What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-12-06 compared with 2022-09-07 · 134 added, 136 removed, 514 unchanged (34% of the section changed)

3 unchanged sentences

(Thousands, except per share amounts)

Thirteen Weeks Ended Twenty-Six Weeks Ended

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Net sales $ 880,084 $ 905,160 $ 2,497,937 $ 2,551,415

3 unchanged sentences

Marketing, general and administrative expense 133,201 146,269 379,518 391,129

Flagship store exit benefits — — — —

Asset impairment 3,744 6,749 9,336 10,199

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

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

Other operating income, net ( 1,005 ) ( 1,320 ) ( 3,894 ) ( 4,586 )

Operating income 17,543 72,731 5,626 244,951

Interest expense, net 7,295 7,270 21,519 27,151

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

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

Income (loss) before income taxes 10,248 65,461 ( 15,893 ) 217,800

Income tax expense 10,966 16,383 14,413 15,560

Net (loss) income ( 718 ) 49,078 ( 30,306 ) 202,240

1 unchanged sentence

Net (loss) income attributable to A&F $ ( 2,214 ) $ 47,233 $ ( 35,517 ) $ 197,501

Net (loss) income attributable to A&F per share

Net (loss) income per share attributable to A&F

Basic $ ( 0.04 ) $ 0.80 $ ( 0.70 ) $ 3.24

16 unchanged sentences

(Thousands, except par value amounts)

July 30, 2022 January 29, 2022

October 29, 2022 January 29, 2022

Current assets:

28 unchanged sentences

Treasury stock, at average cost:

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

54,300 and 50,315 shares as of October 29, 2022 and January 29, 2022, respectively

( 1,954,306 ) ( 1,859,583 )

10 unchanged sentences

(Thousands, except per share amounts)

Thirteen Weeks Ended July 30, 2022

Thirteen Weeks Ended October 29, 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 )

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

Net income (loss) — — — 1,496 ( 2,214 ) — — — ( 718 )

Purchase of Common Stock ( 510 ) — — — — — 510 ( 8,000 ) ( 8,000 )

4 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 2,801 ) — — — — ( 2,801 )

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

Ending balance at October 29, 2022 49,000 $ 1,033 $ 411,041 $ 9,834 $ 2,330,730 $ ( 142,267 ) 54,300 $ ( 1,954,306 ) $ 656,065

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

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

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

4 unchanged sentences

(Thousands, except per share amounts)

Twenty-Six Weeks Ended July 30, 2022

Thirty-Nine Weeks Ended October 29, 2022

Common Stock Paid-in

5 unchanged sentences

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

Net loss — — — 3,715 ( 33,303 ) — — — ( 29,588 )

Net income (loss) — — — 5,211 ( 35,517 ) — — — ( 30,306 )

Purchase of Common Stock ( 4,770 ) — — — — — 4,770 ( 125,775 ) ( 125,775 )

4 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 6,611 ) — — — — ( 6,611 )

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

Ending balance at October 29, 2022 49,000 $ 1,033 $ 411,041 $ 9,834 $ 2,330,730 $ ( 142,267 ) 54,300 $ ( 1,954,306 ) $ 656,065

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

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

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

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Twenty-Six Weeks Ended

July 30, 2022 July 31, 2021

Thirty-Nine Weeks Ended

October 29, 2022 October 30, 2021

Operating activities

6 unchanged sentences

Share-based compensation 23,426 22,269

Loss on extinguishment of debt — 5,347

(Gain) loss on extinguishment of debt ( 52 ) 5,347

Changes in assets and liabilities:

9 unchanged sentences

Proceeds from the sale of property and equipment 11,891 —

Withdrawal of funds from Rabbi Trust assets 12,000 —

Net cash used for investing activities ( 96,391 ) ( 62,223 )

51 unchanged sentences

The Company is deemed to be the primary beneficiary of these VIEs;

therefore, the Company has consolidated the operating results, assets and liabilities of these VIEs, with the noncontrolling interests’ (“NCI”) portions of net income presented as net income attributable to NCI on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income and the NCI portion of stockholders’ equity presented as NCI on the Condensed Consolidated Balance Sheets.

therefore, the Company has consolidated the operating results, assets and liabilities of these VIEs, with the noncontrolling interests’ (“NCI”) portions of net (loss) income presented as net income attributable to NCI on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income and the NCI portion of stockholders’ equity presented as NCI on the Condensed Consolidated Balance Sheets.

