2020.

All of the benefits related to these abatements were recognized within variable lease cost during the applicable periods.

During the thirteen weeks ended October 30, 2021 and October 31, 2020, the Company recognized qualified payroll-related credits reducing payroll expenses by approximately $ 0.6 million and $ 2.8 million, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive Income.

During the thirty-nine weeks ended October 30, 2021 and October 31, 2020, the Company recognized qualified payroll-related credits reducing payroll expenses by approximately $ 5.4 million and $ 14.7 million, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

There are also instances where governments have provided wage subsidies through direct payments to the Company’s associates.

In these instances, no benefits are recognized on the Consolidated Statements of Operations and Comprehensive Income (Loss), but the Company does see a reduction in expense incurred.

The Company also intends to continue to defer qualified payroll and other tax payments as permitted by regional legislation.

During the thirteen and twenty-six weeks ended August 1, 2020, the Company recognized significant asset impairment charges related to the Company’s operating lease right-of-use assets and property and equipment of $ 8.1 million and $ 51.0 million, respectively, which were principally the result of the impact of COVID-19 on store cash flows.

In these instances, no benefits are recognized on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), but the Company does see a reduction in expense incurred.

The Company also intends to continue to defer qualified payroll and other tax payments as permitted by applicable government laws and regulations.

The Company has recognized asset impairment charges related to the Company’s operating lease right-of-use assets and property and equipment, which are principally the result of the impact of COVID-19 on store cash flows.

Refer to Note 9, “ ASSET IMPAIRMENT ,” for additional information.

9 unchanged sentences

Contract liabilities

The following table details certain contract liabilities representing unearned revenue as of July 31, 2021, January 30, 2021, August 1, 2020 and February 1, 2020:

(in thousands) July 31, 2021 January 30, 2021 August 1, 2020 February 1, 2020

The following table details certain contract liabilities representing unearned revenue as of October 30, 2021, January 30, 2021, October 31, 2020 and February 1, 2020:

(in thousands) October 30, 2021 January 30, 2021 October 31, 2020 February 1, 2020

Gift card liability $ 30,815 $ 28,561 $ 22,910 $ 28,844

Loyalty program liability $ 21,964 $ 20,426 $ 19,640 $ 23,051

The following table details recognized revenue associated with the Company’s gift card program and loyalty programs for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

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 30, 2021 and October 31, 2020:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Revenue associated with gift card redemptions and gift card breakage $ 17,801 $ 11,717 $ 51,310 $ 32,792

3 unchanged sentences

Additional information pertaining to net income (loss) per share attributable to A&F follows:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Shares of Common Stock issued 103,300 103,300 103,300 103,300

14 unchanged sentences

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 were measured at fair value on a recurring basis, as of July 31, 2021 and January 30, 2021, were as follows:

Assets and Liabilities at Fair Value as of July 31, 2021

The three levels of the hierarchy and the distribution of the Company’s assets and liabilities that were measured at fair value on a recurring basis, as of October 30, 2021 and January 30, 2021, were as follows:

Assets and Liabilities at Fair Value as of October 30, 2021

(in thousands) Level 1 Level 2 Level 3 Total

24 unchanged sentences

Total liabilities $ — $ 4,694 $ — $ 4,694

(1) Level 1 assets consisted of investments in money market funds.

(1) Level 1 assets consisted of investments in money market funds and U.S.

treasury bills.

Level 2 assets consisted of time deposits.

3 unchanged sentences

The Company’s Level 2 assets and liabilities consisted of:

• Time deposits, which were valued at cost, approximating fair value, due to the short-term nature of these investments;

• Trust-owned life insurance policies, which were valued using the cash surrender value of the life insurance policies;

• Time deposits, which were valued at cost, approximating fair value, due to the short-term nature of these investments;

• Derivative instruments, primarily foreign currency exchange forward contracts, which were valued using quoted market prices of the same or similar instruments, adjusted for counterparty risk.

