What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-09-07 compared with 2022-06-08 · 199 added, 124 removed, 451 unchanged (42% of the section changed)

3 unchanged sentences

(Thousands, except per share amounts)

Thirteen Weeks Ended

April 30, 2022 May 1, 2021

Thirteen Weeks Ended Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Net sales $ 805,091 $ 864,850 $ 1,617,853 $ 1,646,255

3 unchanged sentences

Marketing, general and administrative expense 124,168 123,913 246,317 244,860

Flagship store exit benefits — — — —

Asset impairment 2,170 786 5,592 3,450

Other operating income, net ( 3,842 ) ( 1,418 )

Other operating expense (income), net 953 ( 1,848 ) ( 2,889 ) ( 3,266 )

Operating (loss) income ( 2,191 ) 114,787 ( 11,917 ) 172,220

1 unchanged sentence

(Loss) income before income taxes ( 9,108 ) 103,512 ( 26,141 ) 152,339

Income tax (benefit) expense ( 2,187 ) 6,121

Income tax expense (benefit) 5,634 ( 6,944 ) 3,447 ( 823 )

Net (loss) income ( 14,742 ) 110,456 ( 29,588 ) 153,162

20 unchanged sentences

(Thousands, except par value amounts)

April 30, 2022 January 29, 2022

July 30, 2022 January 29, 2022

Current assets:

28 unchanged sentences

Treasury stock, at average cost:

52,858 and 50,315 shares as of April 30, 2022 and January 29, 2022, respectively

53,829 and 50,315 shares as of July 30, 2022 and January 29, 2022, respectively

( 1,948,199 ) ( 1,859,583 )

10 unchanged sentences

(Thousands, except per share amounts)

Thirteen Weeks Ended April 30, 2022

Thirteen Weeks Ended July 30, 2022

Common Stock Paid-in

4 unchanged sentences

value Shares At average

Balance, April 30, 2022 50,442 $ 1,033 $ 398,412 $ 9,444 $ 2,350,807 $ ( 123,397 ) 52,858 $ ( 1,931,494 ) $ 704,805

Net loss — — — 2,092 ( 16,834 ) — — — ( 14,742 )

Purchase of Common Stock ( 1,000 ) — — — — — 1,000 ( 17,775 ) ( 17,775 )

Share-based compensation issuances and exercises 29 — ( 1,045 ) — ( 106 ) — ( 29 ) 1,070 ( 81 )

Share-based compensation expense — — 7,760 — — — — — 7,760

Derivative financial instruments, net of tax — — — — — ( 1,729 ) — — ( 1,729 )

Foreign currency translation adjustments, net of tax — — — — — ( 4,914 ) — — ( 4,914 )

Distributions to noncontrolling interests, net — — — ( 397 ) — — — — ( 397 )

Ending balance at July 30, 2022 49,471 $ 1,033 $ 405,127 $ 11,139 $ 2,333,867 $ ( 130,040 ) 53,829 $ ( 1,948,199 ) $ 672,927

Thirteen Weeks Ended July 31, 2021

Common Stock Paid-in

capital Non-controlling interests Retained

earnings AOCL Treasury stock Total

stockholders’

outstanding Par

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

Net income — — — 1,956 108,500 — — — 110,456

Purchase of Common Stock ( 2,374 ) — — — 2,374 ( 100,000 ) ( 100,000 )

Share-based compensation issuances and exercises 130 — ( 1,873 ) — ( 3,239 ) — ( 130 ) 4,800 ( 312 )

Share-based compensation expense — — 6,487 — — — — — 6,487

Derivative financial instruments, net of tax — — — — — 2,703 — — 2,703

Foreign currency translation adjustments, net of tax — — — — — ( 1,986 ) — — ( 1,986 )

Distributions to noncontrolling interests, net — — — ( 365 ) — — — — ( 365 )

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

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

Abercrombie & Fitch Co.

2022 2Q Form 10-Q

Abercrombie & Fitch Co.