The Company’s fiscal year ends on the Saturday closest to January 31.

7 unchanged sentences

Interim 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.

The Condensed Consolidated Financial Statements as of October 29, 2022, and for the thirteen and thirty-nine week periods ended October 29, 2022 and October 30, 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 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.

Additionally, these estimates and assumptions may change as a result of the impact of global economic conditions such as the uncertainty regarding a slowing economy, rising interest rates, continued inflation, fluctuation in foreign exchange rates, the coronavirus ("COVID-19") pandemic, and the ongoing conflict in Ukraine 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 July 30, 2022 January 29, 2022 July 31, 2021 January 30, 2021

(in thousands) Location October 29, 2022 January 29, 2022 October 30, 2021 January 30, 2021

Cash and equivalents Cash and equivalents $ 257,332 $ 823,139 $ 865,622 $ 1,104,862

7 unchanged sentences

Contract liabilities

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

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

(in thousands) October 29, 2022 January 29, 2022 October 30, 2021

Gift card liability $ 35,016 $ 36,984 $ 30,815

Loyalty programs liability 22,930 22,757 21,964

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

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 29, 2022 and October 30, 2021:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Revenue associated with gift card redemptions and gift card breakage $ 21,194 $ 17,801 $ 66,847 $ 51,310

5 unchanged sentences

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

Thirteen Weeks Ended Twenty-Six Weeks Ended

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

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

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 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

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

Assets and Liabilities at Fair Value as of October 29, 2022

(in thousands) Level 1 Level 2 Level 3 Total

32 unchanged sentences

• 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.

• 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.

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) July 30, 2022 January 29, 2022

(in thousands) October 29, 2022 January 29, 2022

Gross borrowings outstanding, carrying amount $ 299,730 $ 307,730

2 unchanged sentences

Property and equipment, net consisted of:

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

(in thousands) October 29, 2022 January 29, 2022

Property and equipment, at cost $ 2,502,008 $ 2,453,493

1 unchanged sentence

Property and equipment, net $ 542,138 $ 508,336

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.

R efer to Note 8, “ ASSET IMPAIRMENT ,” for details related to property and equipment impairment charges incurred during the thirteen and thirty-nine weeks ended October 29, 2022 and October 30, 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 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

The following table provides a summary of the Company’s operating lease costs for the thirteen and thirty-nine weeks ended October 29, 2022 and October 30, 2021:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

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) 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.

(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 $ 0.8 million and $ 3.3 million of rent abatements during the thirteen and thirty-nine weeks ended October 29, 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 thirty-nine weeks ended October 30, 2021 was $ 1.7 million and $ 14.6 million respectively.

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

1 unchanged sentence

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

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

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.

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

The Company had minimum commitments related to operating lease contracts that have not yet commenced, primarily for its Company-operated retail stores, of approximately $ 31.5 million as of October 29, 2022.

Abercrombie & Fitch Co.

2022 3Q 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 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

Asset impairment charges for the thirteen and thirty-nine weeks ended October 29, 2022 and October 30, 2021 were as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Operating lease right-of-use asset impairment $ 1,205 $ 5,512 $ 4,693 $ 8,216

Property and equipment asset impairment (1)

2,539 1,237 4,643 1,983

Total asset impairment $ 3,744 $ 6,749 $ 9,336 $ 10,199

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.

(1) Amounts include $ 0.6 million of store asset impairment and $ 1.9 million other asset impairment for the thirteen weeks ended October 29, 2022 and

$ 2.7 million of store asset impairment and $ 1.9 million other asset impairment for the thirty-nine weeks ended October 29, 2022.

Amounts for the thirteen and thirty-nine weeks ended October 30, 2021 only include store asset impairment.

Asset impairment charges for the thirteen and thirty-nine weeks ended October 29, 2022 and October 30, 2021 related to certain of the Company’s assets including stores across brands, geographies and store formats and other assets.