2 unchanged sentences

The carrying amount and fair value of the Company’s long-term gross borrowings were as follows:

(in thousands) July 31, 2021 January 30, 2021

(in thousands) October 30, 2021 January 30, 2021

Gross borrowings outstanding, carrying amount $ 307,730 $ 350,000

2 unchanged sentences

Property and equipment, net consisted of:

(in thousands) July 31, 2021 January 30, 2021

(in thousands) October 30, 2021 January 30, 2021

Property and equipment, at cost $ 2,490,552 $ 2,488,957

1 unchanged sentence

Property and equipment, net $ 516,176 $ 550,587

Refer to Note 9, “ ASSET IMPAIRMENT ,” for details related to property and equipment impairment charges incurred during the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020.

Refer to Note 9, “ ASSET IMPAIRMENT ,” for details related to property and equipment impairment charges incurred during the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020.

The Company is a party to leases related to its Company-operated retail stores as well as for certain of its distribution centers, office space, information technology and equipment.

The following table provides a summary of the Company’s operating lease costs for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

The following table provides a summary of the Company’s operating lease costs for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Single lease cost (1)

8 unchanged sentences

(1) Included amortization and interest expense associated with operating lease right-of-use assets and the impact from remeasurement of operating lease liabilities.

(2) Included 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, as well as the benefit of $ 5.2 million and $ 13.0 million of rent abatements during the thirteen and twenty-six weeks ended July 31, 2021 related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

Rent abatements obtained during the thirteen and twenty-six weeks ended August 1, 2020 were not significant.

(2) Included variable payments related to both lease and nonlease components, such as contingent rent payments made by the Company based on net sales performance, and payments related to taxes, insurance, and maintenance costs, as well as the benefit of $ 1.7 million and $ 14.6 million of rent abatements during the thirteen and thirty-nine weeks ended October 30, 2021 related to the effects of the COVID-19 pandemic that resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

The benefit related to rent abatements recognized during the thirteen and thirty-nine weeks ended October 31, 2020 was $ 1.9 million and $ 18.9 million respectively.

(3) Refer to Note 9, “ ASSET IMPAIRMENT ,” for details related to operating lease right-of-use asset impairment charges.

2 unchanged sentences

Sublease income is recognized in other operating income (loss), net on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

During the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020, the Company suspended rent payments for a number of stores that were closed as a result of COVID-19, and has been successful in obtaining certain rent abatements and landlord concessions of rent payable.

The Company has suspended rent payments for a number of stores that were closed as a result of COVID-19, and has been successful in obtaining certain rent abatements and landlord concessions of rent payable.

Refer to Note 3.

“ IMPACT OF COVID-19 ”, for additional details.

As of July 31, 2021, the Company had minimum commitments related to additional operating lease contracts the terms of which have not yet commenced, primarily for its Company-operated retail stores, of approximately $ 2.5 million.

As of October 30, 2021, the Company had minimum commitments related to additional operating lease contracts the terms of which have not yet commenced, primarily for its Company-operated retail stores, of approximately $ 8.7 million.

ASSET IMPAIRMENT

Asset impairment charges for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 were as follows:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Asset impairment charges for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 were as follows:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Operating lease right-of-use asset impairment $ 5,512 $ 3,979 $ 8,216 $ 44,397

1 unchanged sentence

Total asset impairment $ 6,749 $ 6,329 $ 10,199 $ 57,340

Asset impairment charges for the thirteen and twenty-six weeks ended July 31, 2021 related to certain of the Company’s stores across brands, geographies and store formats.

The impairment charges for the twenty-six weeks ended July 31, 2021 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 9.4 million, including $ 8.8 million related to operating lease right-of-use assets.

Asset impairment charges for the thirteen and twenty-six weeks ended August 1, 2020 were principally the result of the impact of COVID-19 and were related to certain of the Company’s stores across brands, geographies and store formats.

The impairment charges for the twenty-six weeks ended August 1, 2020 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 135.5 million, including $ 124.6 million related to operating lease right-of-use assets.

Asset impairment charges for the thirteen and thirty-nine weeks ended October 30, 2021 related to certain of the Company’s stores across brands, geographies and store formats.

The impairment charges for the thirty-nine weeks ended October 30, 2021 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 19.5 million, including $ 17.0 million related to operating lease right-of-use assets.