Condensed Consolidated Statements of Stockholders’ Equity

(Thousands, except per share amounts)

Twenty-Six Weeks Ended July 30, 2022

Common Stock Paid-in

capital Non-controlling interests Retained

earnings AOCL Treasury stock Total

stockholders’

outstanding Par

value Shares At average

Balance, January 29, 2022 52,985 $ 1,033 $ 413,190 $ 11,234 $ 2,386,156 $ ( 114,706 ) 50,315 $ ( 1,859,583 ) $ 837,324

6 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 3,810 ) — — — — ( 3,810 )

Ending balance at April 30, 2022 50,442 $ 1,033 $ 398,412 $ 9,444 $ 2,350,807 $ ( 123,397 ) 52,858 $ ( 1,931,494 ) $ 704,805

Thirteen Weeks Ended May 1, 2021

Ending balance at July 30, 2022 49,471 $ 1,033 $ 405,127 $ 11,139 $ 2,333,867 $ ( 130,040 ) 53,829 $ ( 1,948,199 ) $ 672,927

Twenty-Six Weeks Ended July 31, 2021

Common Stock Paid-in

12 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 5,211 ) — — — — ( 5,211 )

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

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

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

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Thirteen Weeks Ended

April 30, 2022 May 1, 2021

Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021

Operating activities

Net (loss) income $ ( 29,588 ) $ 153,162

Adjustments to reconcile net (loss) income to net cash used for operating activities:

Adjustments to reconcile net (loss) income to net cash (used for) provided by operating activities:

Depreciation and amortization 65,543 72,249

1 unchanged sentence

(Gain) loss on disposal ( 1,083 ) 2,188

(Benefit) provision for deferred income taxes ( 5,853 ) 4,231

Benefit for deferred income taxes ( 1,629 ) ( 21,187 )

Share-based compensation 16,116 14,937

Loss on extinguishment of debt — 5,347

Changes in assets and liabilities:

5 unchanged sentences

Other liabilities 698 ( 1,554 )

Net cash used for operating activities ( 217,787 ) ( 131,350 )

Net cash (used for) provided by operating activities ( 259,733 ) 49,945

Investing activities

3 unchanged sentences

Financing activities

Purchase of senior secured notes — ( 46,969 )

Payment of debt issuance or modification costs and fees — ( 1,837 )

58 unchanged sentences

Interim financial statements

The Condensed Consolidated Financial Statements as of April 30, 2022, and for the thirteen week periods ended April 30, 2022 and May 1, 2021, 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 July 30, 2022, and for the thirteen and twenty-six week periods ended July 30, 2022 and July 31, 2021, 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 2021 filed with the SEC on March 28, 2022 (the “Fiscal 2021 Form 10-K”).

9 unchanged sentences

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 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, foreign currency exchange 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.

The extent to which the 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, spread and emergence of new variants of the virus, 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, foreign currency exchange rates, and governmental, business and consumer reactions to the pandemic.

The Company’s assessment of these, as well as other factors, such as the impact of a slowing economy, rising interest rates and continued inflation, could impact management's estimates and result in material impacts to the Company’s consolidated financial statements in future reporting periods.

Recent accounting pronouncements

2 unchanged sentences

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 April 30, 2022 January 29, 2022 May 1, 2021 January 30, 2021

(in thousands) Location July 30, 2022 January 29, 2022 July 31, 2021 January 30, 2021

Cash and equivalents Cash and equivalents $ 369,957 $ 823,139 $ 921,504 $ 1,104,862

7 unchanged sentences

Contract liabilities

The following table details certain contract liabilities representing unearned revenue as of April 30, 2022, January 29, 2022 and May 1, 2021:

(in thousands) April 30, 2022 January 29, 2022 May 1, 2021

The following table details certain contract liabilities representing unearned revenue as of July 30, 2022, January 29, 2022 and July 31, 2021:

(in thousands) July 30, 2022 January 29, 2022 July 31, 2021

Gift card liability $ 35,205 $ 36,984 $ 29,038

Loyalty programs liability 21,525 22,757 20,962

The following table details recognized revenue associated with the Company’s gift card program and loyalty programs for the thirteen weeks ended April 30, 2022 and May 1, 2021:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

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 30, 2022 and July 31, 2021:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Revenue associated with gift card redemptions and gift card breakage $ 22,652 $ 17,353 $ 45,653 $ 33,509

5 unchanged sentences

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

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

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

4 unchanged sentences

Anti-dilutive shares (1)

4,209 1,194 4,245 1,277

(1) Reflects the total number of shares related to outstanding share-based compensation awards that have been excluded from the computation of net (loss) income per diluted share because the impact would have been anti-dilutive.

7 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 measured at fair value on a recurring basis, as of April 30, 2022 and January 29, 2022, were as follows:

Assets at Fair Value as of April 30, 2022

The three levels of the hierarchy and the distribution of the Company’s assets measured at fair value on a recurring basis, as of July 30, 2022 and January 29, 2022, were as follows:

Assets and liabilities at Fair Value as of July 30, 2022

(in thousands) Level 1 Level 2 Level 3 Total

8 unchanged sentences

Total assets $ 38,974 $ 83,326 $ — $ 122,300

Derivative instruments (2)

$ — $ 3 $ — $ 3

Total liabilities $ — $ 3 $ — $ 3

Assets at Fair Value as of January 29, 2022

15 unchanged sentences

Level 2 assets consisted of trust-owned life insurance policies.