The store impairment charges for the thirty-nine weeks ended October 29, 2022 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 38.7 million, including $ 37.8 million related to operating lease right-of-use assets.

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.

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.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) was enacted into law.

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 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 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.

During the thirteen and thirty-nine weeks ended October 29, 2022, the Company did not recognize income tax benefits on $ 30.0 million and $ 69.7 million, respectively, of pretax losses, primarily in Switzerland, resulting in adverse tax impacts of $ 5.6 million and $ 12.8 million, respectively.

As of October 29, 2022, there were approximately $ 11.2 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.

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.

During the thirty-nine weeks ended October 29, 2022, the company recorded a $ 0.2 million valuation allowance on net operating losses currently not projected to be utilized in future years.

The Company is closely monitoring its operations in China.

1 unchanged sentence

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.

During the thirteen weeks ended October 30, 2021, 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.

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.

During the thirty-nine weeks ended October 30, 2021, 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 had previously been established.

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

Abercrombie & Fitch Co.

2022 3Q 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 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

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 thirty-nine weeks ended October 29, 2022 and October 30, 2021.

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

(in thousands) October 29, 2022 January 29, 2022

Long-term portion of borrowings, gross at carrying amount $ 299,730 $ 307,730

2 unchanged sentences

Senior Secured Notes

During the thirteen weeks ended October 29, 2022, Abercrombie & Fitch Management Co.(“A&F Management”), a wholly-owned indirect subsidiary of A&F, purchased $ 8.0 million of outstanding Senior Secured Notes and incurred a $ 0.1 million gain on extinguishment of debt, recognized in interest expense, net on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

The terms of the Senior Secured Notes have 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 on the Fiscal 2021 Form 10-K.

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.

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

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.

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 $ 359.2 million as of July 30, 2022.

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

As of October 29, 2022, availability under the ABL Facility was $ 399.4 million, net of $ 0.6 million in outstanding stand-by letters of credit.

Representations, warranties and covenants

6 unchanged sentences

change the nature of their business;

and consolidate or merge with or into, or sell substantially all of the assets of the Company or Abercrombie & Fitch Management Co.

(“A&F Management”), a wholly-owned indirect subsidiary of A&F, to another entity.

and consolidate or merge with or into, or sell substantially all of the assets of the Company or A&F Management to another entity.

The Senior Secured Notes are guaranteed on a senior secured basis, jointly and severally, by A&F and each of the existing and future wholly-owned domestic restricted subsidiaries of A&F that guarantee or will guarantee A&F Management’s Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) or certain future capital markets indebtedness.

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 30, 2022.

The Company was in compliance with all debt covenants under these agreements as of October 29, 2022.

Abercrombie & Fitch Co.

2 unchanged sentences

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 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

The following table details share-based compensation expense and the related income tax impacts for the thirteen and thirty-nine weeks ended October 29, 2022 and October 30, 2021:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Share-based compensation expense $ 7,310 $ 7,332 $ 23,426 $ 22,269

Income tax benefit associated with share-based compensation expense recognized 635 806 2,615 2,492

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

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 29, 2022 and October 30, 2021:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Income tax discrete (charges) benefits realized for tax deductions related to the issuance of shares $ ( 29 ) $ 150 $ 1,970 $ 4,166

1 unchanged sentence

Total income tax discrete (charges) benefits related to share-based compensation awards $ ( 39 ) $ 150 $ 1,757 $ 4,163

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 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

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 29, 2022 and October 30, 2021:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 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 twenty-six weeks ended July 30, 2022:

The following table summarizes activity for restricted stock units for the thirty-nine weeks ended October 29, 2022:

Service-based Restricted

16 unchanged sentences

Forfeited ( 136,982 ) 20.37 — — ( 16,247 ) 16.24

Unvested at July 30, 2022 (1)

Unvested at October 29, 2022 (1)

2,451,051 $ 21.30 336,549 $ 31.08 662,137 $ 23.68

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 30, 2022:

(in thousands) Service-based Restricted

5 unchanged sentences

2022 3Q 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

Additional information pertaining to restricted stock units for the thirty-nine weeks ended October 29, 2022 and October 30, 2021 follows:

(in thousands) October 29, 2022 October 30, 2021

Service-based restricted stock units:

7 unchanged sentences

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

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

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during the thirty-nine weeks ended October 29, 2022 and October 30, 2021 were as follows:

October 29, 2022 October 30, 2021

Grant date market price $ 30.24 $ 36.15

7 unchanged sentences

Stock appreciation rights

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

The following table summarizes stock appreciation rights activity for the thirty-nine weeks ended October 29, 2022:

Shares Weighted-Average

4 unchanged sentences

Forfeited or expired ( 37,800 ) 48.72

Outstanding at July 30, 2022

Outstanding at October 29, 2022

198,339 $ 29.47 $ — 1.9

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.

Stock appreciation rights exercisable at October 29, 2022 198,339 $ 29.47 $ — 1.9

No stock appreciation rights were exercised during the thirty-nine weeks ended October 29, 2022 or October 30, 2021.

DERIVATIVE INSTRUMENTS

13 unchanged sentences

Examples of monetary assets/liabilities include cash balances, receivables and payables.

Fluctuations in foreign currency exchange rates result in transaction gains or losses being recorded in earnings, as U.S.

GAAP requires that monetary assets/liabilities be remeasured at the spot exchange rate at quarter-end and upon settlement.

Fluctuations in foreign currency exchange rates result in transaction gains or losses being recorded in earnings, as GAAP requires that monetary assets/liabilities be remeasured at the spot exchange rate at quarter-end and upon settlement.

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 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:

As of October 29, 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 July 30, 2022.

Dollar notional amounts outstanding as of October 29, 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 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

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

(in thousands) Location October 29, 2022 January 29, 2022 Location October 29, 2022 January 29, 2022

Derivatives designated as cash flow hedging instruments Other current assets $ 3,802 $ 4,973 Accrued expenses $ 10 $ —

2 unchanged sentences

$ 3,802 $ 4,973 $ 10 $ —

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

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 29, 2022 and October 30, 2021 follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 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 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 )

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 29, 2022 and October 30, 2021 follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Gain recognized in other operating income, net

$ 504 $ 487 $ 2,276 $ 324

Abercrombie & Fitch Co.

1 unchanged sentence

ACCUMULATED OTHER COMPREHENSIVE LOSS

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

Fo r the thirteen and thirty-nine weeks ended October 29, 2022, the activity in AOCL was as follows:

Thirteen Weeks Ended October 29, 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 )

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

Other comprehensive (loss) income before reclassifications ( 11,021 ) 2,723 ( 8,298 )

3 unchanged sentences

Other comprehensive loss after reclassifications ( 11,021 ) ( 1,206 ) ( 12,227 )

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

Twenty-Six Weeks Ended July 30, 2022

Ending balance at October 29, 2022 $ ( 147,027 ) $ 4,760 $ ( 142,267 )

Thirty-Nine Weeks Ended October 29, 2022

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

5 unchanged sentences

Other comprehensive loss after reclassifications ( 26,338 ) ( 1,223 ) ( 27,561 )

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

Ending balance at October 29, 2022 $ ( 147,027 ) $ 4,760 $ ( 142,267 )

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

Thirteen Weeks Ended July 31, 2021

For 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 AOCL (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

5 unchanged sentences

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

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

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

(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.

6 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 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

The Company’s net sales by operating segment for the thirteen and thirty-nine weeks ended October 29, 2022 and October 30, 2021 were as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Hollister $ 457,752 $ 522,311 $ 1,323,492 $ 1,479,202

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 and wholesale orders.

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

The Company’s net sales by geographic area for the thirteen and thirty-nine weeks ended October 29, 2022 and October 30, 2021 were as follows:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in thousands) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

$ 674,555 $ 654,858 $ 1,837,760 $ 1,810,471

6 unchanged sentences

(2) Asia-Pacific Region (“APAC”).

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

(3) Other includes all sales that do not fall within the United States, EMEA, or APAC regions, which are derived primarily in Canada.

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