Asset impairment charges for the thirteen and thirty-nine weeks ended October 31, 2020 were principally the result of the impact of COVID-19 and were related to certain of the Company’s stores across brands, geographies and store formats.

The impairment charges for the thirty-nine weeks ended October 31, 2020 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 102.2 million, including $ 94.2 million related to operating lease right-of-use assets.

The quarterly provision for income taxes is based on the current estimate of the annual effective income tax rate and the tax effect of discrete items occurring during the quarter.

1 unchanged sentence

These factors include variability in the pre-tax jurisdictional mix of earnings, changes in how the Company does business including entering into new businesses or geographies, changes in foreign currency exchange rates, changes in laws, regulations, interpretations and administrative practices, relative changes in expenses or losses for which tax benefits are not recognized and the impact of discrete items.

In addition, jurisdictions where the Company anticipates an ordinary loss for the fiscal year for which the Company does not anticipate future benefits are excluded from the overall computation of estimated annual effective tax rate and no tax benefits are recognized in the period related to losses in such jurisdictions.

In addition, jurisdictions where the Company anticipates an ordinary loss for the fiscal year for which the Company does not anticipate future tax benefits are excluded from the overall computation of estimated annual effective tax rate and no tax benefits are recognized in the period related to losses in such jurisdictions.

The impact of these items on the effective tax rate will be greater at lower levels of pre-tax earnings.

Impact of valuation allowances and other tax charges

During the thirteen weeks ended July 31, 2021, as a result of the improvement seen in business conditions, the Company recognized $ 23.5 million of discrete tax benefits due to the release of valuation allowances, primarily in the U.S.

and Germany, and a discrete tax benefit of $ 3.9 million due to the impact of a statutory rate change in the U.K on the valuation of deferred tax assets.

The Company also recognized $ 6.7 million of tax benefits related to the utilization of deferred tax assets against projected pre-tax income for the full fiscal year, primarily in the U.S.

and Germany, based on information available, on which a valuation allowance had previously been established.

During the twenty-six weeks ended July 31, 2021, as a result of the improvement seen in business conditions, the Company recognized $ 23.6 million of discrete tax benefits due to the release of valuation allowances, primarily in the U.S.

and Germany, and a discrete tax benefit of $ 3.9 million due to the impact of a statutory rate change in the U.K on the valuation of deferred tax assets.

The Company also recognized $ 10.1 million of tax benefits related to the utilization of deferred tax assets against projected pre-tax income for the full fiscal year, primarily in the U.S.

During the thirteen weeks ended October 30, 2021, as a result of the improvement seen in business conditions, the Company recognized $ 3.5 million of tax benefits due to the expected utilization of deferred tax assets against projected pre-tax income for the full fiscal year, primarily in the U.S.

and Germany, based on information available, on which a valuation allowance had previously been established.

The Company continues to maintain valuation allowances in certain jurisdictions, principally Japan, Korea, and Switzerland.

During the twenty-six weeks ended August 1, 2020, the Company recognized $ 84.1 million of tax charges, ultimately giving rise to income tax expense on a consolidated pre-tax year-to-date loss.

During the thirty-nine weeks ended October 30, 2021, as a result of the improvement seen in business conditions, the Company recognized $ 23.4 million of discrete tax benefits due to the release of valuation allowances, primarily in the U.S.

and Germany, and a discrete tax benefit of $ 3.9 million due to a rate change in the U.K.

The Company also recognized $ 13.6 million of tax benefits due to the expected utilization of deferred tax assets against projected pre-tax income for the full fiscal year, primarily in the U.S.

and Germany, based on information available, on which a valuation allowance has previously been established.

During the thirty-nine weeks ended October 31, 2020, the Company recognized $ 77.4 million of tax charges, ultimately giving rise to income tax expense on a consolidated pre-tax year-to-date loss.

Further details regarding these adverse tax impacts are as follows:

• The Company anticipated pre-tax losses for the full fiscal year in certain jurisdictions, based on information then available, primarily due to the significant adverse impacts of COVID-19.

The Company did not recognize income tax benefits on $ 204.1 million of pre-tax losses during the twenty-six weeks ended August 1, 2020, resulting in an adverse tax impact of $ 47.6 million.