The Company’s Level 2 assets consisted of:

• 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.

Abercrombie & Fitch Co.

2022 2Q Form 10-Q

The Company’s Level 2 assets consisted of:

• 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 and 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.

Fair value of long-term borrowings

1 unchanged sentence

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

(in thousands) April 30, 2022 January 29, 2022

(in thousands) July 30, 2022 January 29, 2022

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

2 unchanged sentences

Property and equipment, net consisted of:

(in thousands) April 30, 2022 January 29, 2022

(in thousands) July 30, 2022 January 29, 2022

Property and equipment, at cost $ 2,462,069 $ 2,453,493

1 unchanged sentence

Property and equipment, net $ 511,181 $ 508,336

Refer to Note 8, “ ASSET IMPAIRMENT ,” for details related to property and equipment impairment charges incurred during the thirteen weeks ended April 30, 2022 and May 1, 2021.

Refer to Note 8, “ ASSET IMPAIRMENT ,” for details related to property and equipment impairment charges incurred during the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021.

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 weeks ended April 30, 2022 and May 1, 2021:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

The following table provides a summary of the Company’s operating lease costs for the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Single lease cost (1)

3 unchanged sentences

Operating lease right-of-use asset impairment (3)

1,573 240 3,488 2,704

Sublease income (4)

2 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) Includes 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 $ 1.7 million of rent abatements during the thirteen weeks ended April 30, 2022 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 weeks ended May 1, 2021 was $ 7.7 million.

(2) Includes 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 $ 0.9 million and $ 2.6 million of rent abatements during the thirteen and twenty-six weeks ended July 30, 2022, respectively, 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 twenty-six weeks ended July 31, 2021 was $ 5.2 million and $ 13.0 million respectively.

(3) Refer to Note 8, “ ASSET IMPAIRMENT ,” for details related to operating lease right-of-use asset impairment charges.

3 unchanged sentences

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 had minimum commitments related to operating lease contracts that have not yet commenced, primarily for its Company-operated retail stores, of approximately $ 20.5 million as of April 30, 2022.

Abercrombie & Fitch Co.

2022 2Q Form 10-Q

The Company had minimum commitments related to operating lease contracts that have not yet commenced, primarily for its Company-operated retail stores, of approximately $ 25.0 million as of July 30, 2022.

ASSET IMPAIRMENT

Asset impairment charges for the thirteen weeks ended April 30, 2022 and May 1, 2021 were as follows:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

Asset impairment charges for the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021 were as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Operating lease right-of-use asset impairment $ 1,573 $ 240 $ 3,488 $ 2,704

1 unchanged sentence

Total asset impairment $ 2,170 $ 786 $ 5,592 $ 3,450

Asset impairment charges for the thirteen weeks ended April 30, 2022 and May 1, 2021 related to certain of the Company’s stores across brands, geographies and store formats.

The impairment charges for the thirteen weeks ended April 30, 2022 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 7.5 million, including $ 6.5 million related to operating lease right-of-use assets.

The impairment charges for the thirteen weeks ended May 1, 2021 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 6.3 million, including $ 5.7 million related to operating lease right-of-use assets.

Asset impairment charges for the thirteen and twenty-six weeks ended July 30, 2022 and 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 30, 2022 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 16.9 million, including $ 16.1 million related to operating lease right-of-use assets.

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.

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.

3 unchanged sentences

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

On August 16, 2022, the Inflation Reduction Act was enacted into U.S.

The Company does not currently expect that the Inflation Reduction Act will have a material impact on its income taxes.

Impact of valuation allowances and other tax charges

During the thirteen weeks ended April 30, 2022, the Company did not recognize income tax benefits on $ 13.4 million of pretax

During the thirteen weeks ended July 30, 2022, the Company did not recognize income tax benefits on $ 26.4 million of pretax

losses, primarily in Switzerland, resulting in adverse tax impacts of $ 4.8 million.

During the thirteen weeks ended May 1, 2021, the Company recognized $ 3.1 million of tax benefits due to the anticipated utilization of deferred tax assets against projected pre-tax income for the full fiscal year, primarily in the U.S.

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

As of April 30, 2022, there were approximately $ 11.4 million of net deferred tax assets in China.

During the twenty-six weeks ended July 30, 2022, the Company did not recognize income tax benefits on $ 39.8 million of pre-tax losses, primarily in Switzerland, resulting in adverse tax impacts of $ 7.2 million.

As of July 30, 2022, there were approximately $ 12.1 million of net deferred tax assets in China.

The realization of these net deferred tax assets is dependent upon the future generation of sufficient taxable profits in China.

While the Company believes that the net deferred tax assets are more-likely-than-not to be realized, it is not a certainty, as there are continued issues and related responses due to emerging situations, such as the COVID-19 pandemic.

During the thirteen weeks ended July 30, 2022, the company recorded a $0.2 million valuation allowance on net operating losses currently not projected to be utilized in future years.

While the Company believes that the remaining net deferred tax assets are more-likely-than-not to be realized, it is not a certainty, as the Company continues to evaluate and respond to emerging situations, such as the COVID-19 pandemic.

The company is closely monitoring its operations in China.

Should circumstances change, the net deferred tax assets may become subject to a valuation allowance in the future.

Should circumstances change, the net deferred tax assets may become subject to additional valuation allowances in the future.

Additional valuation allowances would result in additional tax expense.

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 due to the anticipated 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.

Abercrombie & Fitch Co.

2022 2Q Form 10-Q

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.

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 and Switzerland.

Share-based compensation

Refer to Note 11, “ SHARE-BASED COMPENSATION ,” for details on income tax benefits and charges related to share-based compensation awards during the thirteen weeks ended April 30, 2022 and May 1, 2021.

Details on the Company’s long-term borrowings, net, as of April 30, 2022 and January 29, 2022 are as follows:

(in thousands) April 30, 2022 January 29, 2022

Refer to Note 11, “ 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 30, 2022 and July 31, 2021.

Details on the Company’s long-term borrowings, net, as of July 30, 2022 and January 29, 2022 are as follows:

(in thousands) July 30, 2022 January 29, 2022

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

1 unchanged sentence

Long-term borrowings, net $ 304,219 $ 303,574

Abercrombie & Fitch Co.

2022 1Q Form 10-Q

Senior Secured Notes

2 unchanged sentences

The terms of the Company’s senior secured revolving credit facility of up to $ 400.0 million (the “ABL Facility”) remained unchanged from those disclosed in Note 13, “BORROWINGS,” of the Notes to Consolidated Financial Statements contained in “Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of the Fiscal 2021 Form 10-K.

The Company did not have any borrowings outstanding under the ABL Facility as of April 30, 2022 or as of January 29, 2022.

As of April 30, 2022, availability under the ABL Facility was $ 349.4 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 $ 314.4 million as of April 30, 2022.

Financial Statements and Supplementary Dat a ” of the Fiscal 2021 Form 10-K.

The Company did not have any borrowings outstanding under the ABL Facility as of July 30, 2022 or as of January 29, 2022.

As of July 30, 2022, availability under the ABL Facility was $ 399.2 million, net of $ 0.8 million in outstanding stand-by letters of credit.

Representations, warranties and covenants

10 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 April 30, 2022.

The Company was in compliance with all debt covenants under these agreements as of July 30, 2022.

Abercrombie & Fitch Co.

2022 2Q Form 10-Q

SHARE-BASED COMPENSATION

Financial statement impact

The following table details share-based compensation expense and the related income tax impacts for the thirteen weeks ended April 30, 2022 and May 1, 2021:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

The following table details share-based compensation expense and the related income tax impacts for the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Share-based compensation expense $ 7,760 $ 6,487 $ 16,116 $ 14,937

Income tax benefit associated with share-based compensation expense recognized 1,015 1,388 $ 1,980 $ 1,686

The following table details discrete income tax benefits and charges related to share-based compensation awards during the thirteen weeks ended April 30, 2022 and May 1, 2021:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

Income tax discrete benefits realized for tax deductions related to the issuance of shares $ 2,111 $ 3,190

Income tax discrete charges realized upon cancellation of stock appreciation rights ( 195 ) ( 3 )

Total income tax discrete benefits related to share-based compensation awards $ 1,916 $ 3,187

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 weeks ended April 30, 2022 and May 1, 2021:

Abercrombie & Fitch Co.