• The Company recognized charges of $ 36.5 million related to the establishment of valuation allowances and other tax charges in certain jurisdictions during the twenty-six weeks ended August 1, 2020, principally as a result of the significant adverse impacts of COVID–19.

The Company did not recognize income tax benefits on $ 180.7 million of pre-tax losses during the thirty-nine weeks ended October 31, 2020, resulting in an adverse tax impact of $ 41.8 million.

• The Company recognized charges of $ 35.6 million related to the establishment of valuation allowances and other tax charges in certain jurisdictions during the thirty-nine weeks ended October 31, 2020, principally as a result of the significant adverse impacts of COVID–19.

These charges related to valuation allowances recognized by the Company of $ 10.6 million and $ 6.0 million related to the U.S.

1 unchanged sentence

The Company also recognized valuation allowances of $ 78.9 million related to Switzerland with a U.S.

equally offsetting amount, which in net, did not have an impact on the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

branch equally offsetting amount, which in net, did not have an impact on the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

The Company continues to review the need for valuation allowances in certain jurisdictions, principally Japan, Korea and Switzerland, on a quarterly basis.

2 unchanged sentences

Share-based compensation

Refer to Note 12, “ SHARE-BASED COMPENSATION ,” for details on income tax benefits and charges related to share-based compensation awards during the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020.

Details on the Company’s long-term borrowings, net, as of July 31, 2021 and January 30, 2021 are as follows:

(in thousands) July 31, 2021 January 30, 2021

Refer to Note 12, “ SHARE-BASED COMPENSATION ,” for details on income tax benefits and charges related to share-based compensation awards during the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020.

Details on the Company’s long-term borrowings, net, as of October 30, 2021 and January 30, 2021 are as follows:

(in thousands) October 30, 2021 January 30, 2021

Long-term portion of borrowings, gross at carrying amount $ 307,730 $ 350,000

6 unchanged sentences

Bank National Association, as trustee, and as collateral agent.

During the thirteen weeks ended July 31, 2021, A&F Management purchased $ 42.3 million of its outstanding Senior Secured Notes and incurred $ 5.3 million of loss on extinguishment of debt, comprised of a premium of $ 4.7 million and the write-off of unamortized fees of $ 0.6 million, in interest expense, net on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

During the thirty-nine weeks ended October 30, 2021, A&F Management purchased $ 42.3 million of its outstanding Senior Secured Notes and incurred $ 5.3 million of loss on extinguishment of debt, comprised of a premium of $ 4.7 million and the write-off of unamortized fees of $ 0.6 million, in interest expense, net on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The terms of the Senior Secured Notes have not changed materially from those disclosed in Note 13, “BORROWINGS,” of the Notes to Consolidated Financial Statements contained in “ITEM 8.

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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of A&F’s Annual Report on Form 10-K for Fiscal 2020.

The Company did not have any borrowings outstanding under the ABL Facility as of July 31, 2021 or as of January 30, 2021.

As of July 31, 2021, the Company had availability under the ABL Facility of $ 278.6 million, net of $ 0.8 million in outstanding stand-by letters of credit.

As the Company must maintain excess availability equal to the greater of 10% of the loan cap or $30 million under the ABL Facility, borrowing available to the Company under the ABL Facility was $ 248.6 million as of July 31, 2021.

The Company did not have any borrowings outstanding under the ABL Facility as of October 30, 2021 or as of January 30, 2021.

As of October 30, 2021, availability under the ABL Facility was $ 301.0 million, net of $ 0.8 million in outstanding stand-by letters of credit.

As the Company must maintain excess availability equal to the greater of 10% of the loan cap or $30 million under the ABL Facility, borrowing capacity available to the Company under the ABL Facility was $ 270.8 million as of October 30, 2021.

Representations, warranties and covenants

9 unchanged sentences

Certain of the agreements related to the Senior Secured Notes and the ABL Facility also contain certain affirmative covenants, including reporting requirements such as delivery of financial statements, certificates and notices of certain events, maintaining insurance and providing additional guarantees and collateral in certain circumstances.

The Company was in compliance with all debt covenants under these agreements as of July 31, 2021.