2022 1Q Form 10-Q

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

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 30, 2022 and July 31, 2021:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Income tax discrete (charges) benefits realized for tax deductions related to the issuance of shares $ ( 113 ) $ 826 $ 1,998 $ 4,016

Income tax discrete (charges) benefits realized upon cancellation of stock appreciation rights ( 8 ) — ( 203 ) ( 3 )

Total income tax discrete (charges) benefits related to share-based compensation awards $ ( 121 ) $ 826 $ 1,795 $ 4,013

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

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 thirteen weeks ended April 30, 2022:

The following table summarizes activity for restricted stock units for the twenty-six weeks ended July 30, 2022:

Service-based Restricted

16 unchanged sentences

Forfeited ( 38,522 ) 18.79 — — — —

Unvested at April 30, 2022 (1)

Unvested at July 30, 2022 (1)

2,544,552 $ 21.43 316,615 $ 32.08 668,416 $ 23.67

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 April 30, 2022:

(in thousands) Service-based Restricted

3 unchanged sentences

Remaining weighted-average period cost is expected to be recognized (years) 1.3 0.0 1.0

Additional information pertaining to restricted stock units for the thirteen weeks ended April 30, 2022 and May 1, 2021 follows:

(in thousands) April 30, 2022 May 1, 2021

Abercrombie & Fitch Co.

2022 2Q Form 10-Q

Additional information pertaining to restricted stock units for the twenty-six weeks ended July 30, 2022 and July 31, 2021 follows:

(in thousands) July 30, 2022 July 31, 2021

Service-based restricted stock units:

7 unchanged sentences

Total grant date fair value of awards vested 4,105 3,390

Abercrombie & Fitch Co.

2022 1Q Form 10-Q

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during the thirteen weeks ended April 30, 2022 and May 1, 2021 were as follows:

April 30, 2022 May 1, 2021

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during the twenty-six weeks ended July 30, 2022 and July 31, 2021 were as follows:

July 30, 2022 July 31, 2021

Grant date market price $ 32.07 $ 31.78

7 unchanged sentences

Stock appreciation rights

The following table summarizes stock appreciation rights activity for the thirteen weeks ended April 30, 2022:

The following table summarizes stock appreciation rights activity for the twenty-six weeks ended July 30, 2022:

Shares Weighted-Average

4 unchanged sentences

Forfeited or expired ( 37,800 ) 48.72

Outstanding at April 30, 2022

Outstanding at July 30, 2022

198,339 $ 29.47 $ — 2.4

Stock appreciation rights exercisable at April 30, 2022 202,839 $ 29.24 $ 1,523,587 2.4

No stock appreciation rights were exercised during the thirteen weeks ended April 30, 2022 or May 1, 2021.

Stock appreciation rights exercisable at July 30, 2022 198,339 $ 29.47 $ — 2.4

No stock appreciation rights were exercised during the twenty-six weeks ended July 30, 2022 or July 31, 2021.

DERIVATIVE INSTRUMENTS

6 unchanged sentences

Foreign currency exchange forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed upon settlement date.

These foreign currency exchange forward contracts typically have a maximum term of twelve months.

These foreign currency exchange forward contracts typically have a maximum term

Abercrombie & Fitch Co.

2022 2Q Form 10-Q

of twelve months.

The sale of the inventory to the Company’s customers will result in the reclassification of related derivative gains and losses that are reported in AOCL into earnings.

4 unchanged sentences

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

As of April 30, 2022, 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 transactions, the resulting settlement of the foreign-currency-denominated intercompany accounts receivable, or both:

Abercrombie & Fitch Co.

2022 1Q Form 10-Q

As of July 30, 2022, 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 transactions, the resulting settlement of the foreign-currency-denominated intercompany accounts receivable, or both:

(in thousands) Notional Amount (1)

4 unchanged sentences

(1) Amounts reported are the U.S.

Dollar notional amounts outstanding as of April 30, 2022.

Dollar notional amounts outstanding as of July 30, 2022.

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 April 30, 2022 and January 29, 2022 were as follows:

(in thousands) Location April 30, 2022 January 29, 2022 Location April 30, 2022 January 29, 2022

The location and amounts of derivative fair values of foreign currency exchange forward contracts on the Condensed Consolidated Balance Sheets as of July 30, 2022 and January 29, 2022 were as follows:

(in thousands) Location July 30, 2022 January 29, 2022 Location July 30, 2022 January 29, 2022

Derivatives designated as cash flow hedging instruments Other current assets $ 5,169 $ 4,973 Accrued expenses $ 3 $ —

2 unchanged sentences

$ 5,169 $ 4,973 $ 3 $ —

Information pertaining to derivative gains or losses from foreign currency exchange forward contracts designated as cash flow hedging instruments for the thirteen weeks ended April 30, 2022 and May 1, 2021 follows:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

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 30, 2022 and July 31, 2021 follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Gain recognized in AOCL (1)

5 unchanged sentences

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 (Loss) Income 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 weeks ended April 30, 2022 and May 1, 2021 follows:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

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 30, 2022 and July 31, 2021 follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Gain (loss) recognized in other operating income, net $ 631 $ 304 $ 1,772 $ ( 164 )

2 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

Fo r the thirteen weeks ended April 30, 2022, the activity in AOCL was as follows:

Thirteen Weeks Ended April 30, 2022

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

Fo r the thirteen and twenty-six weeks ended July 30, 2022, the activity in AOCL was as follows:

Thirteen Weeks Ended July 30, 2022

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

Beginning balance at April 30, 2022 $ ( 131,092 ) $ 7,695 $ ( 123,397 )

Other comprehensive (loss) income before reclassifications ( 4,914 ) 2,361 ( 2,553 )

Reclassified gain from AOCL (1)

— ( 4,124 ) ( 4,124 )

Tax effect — 34 34

Other comprehensive loss after reclassifications ( 4,914 ) ( 1,729 ) ( 6,643 )

Ending balance at July 30, 2022 $ ( 136,006 ) $ 5,966 $ ( 130,040 )

Twenty-Six Weeks Ended July 30, 2022

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

Beginning balance at January 29, 2022 $ ( 120,689 ) $ 5,983 $ ( 114,706 )

3 unchanged sentences

Tax effect — 68 68

Other comprehensive (loss) income after reclassifications ( 10,403 ) 1,712 ( 8,691 )

Ending balance at April 30, 2022 $ ( 131,092 ) $ 7,695 $ ( 123,397 )

Other comprehensive loss after reclassifications ( 15,317 ) ( 17 ) ( 15,334 )

Ending balance at July 30, 2022 $ ( 136,006 ) $ 5,966 $ ( 130,040 )

(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 (Loss) Income.

For the thirteen weeks ended May 1, 2021, the activity in AOCL was as follows:

Thirteen Weeks Ended May 1, 2021

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

Beginning balance at January 30, 2021 $ ( 97,772 ) $ ( 4,535 ) $ ( 102,307 )

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

Thirteen Weeks Ended July 31, 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 )

Other comprehensive (loss) income before reclassifications ( 1,986 ) 1,084 ( 902 )

1 unchanged sentence

— 1,697 1,697

Tax effect — ( 78 ) ( 78 )

Other comprehensive (loss) income after reclassifications ( 1,986 ) 2,703 717

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

Twenty-Six Weeks Ended July 31, 2021

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

Beginning balance at January 30, 2021 $ ( 97,772 ) $ ( 4,535 ) $ ( 102,307 )

Other comprehensive (loss) income before reclassifications ( 3,260 ) 2,228 ( 1,032 )

Reclassified loss from AOCL (1)

— 3,152 3,152

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

Tax effect — ( 78 ) ( 78 )

Other comprehensive (loss) 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 (Loss) Income.

(2) No income tax benefit was recognized during the period due to the establishment of a valuation allowance

Abercrombie & Fitch Co.

2022 2Q Form 10-Q

SEGMENT REPORTING

3 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 weeks ended April 30, 2022 and May 1, 2021 were as follows:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

The Company’s net sales by operating segment for the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021 were as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Hollister $ 436,934 $ 514,483 $ 865,740 $ 956,891

1 unchanged sentence

Total $ 805,091 $ 864,850 $ 1,617,853 $ 1,646,255

Abercrombie & Fitch Co.

2022 1Q Form 10-Q

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 and wholesale orders.

The Company’s net sales by geographic area for the thirteen weeks ended April 30, 2022 and May 1, 2021 were as follows:

Thirteen Weeks Ended

(in thousands) April 30, 2022 May 1, 2021

The Company’s net sales by geographic area for the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021 were as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in thousands) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

$ 578,086 $ 601,767 $ 1,163,190 $ 1,155,613

1 unchanged sentence

27,778 41,228 57,675 87,274

Other 33,790 22,511

32,442 31,015 66,239 53,526

International $ 227,005 $ 263,083 $ 454,663 $ 490,642

2 unchanged sentences

(2) Asia-Pacific Region (“APAC”)

(3) Other includes all sales that do not fall within the United States, EMEA, or APAC regions.

Abercrombie & Fitch Co.

1 unchanged sentence

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