The Company was in compliance with all debt covenants under these agreements as of October 30, 2021.

SHARE-BASED COMPENSATION

Financial statement impact

The following table details share-based compensation expense and the related income tax impacts for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

The following table details share-based compensation expense and the related income tax impacts for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Share-based compensation expense $ 7,332 $ 4,669 $ 22,269 $ 13,575

1 unchanged sentence

$ 806 $ — $ 2,492 $ —

(1) No income tax benefit was recognized during the thirteen and twenty-six weeks ended August 1, 2020 due to the establishment of a valuation allowance.

The following table details discrete income tax benefits and charges related to share-based compensation awards during the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

(1) No income tax benefit was recognized during the thirteen and thirty-nine weeks ended October 31, 2020 due to the establishment of a valuation allowance.

The following table details discrete income tax benefits and charges related to share-based compensation awards during the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Income tax discrete benefits realized for tax deductions related to the issuance of shares (1)

3 unchanged sentences

$ 150 $ — $ 4,163 $ —

(1) No income tax benefit was recognized during the thirteen and twenty-six weeks ended August 1, 2020 due to the establishment of a valuation allowance.

The following table details the amount of employee tax withheld by the Company upon the issuance of shares associated with restricted stock units vesting and the exercise of stock appreciation rights for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

(1) No income tax discrete charges were recognized during the thirteen and thirty-nine weeks ended October 31, 2020 due to the establishment of a valuation allowance.

The following table details the amount of employee tax withheld by the Company upon the issuance of shares associated with restricted stock units vesting and the exercise of stock appreciation rights for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Employee tax withheld upon issuance of shares (1)

2 unchanged sentences

Restricted stock units

The following table summarizes activity for restricted stock units for the twenty-six weeks ended July 31, 2021:

The following table summarizes activity for restricted stock units for the thirty-nine weeks ended October 30, 2021:

Service-based Restricted

16 unchanged sentences

Forfeited ( 98,340 ) 16.89 ( 7,997 ) 29.92 ( 13,804 ) 25.13

Unvested at July 31, 2021 (1)

Unvested at October 30, 2021 (1)

2,582,755 $ 17.10 340,149 $ 27.08 680,184 $ 22.81

1 unchanged sentence

Unvested shares related to restricted stock units with performance-based and market-based vesting conditions can be achieved at up to 200% of their target vesting amount.

The following table details unrecognized compensation cost and the remaining weighted-average period over which these costs are expected to be recognized for restricted stock units as of July 31, 2021:

(in thousands) Service-based Restricted

3 unchanged sentences

Remaining weighted-average period cost is expected to be recognized (years) 1.3 1.2 1.0

Additional information pertaining to restricted stock units for the twenty-six weeks ended July 31, 2021 and August 1, 2020 follows:

(in thousands) July 31, 2021 August 1, 2020

Additional information pertaining to restricted stock units for the thirty-nine weeks ended October 30, 2021 and October 31, 2020 follows:

(in thousands) October 30, 2021 October 31, 2020

Service-based restricted stock units:

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Total grant date fair value of awards vested $ 3,390 $ 4,132

No market-based restricted stock units were granted during the twenty-six weeks ended August 1, 2020.

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during the twenty-six weeks ended July 31, 2021 were as follows:

July 31, 2021

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during the thirty-nine weeks ended October 30, 2021 and October 31, 2020 were as follows:

October 30, 2021 October 31, 2020

Grant date market price $ 36.15 $ 12.31

7 unchanged sentences

Stock appreciation rights

The following table summarizes stock appreciation rights activity for the twenty-six weeks ended July 31, 2021:

The following table summarizes stock appreciation rights activity for the thirty-nine weeks ended October 30, 2021:

Shares Weighted-Average

5 unchanged sentences

Forfeited or expired ( 34,150 ) 54.87

Outstanding at July 31, 2021

Outstanding at October 30, 2021

240,839 $ 32.80 $ 2,258,144 2.6

Stock appreciation rights exercisable at July 31, 2021 243,539 $ 32.69 $ 2,029,216 2.8

Stock appreciation rights expected to become exercisable in the future as of July 31, 2021 — $ — $ — 0.0

No stock appreciation rights were exercised during the twenty-six weeks ended August 1, 2020.

Information pertaining to stock appreciation rights exercised during the twenty-six weeks ended July 31, 2021 follows:

(in thousands) July 31, 2021

Stock appreciation rights exercisable at October 30, 2021 240,839 $ 32.80 $ 2,258,144 2.6

No stock appreciation rights were exercised during the thirty-nine weeks ended October 31, 2020.

Information pertaining to stock appreciation rights exercised during the thirty-nine weeks ended October 30, 2021 follows:

(in thousands) October 30, 2021

Total grant date fair value of awards exercised $ 1,042

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The Company has chosen not to apply hedge accounting to these instruments because there are no differences in the timing of gain or loss recognition on the hedging instruments and the hedged items.

As of July 31, 2021, the Company had outstanding the following foreign currency exchange forward contracts that were entered into to hedge either a portion, or all, of forecasted foreign-currency-denominated intercompany inventory sales, the resulting settlement of the foreign-currency-denominated intercompany accounts receivable, or both:

As of October 30, 2021, the Company had outstanding the following foreign currency exchange forward contracts that were entered into to hedge either a portion, or all, of forecasted foreign-currency-denominated intercompany inventory sales, the resulting settlement of the foreign-currency-denominated intercompany accounts receivable, or both:

(in thousands) Notional Amount (1)

4 unchanged sentences

(1) Amount reported is the U.S.

Dollar notional amount outstanding as of July 31, 2021.

Dollar notional amount outstanding as of October 30, 2021.

The fair value of derivative instruments is valued using quoted market prices of the same or similar instruments, adjusted for counterparty risk.

The location and amounts of derivative fair values of foreign currency exchange forward contracts on the Condensed Consolidated Balance Sheets as of July 31, 2021 and January 30, 2021 were as follows:

(in thousands) Location July 31, 2021 January 30, 2021 Location July 31, 2021 January 30, 2021

The location and amounts of derivative fair values of foreign currency exchange forward contracts on the Condensed Consolidated Balance Sheets as of October 30, 2021 and January 30, 2021 were as follows:

(in thousands) Location October 30, 2021 January 30, 2021 Location October 30, 2021 January 30, 2021

Derivatives designated as cash flow hedging instruments

3 unchanged sentences

$ 5,082 $ 79 $ 86 $ 4,694

Information pertaining to derivative gains or losses from foreign currency exchange forward contracts designated as cash flow hedging instruments for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 follows:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Information pertaining to derivative gains or losses from foreign currency exchange forward contracts designated as cash flow hedging instruments for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 follows:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Gain recognized in AOCL (1)

$ 4,589 $ 93 $ 6,818 $ 12,328

(Loss) gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization (2)

Gain (loss) reclassified from AOCL to cost of sales, exclusive of depreciation and amortization (2)

$ 141 $ 5,327 $ ( 3,010 ) $ 11,104

(1) Amount represents the change in fair value of derivative contracts.

As a result of COVID-19, there was a significant change in the expected timing of previously hedged intercompany sales transactions, resulting in a dedesignation of the related hedge instruments during the twenty-six weeks ended August 1, 2020.

At the time of dedesignation of these hedges, they were in a net gain position of approximately $ 12.6 million.

1 unchanged sentence

Subsequent to the dedesignation of these hedges, these hedge contracts were settled in Fiscal 2020.

(2) Amount represents (loss) gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) when the hedged item affects earnings, which is when merchandise is converted to cost of sales, exclusive of depreciation and amortization.

(2) Amount represents gain (loss) reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) when the hedged item affects earnings, which is when merchandise is converted to cost of sales, exclusive of depreciation and amortization.

Substantially all of the unrealized gain will be recognized in costs of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) over the next twelve months .

Additional information pertaining to derivative gains or losses from foreign currency exchange forward contracts not designated as hedging instruments for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 follows:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Additional information pertaining to derivative gains or losses from foreign currency exchange forward contracts not designated as hedging instruments for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 follows:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Gain (loss) recognized in other operating income, net $ 487 $ — $ 324 $ 742

ACCUMULATED OTHER COMPREHENSIVE LOSS

Fo r the thirteen and twenty-six weeks ended July 31, 2021, the activity in AOCL was as follows:

Thirteen Weeks Ended July 31, 2021

Fo r the thirteen and thirty-nine weeks ended October 30, 2021, the activity in AOCL was as follows:

Thirteen Weeks Ended October 30, 2021

(in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total

Beginning balance at May 1, 2021 $ ( 99,046 ) $ ( 1,936 ) $ ( 100,982 )

Beginning balance at July 31, 2021 $ ( 101,032 ) $ 767 $ ( 100,265 )

Other comprehensive (loss) income before reclassifications ( 5,629 ) 4,589 ( 1,040 )

Reclassified loss from accumulated other comprehensive loss (1)

Reclassified gain from AOCL (1)

— ( 141 ) ( 141 )

1 unchanged sentence

Other comprehensive (loss) income after reclassifications ( 5,629 ) 4,416 ( 1,213 )

Ending balance at July 31, 2021 $ ( 101,032 ) $ 767 $ ( 100,265 )

Twenty-six Weeks Ended July 31, 2021

Ending balance at October 30, 2021 $ ( 106,661 ) $ 5,183 $ ( 101,478 )

Thirty-nine Weeks Ended October 30, 2021

(in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total

1 unchanged sentence

Other comprehensive (loss) income before reclassifications ( 8,889 ) 6,818 ( 2,071 )

Reclassified loss from accumulated other comprehensive loss (1)

Reclassified loss from AOCL (1)

— 3,010 3,010

Tax effect — ( 110 ) ( 110 )

Other comprehensive income after reclassifications ( 3,260 ) 5,302 2,042

Ending balance at July 31, 2021 $ ( 101,032 ) $ 767 $ ( 100,265 )

(1) Amount represents loss reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

For the thirteen and twenty-six weeks ended August 1, 2020, the activity in AOCL was as follows:

Thirteen Weeks Ended August 1, 2020

Other comprehensive (loss) income after reclassifications ( 8,889 ) 9,718 829

Ending balance at October 30, 2021 $ ( 106,661 ) $ 5,183 $ ( 101,478 )

(1) Amount represents (gain) loss reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

For the thirteen and thirty-nine weeks ended October 31, 2020, the activity in AOCL was as follows:

Thirteen Weeks Ended October 31, 2020

(in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total

Beginning balance at May 2, 2020 $ ( 115,366 ) $ 9,946 $ ( 105,420 )

Beginning balance at August 1, 2020 $ ( 106,632 ) $ 7,539 $ ( 99,093 )

Other comprehensive income before reclassifications 2,142 93 2,235

Reclassified gain from accumulated other comprehensive loss (1)

Reclassified gain from AOCL (1)

— ( 5,327 ) ( 5,327 )

Other comprehensive (loss) income after reclassifications (2)

Other comprehensive income (loss) after reclassifications (2)

2,142 ( 5,234 ) ( 3,092 )

Ending balance at August 1, 2020 $ ( 106,632 ) $ 7,539 $ ( 99,093 )

Twenty-six Weeks Ended August 1, 2020

Ending balance at October 31, 2020 $ ( 104,490 ) $ 2,305 $ ( 102,185 )

Thirty-nine Weeks Ended October 31, 2020

(in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total

1 unchanged sentence

Other comprehensive income before reclassifications 5,477 12,328 17,805

Reclassified gain from accumulated other comprehensive loss (1)

Reclassified gain from AOCL (1)

— ( 11,104 ) ( 11,104 )

Other comprehensive (loss) income after reclassifications (2)

Other comprehensive income after reclassifications (2)

5,477 1,224 6,701

Ending balance at August 1, 2020 $ ( 106,632 ) $ 7,539 $ ( 99,093 )

Ending balance at October 31, 2020 $ ( 104,490 ) $ 2,305 $ ( 102,185 )

(1) Amount represents gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

5 unchanged sentences

Amounts shown below include net sales from wholesale, franchise and licensing operations, which are not a significant component of total revenue, and are aggregated within their respective operating segment and geographic area.

The Company’s net sales by operating segment for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 were as follows:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

The Company’s net sales by operating segment for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 were as follows:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Hollister $ 522,311 $ 476,665 $ 1,479,202 $ 1,178,925

2 unchanged sentences

Net sales by geographic area are presented by attributing revenues to an individual country on the basis of the country in which the merchandise was sold for in-store purchases and on the basis of the shipping location provided by customers for digital orders.

The Company’s net sales by geographic area for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 were as follows:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

The Company’s net sales by geographic area for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 were as follows:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

$ 654,858 $ 557,814 $ 1,810,471 $ 1,339,347

EMEA 179,156 190,214 528,998 474,165

APAC 41,228 41,814 87,274 74,150

38,215 43,618 125,489 117,768

Other 32,931 28,007 86,457 72,060

1 unchanged sentence

Total $ 905,160 $ 819,653 $ 2,551,415 $ 2,003,340

FLAGSHIP STORE EXIT BENEFITS

(1) Asia-Pacific Region (“APAC”)

FLAGSHIP STORE EXIT CHARGES (BENEFITS)

Reflecting a continued focus on one of the Company’s key transformation initiatives ‘Global Store Network Optimization,’ the Company continues to pivot away from its large format flagship stores and strives to open smaller, more productive omnichannel focused brand experiences.

As a result, the Company has closed certain of its flagship stores and may have additional closures as it executes against this strategy.

The Company recognizes impacts related to the exit of its flagship stores in flagship store exit benefits on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Details of the (benefits) charges recognized during the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 related to this initiative follow:

Thirteen Weeks Ended Twenty-six Weeks Ended

(in thousands) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

The Company recognizes impacts related to the exit of its flagship stores in flagship store exit charges (benefits) on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Details of the charges (benefits) recognized during the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 related to this initiative follow:

Thirteen Weeks Ended Thirty-nine Weeks Ended

(in thousands) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Operating lease cost — ( 1,729 ) ( 841 ) ( 6,959 )

Asset disposals and other store-closure costs (1)

Gain on lease assignment — ( 5,237 ) — ( 5,237 )

Asset disposals and other store-closure benefits (1)

— ( 405 ) ( 514 ) ( 3,610 )

Employee severance and other employee transition costs ( 88 ) 4,551 167 4,008

Total flagship store exit benefits $ ( 88 ) $ ( 3,884 ) $ ( 1,188 ) $ ( 4,427 )

Employee severance and other employee transition costs (benefits) 11 ( 692 ) 178 3,316

Total flagship store exit charges (benefits) $ 11 $ ( 8,063 ) $ ( 1,177 ) $ ( 12,490 )

(1) Amounts represent costs incurred or benefits realized associated with returning the store to its original condition, including updated estimates to previously established accruals for asset retirement obligations and costs to remove inventory and store assets .

2 unchanged sentences

The new agreement resulted in an acceleration of payments and provided for a discount resulting in a reduction of operating lease liabilities of $ 65.0 million and a cash outflow of $ 63.8 million to settle all remaining obligations related to this location.

This cash outflow was classified within operating lease right-of-use assets and liabilities within Operating activities on the Condensed Consolidated Statement of Cash Flows during the twenty-six weeks ended July 31, 2021.

This cash outflow was classified within operating lease right-of-use assets and liabilities within operating activities on the Condensed Consolidated Statement of Cash Flows during the thirty-nine weeks ended October 30, 2021.

The Company recognized a gain of $ 0.9 million in flagship store exit benefits on the Consolidated Statement of Operations and Comprehensive Income (Loss) related to this transaction.

4 unchanged sentences

At this time, the Company is not able to quantify the amount of future impacts, including any cash expenditures that may take place in future periods resulting from any potential flagship store closures given the unpredictable nature of lease exit negotiations and ultimate lease renewal decisions.

SUBSEQUENT EVENTS

In November 2021, the A&F Board of Directors approved a new share repurchase program of $500 million of outstanding common stock, replacing the prior 2021 share repurchase program of 10.0 million shares, which had approximately 3.9 million shares remaining.

The timing and actual number of common shares to be repurchased will depend on market conditions, eligibility to trade, and other factors.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements