What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-04-01 compared with 2023-03-27 · 362 added, 279 removed, 939 unchanged (41% of the section changed)

1 unchanged sentence

Abercrombie & Fitch Co.

Consolidated Statements of Operations and Comprehensive (Loss) Income

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Thousands, except per share amounts)

5 unchanged sentences

Marketing, general and administrative expense 642,877 517,602 536,815

Asset impairment 14,031 12,100 72,937

Other operating income, net ( 5,873 ) ( 2,674 ) ( 8,327 )

Operating income (loss) 92,648 343,084 ( 20,469 )

Interest expense, net 25,632 34,110 28,274

Income (loss) before income taxes 67,016 308,974 ( 48,743 )

Operating income 484,671 92,648 343,084

Interest expense

30,352 30,236 37,958

Interest income

( 29,980 ) ( 4,604 ) ( 3,848 )

Income before income taxes 484,299 67,016 308,974

Income tax expense 148,886 56,631 38,908

Net income (loss) 10,385 270,066 ( 108,954 )

Net income 335,413 10,385 270,066

Net income attributable to noncontrolling interests 7,290 7,569 7,056

Net income (loss) attributable to A&F $ 2,816 $ 263,010 $ ( 114,021 )

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

Net income attributable to A&F $ 328,123 $ 2,816 $ 263,010

Net income per share attributable to A&F

Basic $ 6.53 $ 0.06 $ 4.41

3 unchanged sentences

Diluted 52,726 52,327 62,636

Other comprehensive (loss) income

Other comprehensive income (loss)

Foreign currency translation, net of tax $ ( 3,879 ) $ ( 11,964 ) $ ( 22,917 )

1 unchanged sentence

5,438 ( 10,857 ) 10,518

Other comprehensive (loss) income ( 22,821 ) ( 12,399 ) 6,579

Comprehensive (loss) income ( 12,436 ) 257,667 ( 102,375 )

Other comprehensive income (loss) 1,559 ( 22,821 ) ( 12,399 )

Comprehensive income (loss) 336,972 ( 12,436 ) 257,667

Comprehensive income attributable to noncontrolling interests 7,290 7,569 7,056

Comprehensive (loss) income attributable to A&F $ ( 20,005 ) $ 250,611 $ ( 107,442 )

Comprehensive income (loss) attributable to A&F $ 329,682 $ ( 20,005 ) $ 250,611

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

4 unchanged sentences

(Thousands, except par value amounts)

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

Current assets:

27 unchanged sentences

Treasury stock, at average cost:

54,298 and 50,315 shares at January 28, 2023 and January 29, 2022, respectively

52,800 and 54,298 shares at February 3, 2024 and January 28, 2023, respectively

( 1,895,143 ) ( 1,953,735 )

15 unchanged sentences

value Shares At average

Balance, February 1, 2020 62,786 $ 1,033 $ 404,983 $ 12,368 $ 2,313,745 $ ( 108,886 ) 40,514 $ ( 1,552,065 ) $ 1,071,178

Net income (loss) — — — 5,067 ( 114,021 ) — — — ( 108,954 )

Balance, January 30, 2021 62,399 $ 1,033 $ 401,283 $ 12,684 $ 2,149,470 $ ( 102,307 ) 40,901 $ ( 1,512,851 ) $ 949,312

Net income — — — 7,056 263,010 — — — 270,066

Purchase of common stock ( 10,200 ) — — — — — 10,200 ( 377,290 ) ( 377,290 )

Dividends ($ 0.28 per share)

— — — — ( 12,556 ) — — — ( 12,556 )

Share-based compensation issuances and exercises 786 — ( 17,397 ) — ( 26,324 ) — ( 786 ) 30,558 ( 13,163 )

19 unchanged sentences

Distributions to noncontrolling interests, net — — — ( 4,191 ) — — — — ( 4,191 )

Balance, January 28, 2023 49,002 $ 1,033 $ 416,255 $ 11,728 $ 2,368,815 $ ( 137,527 ) 54,298 $ ( 1,953,735 ) $ 706,569

Balance, February 3, 2024 50,500 $ 1,033 $ 421,609 $ 14,827 $ 2,643,629 $ ( 135,968 ) 52,800 $ ( 1,895,143 ) $ 1,049,987

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

5 unchanged sentences

Operating activities

Net income (loss) $ 10,385 $ 270,066 $ ( 108,954 )

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

Net income $ 335,413 $ 10,385 $ 270,066

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

Depreciation and amortization 141,104 132,243 144,035

1 unchanged sentence

Loss on disposal 6,408 552 5,020

Provision (benefit) for deferred income taxes 11,500 ( 31,922 ) 23,986

(Benefit) provision for deferred income taxes ( 4,743 ) 11,500 ( 31,922 )

Share-based compensation 40,122 28,995 29,304

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

Loss (gain) on extinguishment of debt 1,975 ( 52 ) 5,347

Changes in assets and liabilities

5 unchanged sentences

Other liabilities ( 6,897 ) 9,458 ( 14,340 )

Net cash (used for) provided by operating activities ( 2,343 ) 277,782 404,918

Net cash provided by (used for) operating activities 653,422 ( 2,343 ) 277,782

Investing activities

4 unchanged sentences

Financing activities

Proceeds from issuance of senior secured notes — — 350,000

Proceeds from borrowings under the senior secured asset-based revolving credit facility — — 210,000

Repayment of borrowings under the term loan facility — — ( 233,250 )

Repayment of borrowings under the senior secured asset-based revolving credit facility — — ( 210,000 )

Purchase of senior secured notes ( 77,972 ) ( 7,862 ) ( 46,969 )

1 unchanged sentence

Purchases of common stock — ( 125,775 ) ( 377,290 )

Dividends paid — — ( 12,556 )

Other financing activities ( 33,049 ) ( 21,511 ) ( 20,623 )

Net cash (used for) provided by financing activities ( 155,329 ) ( 446,898 ) 69,717

Net cash used for financing activities ( 111,201 ) ( 155,329 ) ( 446,898 )

Effect of foreign currency exchange rates on cash ( 2,923 ) ( 8,452 ) ( 23,694 )

Net (decrease) increase in cash and equivalents, and restricted cash and equivalents ( 306,799 ) ( 289,789 ) 431,893

Net increase (decrease) in cash and equivalents, and restricted cash and equivalents 382,116 ( 306,799 ) ( 289,789 )

Cash and equivalents, and restricted cash and equivalents, beginning of period 527,569 834,368 1,124,157

7 unchanged sentences

Cash received from income tax refunds $ 1,843 $ 3,701 $ 2,292

Cash paid for amounts included in measurement of operating lease liabilities, net of abatements received of $ 3.9 million and $ 17.9 million in Fiscal 2022 and 2021, respectively

Cash paid for amounts included in measurement of operating lease liabilities

$ 296,834 $ 263,269 $ 364,842

23 unchanged sentences

Abercrombie & Fitch Co.

(“A&F”), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and its subsidiaries are referred to as “Abercrombie & Fitch” or the “Company”), is a global, digitally-led omnichannel retailer.

The Company offers a broad assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its digital channels and Company-owned stores, as well as through various third-party arrangements.

The Company’s two brand-based operating segments are Hollister, which includes the Company’s Hollister, Gilly Hicks and Social Tourist brands, and Abercrombie, which includes the Company’s Abercrombie & Fitch and abercrombie kids brands.

These five brands share a commitment to offering unique products of enduring quality and exceptional comfort that allow customers around the world to express their own individuality and style.

The Company operates primarily in North America, Europe, Middle East and Asia.

(“A&F”), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and its subsidiaries are referred to as the “Company”), is a global, digitally-led omnichannel retailer.

The Company offers a broad assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its Company-owned stores and digital channels, as well as through various third-party arrangements.

During the second quarter of Fiscal 2023, to leverage the knowledge and experience of our regional teams to better drive brand growth, the Company reorganized its structure and now manages its business on a geographic basis, consisting of three reportable segments:

Europe, the Middle East and Africa (EMEA);

and Asia-Pacific (APAC).

Corporate functions and other income and expenses are evaluated on a consolidated basis and are not allocated to the Company’s segments, and therefore are included as a reconciling item between segment and total operating income (loss).

There was no impact on consolidated net sales, operating income (loss) or net income (loss) as a result of these changes.

All prior periods presented are recast to conform to the new segment presentation.

The Company’s brands include Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister brands, which includes Hollister and Gilly Hicks.

These brands share a commitment to offering unique products of enduring quality and exceptional comfort that allow customers around the world to express their own individuality and style.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4 unchanged sentences

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

The purpose of the business ventures with MAF is to operate stores in the United Arab Emirates and Kuwait and the purpose of the business venture with Dixar is to hold the intellectual property related to the Social Tourist brand.

The purpose of the business ventures with MAF is to operate stores in the United Arab Emirates and Kuwait and the purpose of the business venture with Dixar is to hold certain intellectual property assets related to the Social Tourist product.

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 Consolidated Statements of Operations and Comprehensive (Loss) Income and the NCI portion of stockholders equity presented as NCI on the 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 income presented as net income attributable to NCI on the Consolidated Statements of Operations and Comprehensive Income (Loss) and the NCI portion of stockholders equity presented as NCI on the Consolidated Balance Sheets.

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

This typically results in a fifty-two week year, but occasionally gives rise to an additional week, resulting in a fifty-three week year.

This typically results in a fifty-two week year, but occasionally gives rise to an additional week, resulting in a fifty-three week year, as is the case in Fiscal 2023.

Fiscal years are designated in the Consolidated Financial Statements and notes by the calendar year in which the fiscal year commences.

1 unchanged sentence

Fiscal year Year ended/ ending Number of weeks

Fiscal 2019 February 1, 2020 52

Fiscal 2020 January 30, 2021 52

2 unchanged sentences

Fiscal 2023 February 3, 2024 53

Fiscal 2024 February 1, 2025 52

Use of Estimates

2 unchanged sentences

Due to the inherent uncertainty involved with estimates, actual results may differ.

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 ongoing conflict in Ukraine which could 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 ongoing conflicts between Russia and Ukraine and Israel and Hamas which could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

Abercrombie & Fitch Co.

2 unchanged sentences

Reclassifications

The Company reclassified flagship store exit (benefits) charges into stores and distribution expense on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The Company reclassified asset impairment charges into stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

In addition, the Company expanded the presentation of interest expense, net to present interest expense and interest income on the Consolidated Statements of Operations and Comprehensive Income (Loss).

There were no changes to operating income (loss) or net income (loss).

2 unchanged sentences

A summary of cash and equivalents on the Consolidated Balance Sheets follows:

(in thousands) January 28, 2023 January 29, 2022

(in thousands) February 3, 2024 January 28, 2023

$ 524,735 $ 467,238

7 unchanged sentences

The following table provides a reconciliation of cash and equivalents and restricted cash and equivalents to the amounts shown on the Consolidated Statements of Cash Flows:

(in thousands) Location January 28, 2023 January 29, 2022 January 30, 2021

(in thousands) Location February 3, 2024 January 28, 2023 January 29, 2022

Cash and equivalents Cash and equivalents $ 900,884 $ 517,602 $ 823,139

Long-term restricted cash and equivalents Other assets 9,967 11,229 14,814

Short-term restricted cash and equivalents Other current assets — — 4,481

Restricted cash and equivalents (1)

$ 9,967 $ 11,229 $ 19,295

Long-term restricted cash and equivalents (1)

Other assets 8,801 9,967 11,229

Cash and equivalents and restricted cash and equivalents $ 909,685 $ 527,569 $ 834,368

(1) Restricted cash and equivalents primarily consists of amounts on deposit with banks that are used as collateral for customary non-debt banking commitments and deposits into trust accounts to conform to standard insurance security requirements.

Receivables on the Consolidated Balance Sheets primarily include credit card receivables, lessor construction allowance and lease incentive receivables, value added tax (“VAT”) receivables, trade receivables, income tax receivables and other tax credits or refunds.

As part of the normal course of business, the Company has approximately three to four days of proceeds from sales transactions outstanding with its third-party credit card vendors at any point.

5 unchanged sentences

Inventories on the Consolidated Balance Sheets are valued at the lower of cost and net realizable value on a weighted-average cost basis.

The Company reduces the carrying value of inventory through a lower of cost and net realizable value adjustment, the impact of which is reflected in cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The lower of cost and net realizable value adjustment is based on the Company’s consideration of multiple factors and assumptions including demand forecasts, current sales volumes, expected sell-off activity, composition and aging of inventory, historical recoverability experience and risk of obsolescence from changes in economic conditions or customer preferences.

Additionally, as part of inventory valuation, inventory shrinkage estimates based on historical trends from actual physical inventories are made each quarter that reduce the inventory value for lost or stolen items.

The Company performs physical inventories on a periodic basis and adjusts the shrink estimate accordingly.

The Company performs physical inventories on a periodic basis and adjusts the gross inventory balance and shrink estimate accordingly.

Refer to Note 5, “ INVENTORIES .”

7 unchanged sentences

current store supplies;

derivative contracts;

short-term restricted cash and other.

derivative contracts and other.

Property and Equipment, Net

7 unchanged sentences

Leasehold improvements are amortized over either their respective lease terms or their service lives, whichever is shorter.

The cost of assets sold or retired and the related accumulated depreciation are removed from the accounts with any resulting gain or loss included in net income on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Maintenance and repairs are charged to expense as incurred.

6 unchanged sentences

The commencement date for new leases is when the lessor makes the leased asset available for use by the Company, typically the possession date.

As the rates implicit in the Company’s leases are not readily determinable, the Company uses its incremental borrowing rate based on the transactional currency of the operating lease and the lease term for the initial measurement of the operating lease right-of-use asset and liability.

As the rates implicit in the Company’s leases are not readily determinable, the Company uses its incremental borrowing rate, based on the local economic environment and the duration of the lease term, for the initial measurement of the operating lease right-of-use asset and liability.

The measurement of operating lease right-of-use assets and liabilities includes amounts related to:

6 unchanged sentences

• Costs expected to be incurred to return a leased asset to its original condition, also referred to as asset retirement obligations, which are classified within other liabilities on the Consolidated Balance Sheets;

• Variable payments related to operating lease components, such as contingent rent payments made by the Company based on performance, the expense of which is recognized in the period incurred on the Consolidated Statements of Operations and Comprehensive (Loss) Income;

• Variable payments related to nonlease components, such as taxes, insurance, and maintenance costs, the expense of which is recognized in the period incurred in the Consolidated Statements of Operations and Comprehensive (Loss) Income;

• Leases not related to Company-operated retail stores with an initial term of 12 months or less, the expense of which is recognized in the period incurred in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

Certain of the Company’s operating leases include options to extend the lease or to terminate the lease.

1 unchanged sentence

Generally, the Company’s options to extend its operating leases are at the Company’s sole discretion and at the time of lease commencement are not reasonably certain of being exercised.

There may be instances in which a lease is being renewed on a month-to-month basis and, in these instances, the Company will recognize lease expense in the period incurred in the Consolidated Statements of Operations and Comprehensive (Loss) Income until a new agreement has been executed.

There may be instances in which a lease is being renewed on a month-to-month basis and, in these instances, the Company will recognize lease expense in the period incurred in the Consolidated Statements of Operations and Comprehensive Income (Loss) until a new agreement has been executed.

Upon the signing of the renewal agreement, the Company recognizes an asset for the right to use the leased asset and a liability based on the present value of remaining lease payments over the lease term.

1 unchanged sentence

Amortization and interest expense related to previously impaired operating lease right-of-use assets are calculated on a front-loaded pattern.

Depending on the nature of the operating lease, amortization and interest expense are primarily recorded within stores and distribution expense, marketing, or general and administrative expense, on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

12 unchanged sentences

Refer to Note 8, “ ASSET IMPAIRMENT .”

Other assets on the Consolidated Balance Sheets consist primarily of the Company’s trust-owned life insurance policies held in the irrevocable rabbi trust (the “Rabbi Trust”), deferred tax assets, long-term deposits, intellectual property, long-term restricted cash and equivalents, long-term supplies and various other assets.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

Rabbi Trust Assets

3 unchanged sentences

The Rabbi Trust assets primarily consist of trust-owned life insurance policies which are recorded at cash surrender value and are included in other assets on the Consolidated Balance Sheets.

The change in cash surrender value of the life insurance policies in the Rabbi Trust is recorded in interest expense, net on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The change in cash surrender value of the life insurance policies in the Rabbi Trust is recorded in interest expense, net on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Refer to Note 9, “ RABBI TRUST ASSETS .”

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Intellectual Property

1 unchanged sentence

The Company’s finite-lived intangible assets are amortized over a useful life of 10 to 20 years.

Supply Chain Finance Program

Under the supply chain finance (“SCF”) program, which is administered by a third party, the Company’s vendors, at their sole discretion, are given the opportunity to sell receivables from the Company to a participating financial institution at a discount that leverages the Company’s credit profile.

The commercial terms negotiated by the Company with its vendors are consistent, irrespective of whether a vendor participates in the SCF program.

A participating vendor has the option to be paid by the financial institution earlier than the original invoice due date.

The Company’s responsibility is limited to making payment on the terms originally negotiated by the Company with each vendor, regardless of whether the vendor sells its receivable to a financial institution.

If a vendor chooses to participate in the SCF program, the Company pays the financial institution the stated amount of confirmed merchandise invoices on the stated maturity date, which is typically 75 days from the invoice date.

The agreement with the financial institution does not require the Company to provide assets pledged as security or other forms of guarantees for the SCF program.

As of February 3, 2024 and January 28, 2023, $ 72.4 million and $ 68.4 million of SCF program liabilities were recorded in accounts payable in the Consolidated Balance Sheets, respectively, and reflected as a cash flow from operating activities in the Consolidated Statements of Cash Flows when settled

Income taxes are calculated using the asset and liability method.

15 unchanged sentences

Favorable resolution would be recognized as a reduction to the Company’s effective tax rate in the period of resolution.

The Company recognizes accrued interest and penalties related to uncertain tax positions as a component of income tax expense on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Refer to Note 11, “ INCOME TAXES .”

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Foreign Currency Translation and Transactions

4 unchanged sentences

assets and liabilities are translated at the exchange rate prevailing at the balance sheet date, equity accounts are translated at historical exchange rates, and revenues and expenses are translated at the monthly average exchange rate for the period.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

Foreign currency transactions, which are transactions denominated in a currency other than the entity’s functional currency, are initially measured in the functional currency of the recording entity using the exchange rate in effect at that date.

25 unchanged sentences

However, the Company’s derivative instruments allow net settlements under certain conditions.

Refer to Note 14, “ DERIVATIVE INSTRUMENTS .

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

Refer to Note 14, “ DERIVATIVE INSTRUMENTS .

Stockholders’ Equity

A summary of the Company’s Class A Common Stock, $ 0.01 par value, and Class B Common Stock, $ 0.01 par value, follows:

(in thousands) January 28, 2023 January 29, 2022

(in thousands) February 3, 2024 January 28, 2023

Class A Common Stock

4 unchanged sentences

Shares authorized 106,400 106,400

(1) No shares were issued or outstanding as of each of January 28, 2023 and January 29, 2022 .

(1) No shares were issued or outstanding as of each of February 3, 2024 and January 28, 2023 .

Holders of Class A Common Stock generally have identical rights to holders of Class B Common Stock, except holders of Class A Common Stock are entitled to one vote per share while holders of Class B Common Stock are entitled to three votes per share on all matters submitted to a vote of stockholders.

3 unchanged sentences

Revenue associated with the related shipping and handling obligations is deferred until the obligation is fulfilled, typically upon the customer’s receipt of the merchandise.

The related shipping and handling costs are classified in stores and distribution expense on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The related shipping and handling costs are classified in stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Revenue is recorded net of estimated returns, associate discounts, promotions and other similar customer incentives.

11 unchanged sentences

The Company does not include tax amounts collected from customers on behalf of third parties, including sales and indirect taxes, in net sales.

All revenues are recognized in net sales in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

All revenues are recognized in net sales in the Consolidated Statements of Operations and Comprehensive Income (Loss).

For a discussion of the disaggregation of revenue, refer to Note 17, “ SEGMENT REPORTING .

3 unchanged sentences

Cost of Sales, Exclusive of Depreciation and Amortization

Cost of sales, exclusive of depreciation and amortization on the Consolidated Statements of Operations and Comprehensive (Loss) Income, primarily consists of cost incurred to ready inventory for sale, including product costs, freight, and import costs, as well as provisions for reserves for shrink and lower of cost and net realizable value.

Gains and losses associated with the effective portion of designated foreign currency exchange forward contracts related to the hedging of intercompany inventory transactions are also recognized in cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Cost of sales, exclusive of depreciation and amortization on the Consolidated Statements of Operations and Comprehensive Income (Loss), primarily consists of cost incurred to ready inventory for sale, including product costs, freight, and import costs, as well as provisions for reserves for shrink and lower of cost and net realizable value.

The Company’s cost of sales, exclusive of depreciation and amortization, and consequently gross profit, may not be comparable to those of other retailers, as inclusion of certain costs vary across the industry.

1 unchanged sentence

Stores and Distribution Expense

Stores and distribution expense on the Consolidated Statements of Operations and Comprehensive (Loss) Income primarily consists of:

Stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss) primarily consists of:

store payroll;

11 unchanged sentences

Marketing, General and Administrative Expense

Marketing, general and administrative expense on the Consolidated Statements of Operations and Comprehensive (Loss) Income primarily consists of:

Marketing, general and administrative expense on the Consolidated Statements of Operations and Comprehensive Income (Loss) primarily consists of:

home office compensation and marketing, except for those departments included in stores and distribution expense;

6 unchanged sentences

Other Operating Income, Net

Other operating income, net on the Consolidated Statements of Operations and Comprehensive (Loss) Income primarily consists of gains and losses resulting from foreign-currency-denominated transactions.

A summary of foreign-currency-denominated transaction (losses) gains, including those related to derivative instruments, follows:

Other operating income, net on the Consolidated Statements of Operations and Comprehensive Income (Loss) primarily consists of gains and losses resulting from foreign-currency-denominated transactions.

A summary of foreign-currency-denominated transaction gains (losses), including those related to derivative instruments, follows:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Foreign-currency-denominated transaction (losses) gains $ ( 1,626 ) $ 4,232 $ 3,933

Interest Expense, Net

Foreign-currency-denominated transaction gains (losses) $ 1,936 $ ( 1,626 ) $ 4,232

Interest Expense and Interest Income

Interest expense primarily consists of interest expense on the Company’s long-term borrowings outstanding.

Interest income primarily consists of interest income earned on the Company’s investments and cash holdings and realized gains from the Rabbi Trust assets.

A summary of interest expense, net follows:

(in thousands) Fiscal 2022 Fiscal 2021 Fiscal 2020

Interest expense $ 30,236 $ 37,958 $ 31,726

Interest income ( 4,604 ) ( 3,848 ) ( 3,452 )

Interest expense, net $ 25,632 $ 34,110 $ 28,274

Abercrombie & Fitch Co.

10 unchanged sentences

The Company issues shares of Class A Common Stock, $ 0.01 par value (the “Common Stock”) from treasury stock upon exercise of stock appreciation rights and vesting of restricted stock units, including those converted from performance share awards.

As of January 28, 2023, the Company had sufficient treasury stock available to settle restricted stock units and stock appreciation rights outstanding.

As of February 3, 2024, the Company had sufficient treasury stock available to settle restricted stock units and stock appreciation rights outstanding.

Settlement of stock awards in Common Stock also requires that the Company have sufficient shares available in stockholder-approved plans at the applicable time.

26 unchanged sentences

Abercrombie & Fitch Co.

Net Income (Loss) per Share Attributable to A&F

Net income (loss) per basic and diluted share attributable to A&F is computed based on the weighted-average number of outstanding shares of Common Stock.

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

Net Income per Share Attributable to A&F

Net income per basic and diluted share attributable to A&F is computed based on the weighted-average number of outstanding shares of Common Stock.

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

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

8 unchanged sentences

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

Unvested shares related to restricted stock units with performance-based and market-based vesting conditions can achieve up to 200% of their target vesting amount and are reflected at the maximum vesting amount less any dilutive portion.

Unvested contingently issuable shares related to restricted stock units with performance-based and market-based vesting conditions can achieve up to 200% of their target vesting amount and are reflected at the maximum vesting amount less any dilutive portion.

Recent Accounting Pronouncements

1 unchanged sentence

The following table provides a brief description of certain recent accounting pronouncements that the Company has adopted or that could affect the Company’s financial statements.

Accounting Standards Update (ASU) Description Effect on the financial statements or other significant matters

Standards not yet adopted

Accounting Standards Update (ASU) Description Date of adoption Effect on the financial statements or other significant matters

Standards adopted

ASU 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations

The update related to disclosure requirements for buyers in supplier finance programs.

The update relates to disclosure requirements for buyers in supplier finance programs.

The amendments in the update require that a buyer disclose qualitative and quantitative information about their supplier finance programs.

Interim and annual requirements include disclosure of outstanding amounts under the obligations as of the end of the reporting period, and annual requirements include a rollforward of those obligations for the annual reporting period, as well as a description of payment and other key terms of the programs.

This update is effective for annual periods beginning after December 15, 2022, and interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective for fiscal years beginning after December 15, 2023.

The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and accompanying notes

Interim and annual requirements include disclosure of outstanding amounts under the obligations as of the end of the reporting period, and annual requirements include a roll-forward of those obligations for the annual reporting period, as well as a description of payment and other key terms of the programs.

This update is effective for annual periods beginning after December 15, 2022, and interim periods within those fiscal years, except for the requirement to disclose roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

January 29, 2023 The Company adopted the changes to the standard under the retrospective method in the first quarter of Fiscal 2023, except for roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

Other than the new disclosure requirements, the adoption of this guidance did not have a significant impact on the Company's consolidated financial statements.

Standards not yet adopted

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

The update modifies the disclosure/presentation requirements of reportable segments.

The amendments in the update require the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit and loss.

The amendments also require disclosure of all other segment items by reportable segment and a description of its composition.

Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Other than the new disclosure requirements, the adoption of this guidance will not have a significant impact on the Company's consolidated financial statements.

ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

For public business entities (PBEs), the requirement will be effective for annual periods beginning after December 15, 2024.

The guidance will be applied on a prospective basis with the option to apply the standard retrospectively.

Early adoption is permitted.

Other than the new disclosure requirements, the adoption of this guidance will not have a significant impact on the Company's consolidated financial statements.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

REVENUE RECOGNITION

Disaggregation of revenue

All revenues are recognized in net sales in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

All revenues are recognized in net sales in the Consolidated Statements of Operations and Comprehensive Income (Loss) .

For information regarding the disaggregation of revenue, refer to Note 17, “ SEGMENT REPORTING .

Contract liabilities

The following table details certain contract liabilities representing unearned revenue as of January 28, 2023 and January 29, 2022:

(in thousands) January 28, 2023 January 29, 2022

The following table details certain contract liabilities representing unearned revenue as of February 3, 2024, January 28, 2023 and January 29, 2022:

(in thousands) February 3, 2024 January 28, 2023 January 29, 2022

Gift card liability (1)

1 unchanged sentence

Loyalty programs liability 27,937 25,640 22,757

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

The following table details recognized revenue associated with the Company’s gift card program and loyalty programs for Fiscal 2022 and Fiscal 2021:

(in thousands) Fiscal 2022 Fiscal 2021

(1) Includes $ 20.0 million and $ 16.4 million of revenue recognized during Fiscal 2023 and Fiscal 2022, respectively, that was included in the gift card liability at the beginning of January 28, 2023 and January 29, 2022, respectively.

The following table details recognized revenue associated with the Company’s gift card program and loyalty programs for Fiscal 2023, Fiscal 2022, and Fiscal 2021:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Revenue associated with gift card redemptions and gift card breakage

10 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 are measured at fair value on a recurring basis, were as follows:

Assets and Liabilities at Fair Value as of January 28, 2023

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

T he three levels of the hierarchy and the distribution of the Company’s assets and liabilities that are measured at fair value on a recurring basis, were as follows:

Assets and Liabilities at Fair Value as of February 3, 2024

(in thousands) Level 1 Level 2 Level 3 Total

2 unchanged sentences

Derivative instruments (2)

— 1,092 — 1,092

Rabbi Trust assets (3)

11 unchanged sentences

Derivative instruments (2)

— 4,973 — 4,973

Rabbi Trust assets (3)

3 unchanged sentences

Total assets $ 52,055 $ 56,887 $ — $ 108,942

Derivative instruments (2)

$ — $ 4,986 $ — $ 4,986

Total liabilities $ — $ 4,986 $ — $ 4,986

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

7 unchanged sentences

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

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

• 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) January 28, 2023 January 29, 2022

(in thousands) February 3, 2024 January 28, 2023

Gross borrowings outstanding, carrying amount $ 223,214 $ 299,730

Gross borrowings outstanding, fair value 226,004 304,975

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Inventories consisted of:

(in thousands) January 28, 2023 January 29, 2022

(in thousands) February 3, 2024 January 28, 2023

Inventories at original cost $ 500,020 $ 541,299

2 unchanged sentences

$ 469,466 $ 505,621

(1) Included $ 93.7 million and $ 142.7 million of inventory in transit, merchandise owned by the Company that has not yet been received at a Company DC, as of January 28, 2023 and January 29, 2022, respectively.

A summary of the Company’s vendors based on location and the percentage of dollar cost of merchandise receipts during Fiscal 2022, and Fiscal 2021 follows:

(1) Included $ 103.5 million and $ 93.7 million of inventory in transit, merchandise owned by the Company that has not yet been received at a Company DC, as of February 3, 2024 and January 28, 2023, respectively.

A summary of the Company’s vendors based on location and the percentage of cost of merchandise receipts during Fiscal 2023, Fiscal 2022 and Fiscal 2021 follows:

% of Total Company Merchandise Receipts (1)

Location Fiscal 2022 Fiscal 2021

Location Fiscal 2023 Fiscal 2022 Fiscal 2021

Vietnam 34 % 33 % 36 %

7 unchanged sentences

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories ,” for discussion regarding significant accounting policies related to the Company’s inventories.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of:

(in thousands) January 28, 2023 January 29, 2022

(in thousands) February 3, 2024 January 28, 2023

Land $ 28,599 $ 28,599

11 unchanged sentences

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment, net ,” for discussion regarding significant accounting policies related to the Company’s property and equipment, net.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

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

10 unchanged sentences

(1) Includes 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 $ 3.9 million, $ 14.1 million and $ 30.1 million of rent abatements in Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively, related to the effects of the COVID-19 pandemic that resulted in lease concessions with total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

The total benefit related to rent abatements recognized during Fiscal 2022, Fiscal 2021 and Fiscal 2020 was $ 3.9 million, $ 17.9 million and $ 30.7 million, respectively.

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

The following table provides the weighted-average remaining lease term of the Company’s operating leases and the weighted-average discount rate used to calculate the Company’s operating lease liabilities as of January 28, 2023 and January 29, 2022:

January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023

Weighted-average remaining lease term (years) 4.7 5.3

Weighted-average discount rate 6.7 % 6.3 %

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

The following table provides a maturity analysis of the Company’s operating lease liabilities, based on undiscounted cash flows, as of January 28, 2023:

(in thousands) January 28, 2023

The following table provides a maturity analysis of the Company’s operating lease liabilities, based on undiscounted cash flows, as of February 3, 2024:

(in thousands) February 3, 2024

Fiscal 2024 $ 228,719

7 unchanged sentences

Present value of operating lease liabilities $ 826,249

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

During Fiscal 2020, the Company entered into a sublease agreement with a third party for the remaining lease term of one of its European Abercrombie & Fitch flagship store locations upon its closure.

As of January 28, 2023, the Company's subleased property had a remaining lease term of 4.8 years with the sublease term from February 1, 2021 through November 30, 2027.

Future minimum tenant operating lease payments remaining under this sublease as of January 28, 2023 were $ 19.5 million.

The Company had minimum commitments related to operating lease contracts that have not yet commenced, primarily for its Company-operated retail stores, of approximately $ 28.3 million as of January 28, 2023.

As of February 3, 2024, future minimum tenant operating lease payments remaining under this sublease were $ 15.5 million with a remaining sublease term of 3.8 years.

The Company had minimum commitments related to operating lease contracts that have not yet commenced, primarily for its Company-operated retail stores, of approximately $ 29.1 million as of February 3, 2024.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

ASSET IMPAIRMENT

5 unchanged sentences

Total asset impairment (2)

$ 8,289 $ 14,031 $ 12,100

(1) Amounts for Fiscal 2022 include store asset impairment of $ 4.8 million and other asset impairment of $ 3.0 million.

Amounts for Fiscal 2023 and Fiscal 2021 only include store asset impairment.

Asset impairment charges for Fiscal 2022 were related to certain of the Company’s assets including stores across brands, geographies and store formats and other assets.

(2) Included in Stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Asset impairment charges for Fiscal 2023 were related to certain of the Company’s assets including stores across brands, primarily in the Americas and EMEA segments.

The impairment charges for Fiscal 2023 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 28.1 million, including $ 23.7 million related to operating lease right-of-use assets.

Asset impairment charges for Fiscal 2021 were related to certain of the Company’s stores across brands, geographies and store formats.

Asset impairment charges for Fiscal 2022 were related to certain of the Company’s stores across brands, segments and store formats and other assets.

The impairment charges for Fiscal 2022 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 39.7 million, including $ 37.0 million related to operating lease right-of-use assets.

Asset impairment charges for Fiscal 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.

Asset impairment charges for Fiscal 2021 were principally the result of the impact of COVID-19 and were related to certain of the Company’s stores across brands, segments and store formats.

The impairment charges for Fiscal 2021 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 18.1 million, including $ 15.6 million related to operating lease right-of-use assets.

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Long-lived Asset Impairment ,” for discussion regarding significant accounting policies related to impairment of the Company’s long-lived assets.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

RABBI TRUST ASSETS

Investments of Rabbi Trust assets consisted of the following as of January 28, 2023 and January 29, 2022:

(in thousands) January 28, 2023 January 29, 2022

Investments of Rabbi Trust assets consisted of the following as of February 3, 2024 and January 28, 2023:

(in thousands) February 3, 2024 January 28, 2023

Trust-owned life insurance policies (at cash surrender value) $ 52,521 $ 51,681

1 unchanged sentence

Rabbi Trust assets $ 53,685 $ 51,682

Realized gains resulting from the change in cash surrender value of the Rabbi Trust assets for Fiscal 2022, Fiscal 2021 and Fiscal 2020 were as follows:

Realized gains resulting from the change in cash surrender value and benefits paid pursuant to the trust-owned life insurance policies of the Rabbi Trust assets for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were as follows:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

1 unchanged sentence

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Rabbi Trust Assets ,” for further discussion related to the Company’s Rabbi Trust assets.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

ACCRUED EXPENSES

Accrued expenses consisted of:

(in thousands) January 28, 2023 January 29, 2022

(in thousands) February 3, 2024 January 28, 2023

Accrued payroll and related costs (1)

8 unchanged sentences

During Fiscal 2023, the Company did not recognize income tax benefits on $ 103.0 million of pre-tax losses, primarily in Switzerland, resulting in adverse tax impacts of $ 15.6 million.

As of January 28, 2023, the Company had net deferred tax assets of approximately $ 8.0 million, $ 9.1 million, and $ 15.6 million in China, Japan, and the United Kingdom, respectively.

In China, while the Company believes these 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 on China.

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

As of February 3, 2024, the Company had foreign net deferred tax assets of approximately $ 36.7 million, including $ 7.6 million, $ 7.5 million, and $ 12.6 million in China, Japan, and the United Kingdom, respectively.

While the Company believes that these 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.

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.

Impact of valuation allowances and other tax benefits during Fiscal 2022

During Fiscal 2022, the Company did not recognize income tax benefits on $ 136.5 million of pre-tax losses, primarily in Switzerland, resulting in adverse tax impacts of $ 20.0 million.

As of January 28, 2023, the Company had foreign net deferred tax assets of approximately $ 43.8 million, including $ 8.0 million, $ 9.1 million, and $ 15.6 million in China, Japan, and the United Kingdom, respectively.

Impact of valuation allowances and other tax charges during Fiscal 2021

During Fiscal 2021, as a result of the improvement seen in business conditions, the Company recognized $ 42.5 million of tax benefits due to the release of valuation allowances, primarily in the U.S.

1 unchanged sentence

The Company did not recognize income tax benefits on $ 25.3 million of pre-tax losses generated in Fiscal 2022, primarily in Switzerland, resulting in adverse tax impacts of $ 4.6 million.

As of January 29, 2022, the Company had net deferred tax assets of approximately $ 9.7 million, $ 12.2 million, and $ 20.1 million in China, Japan, and the United Kingdom, respectively.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

Impact of valuation allowances and other tax charges during Fiscal 2020

The Company’s effective tax rate for Fiscal 2020 was impacted by $ 101.4 million of adverse tax impacts, ultimately giving rise to income tax expense on a consolidated pre-tax loss.

During Fiscal 2020, due to the significant adverse impacts of COVID-19, the Company did not recognize income tax benefits on $ 203.4 million of pre-tax losses, resulting in an adverse tax impact of $ 39.5 million.

The Company recognized charges of $ 61.9 million related to the establishment of valuation allowances and other tax charges in certain jurisdictions during Fiscal 2020, including, but not limited to, the U.S., Switzerland, Germany and Japan, principally as a result of the significant adverse impacts of COVID-19.

As of January 29, 2022, the Company had foreign net deferred tax assets of approximately $ 54.6 million, including $ 9.7 million, $ 12.2 million, and $ 20.1 million in China, Japan, and the United Kingdom, respectively.

Components of Income Taxes

Income (loss) before income taxes consisted of:

Income before income taxes consisted of:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

1 unchanged sentence

Foreign ( 42,668 ) ( 85,592 ) 25,181

Income (loss) before income taxes $ 67,016 $ 308,974 $ ( 48,743 )

Income before income taxes $ 484,299 $ 67,016 $ 308,974

(1) Includes intercompany charges to foreign affiliates for management fees, cost-sharing, royalties and interest and excludes a portion of foreign income that is currently includable on the U.S.

federal income tax return.

Income tax expense (benefit) consisted of:

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Income tax expense consisted of:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

8 unchanged sentences

Income tax expense $ 148,886 $ 56,631 $ 38,908

(1) Fiscal 2020 includes federal deferred tax benefit of $79.0 million and foreign deferred tax expense of $88.6 million due to the establishment of an additional valuation allowance in Switzerland.

The Company’s earnings and profits from its foreign subsidiaries could be repatriated to the U.S., without incurring additional U.S.

federal income tax.

The Company’s earnings and profits from its foreign subsidiaries could be repatriated to the U.S., without incurring additional federal income tax.

The Company determined that the balance of the Company’s undistributed earnings and profits from its foreign subsidiaries as of February 2, 2019, are considered indefinitely reinvested outside of the U.S., and if these funds were to be repatriated to the U.S., the Company would expect to incur an insignificant amount of state income taxes and foreign withholding taxes.

The Company accrues for both state income taxes and foreign withholding taxes with respect to earnings and profits earned after February 2, 2019, in such a manner that these funds may be repatriated without incurring additional tax expense.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

Reconciliation between the statutory federal income tax rate and the effective tax rate is as follows:

1 unchanged sentence

Federal income tax rate 21.0 % 21.0 % 21.0 %

State income tax, net of U.S.

federal income tax effect 4.9 12.4 4.4

Net change in valuation allowances 3.4 30.7 ( 19.7 )

1 unchanged sentence

operations (1)

16.2 3.5 32.7

State income tax, net of U.S.

federal income tax effect 12.4 4.4 2.6

Audit and other adjustments to prior years' accruals, net 5.9 4.7 2.6

Internal Revenue Code Section 162(m) 1.4 4.6 1.6

1 unchanged sentence

taxation of non-U.S.operations 0.1 1.3 0.6

Tax expense (benefit) recognized on share-based compensation expense (2)

( 2.6 ) ( 1.3 ) ( 7.5 )

Credit for increasing research activities ( 2.5 ) ( 0.6 ) 2.6

Audit and other adjustments to prior years' accruals, net ( 0.2 ) 5.9 4.7

Net income attributable to noncontrolling interests ( 0.3 ) ( 2.4 ) ( 0.5 )

Credit for increasing research activities ( 0.5 ) ( 2.5 ) ( 0.6 )

Tax benefit recognized on share-based compensation expense (2)

( 0.5 ) ( 2.6 ) ( 1.3 )

Other items, net — ( 0.1 ) 0.1

4 unchanged sentences

(2) Refer to Note 13, “ SHARE-BASED COMPENSATION ,” for details on discrete income tax benefits and charges related to share-based compensation awards during Fiscal 2023, Fiscal 2022, and Fiscal 2021.

The impact of various tax items on the Company's effective tax rate were amplified on a percentage basis at lower levels of consolidated pre-tax income (loss) in absolute dollars.

For certain years, the impact of various tax items on the Company's effective tax rate were amplified on a percentage basis at lower levels of consolidated pre-tax income (loss) in absolute dollars.

The effective tax rate remains dependent on jurisdictional mix.

4 unchanged sentences

operations on the Company's effective income tax rate was related to the Company's jurisdictional mix driven primarily by the Company’s operations within Switzerland.

Components of Deferred Income Tax Assets and Deferred Income Tax Liabilities

The effect of temporary differences which gives rise to deferred income tax assets (liabilities) were as follows:

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

Components of Deferred Income Tax Assets and Deferred Income Tax Liabilities

The effect of temporary differences which gives rise to deferred income tax assets (liabilities) were as follows:

(in thousands) January 28, 2023 January 29, 2022

(in thousands) February 3, 2024 January 28, 2023

Deferred income tax assets:

6 unchanged sentences

Inventory 5,518 5,475

Rent 1,874 1,502

Other 1,683 946

Valuation allowances ( 146,973 ) ( 130,622 )

7 unchanged sentences

subsidiaries ( 1,271 ) ( 1,111 )

Rent — ( 360 )

offset to foreign deferred tax assets, excluding intangibles, foreign step-up in basis (1)

( 187 ) ( 175 )

Other ( 781 ) ( 428 )

2 unchanged sentences

$ 67,221 $ 62,981

(1) During Fiscal 2021 an agreement was reached with the Swiss taxing authorities to decrease the basis step up to be amortized in the future thus decreasing the deferred asset by $14.8 million.

Because of the valuation allowance, there is no impact on consolidated tax expense from this agreement.

(1) This table does not reflect deferred taxes classified within AOCL.

As of January 28, 2023 and January 29, 2022, AOCL included deferred tax assets of $0.9 million and deferred tax liabilities of $1.1 million, respectively.

As of January 28, 2023, the Company had deferred tax assets related to foreign and state NOL and credit carryforwards of $ 68.6 million and $ 0.3 million, respectively, that could be utilized to reduce future years’ tax liabilities.

If not utilized, a portion of the foreign NOL carryforwards will begin to expire in 2025 and a portion of state NOL carryforwards will begin to expire in 2025.

As of February 3, 2024 and January 28, 2023, AOCL included deferred tax liabilities of $0.1 million and deferred tax assets of $0.9 million, respectively.

As of February 3, 2024, the Company had deferred tax assets related to foreign and state NOL and credit carryforwards of $ 84.5 million and $ 0.2 million, respectively, that could be utilized to reduce future years’ tax liabilities.

If not utilized, a portion of the foreign NOL carryforwards will begin to expire in Fiscal 2025 and a portion of state NOL carryforwards will begin to expire in Fiscal 2026.

Some foreign NOLs have an indefinite carryforward period.

As of January 28, 2023, the Company did not have any deferred tax assets related to federal NOL and credit carryforwards that could be utilized to reduce future years’ tax liabilities.

The valuation allowances for Fiscal 2022, 2021, 2020 and 2019 was $ 130.6 million, $ 110.1 million, $ 174.3 million and $ 8.9 million, respectively.

The valuation allowances as of Fiscal 2022 have been established against deferred tax assets, primarily in Japan and Switzerland.

All valuation allowances have been reflected through the Consolidated Statements of Operations and Comprehensive (Loss) Income.

As of February 3, 2024, the Company did not have any deferred tax assets related to federal NOL and credit carryforwards that could be utilized to reduce future years’ tax liabilities.

The valuation allowances for Fiscal 2023 and 2022 were $ 147.0 million and $ 130.6 million, respectively.

The valuation allowances as of Fiscal 2023 have been established against deferred tax assets, primarily in Switzerland.

All valuation allowances have been reflected through the Consolidated Statements of Operations and Comprehensive Income (Loss).

The valuation allowances will remain until there is sufficient positive evidence to release them, such positive evidence would include having positive income within the jurisdiction.

1 unchanged sentence

The Company continues to review the need for valuation allowances on a quarterly basis.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

Share-based Compensation

Refer to Note 13, “ SHARE-BASED COMPENSATION ,” for details on income tax benefits and charges related to share-based compensation awards during Fiscal 2023, Fiscal 2022 and Fiscal 2021.

The amount of uncertain tax positions as of January 28, 2023, January 29, 2022 and January 30, 2021, which would impact the Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions, excluding accrued interest and penalties, are as follows:

The amount of uncertain tax positions as of February 3, 2024, January 28, 2023 and January 29, 2022, which would impact the Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions, excluding accrued interest and penalties, are as follows:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

6 unchanged sentences

Uncertain tax positions, end of year $ 2,751 $ 2,293 $ 1,114

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

The IRS is currently conducting an examination of the Company’s U.S.

federal income tax returns for Fiscal 2022 and Fiscal 2021 as part of the IRS’ Compliance Assurance Process program.

federal income tax returns for Fiscal 2023 and 2022 as part of the IRS’ Compliance Assurance Process program.

The IRS examinations for Fiscal 2021 and prior years have been completed.

5 unchanged sentences

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes ,” for discussion regarding significant accounting policies related to the Company’s income taxes.

Details on the Company’s long-term borrowings, net, as of January 28, 2023 and January 29, 2022 are as follows:

(in thousands) January 28, 2023 January 29, 2022

Details on the Company’s long-term borrowings, net, as of February 3, 2024 and January 28, 2023 are as follows:

(in thousands) February 3, 2024 January 28, 2023

Long-term portion of borrowings, gross at carrying amount $ 223,214 $ 299,730

8 unchanged sentences

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

During Fiscal 2022 and 2021, A&F Management purchased $ 8.0 million and $ 42.3 million, respectively, of outstanding Senior Secured Notes and incurred $ 0.1 million of gain and $ 5.3 million of loss, respectively, on extinguishment of debt, recognized in interest expense, net on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The Company used the net proceeds from the offering of the Senior Secured Notes to repay outstanding borrowings and

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

accrued interest of $ 223.6 million and $ 110.8 million under its prior term loan facility and the ABL Facility (defined below), respectively, with the remaining net proceeds used towards fees and expenses in connection with such repayments and the offering of the Senior Secured Notes.

During Fiscal 2023, 2022, and 2021, A&F Management purchased $ 76.5 million, $ 8.0 million and $ 42.3 million, respectively, of outstanding Senior Secured Notes and incurred a $ 2.0 million loss, $ 0.1 million gain and $ 5.3 million loss, respectively, on extinguishment of debt, recognized in interest expense, net on the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company used the net proceeds from the offering of the Senior Secured Notes to repay outstanding borrowings and accrued interest of $ 223.6 million and $ 110.8 million under its prior term loan facility and the ABL Facility (defined below), respectively, with the remaining net proceeds used towards fees and expenses in connection with such repayments and the offering of the Senior Secured Notes.

The Company recorded deferred financing fees associated with the issuance of the Senior Secured Notes, which are being amortized to interest expense over the contractual term of the Senior Secured Notes.

2 unchanged sentences

and (ii) modified the required fee on undrawn commitments under the ABL Facility from 0.25 % per annum to either 0.25 % or 0.375 % per annum (with the ultimate amount dependent on the conditions detailed in the Amended and Restated Credit Agreement).

On March 15, 2023, the Company entered into the First Amendment to the Amended and Restated Credit Agreement to eliminate LIBO rate based loans and to use the current market definitions with respect to the Secured Overnight Financing Rate (“SOFR”), as well as to reflect other conforming changes.

The Company did not have any borrowings outstanding under the ABL Facility as of January 28, 2023 or as of January 29, 2022.

On March 15, 2023, the Company entered into the First Amendment to the Amended and Restated Credit Agreement to

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

eliminate LIBO rate based loans and to use the current market definitions with respect to the Secured Overnight Financing Rate (“SOFR”), as well as to reflect other conforming changes.

The Company did not have any borrowings outstanding under the ABL Facility as of February 3, 2024 or as of January 28, 2023.

The ABL Facility is subject to a borrowing base, consisting primarily of U.S.

1 unchanged sentence

The ABL Facility is available for working capital, capital expenditures and other general corporate purposes.

As of January 28, 2023, the Company had availability under the ABL Facility of $ 386.8 million, net of $ 0.6 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 $ 348.1 million as of January 28, 2023.

As of February 3, 2024, the Company had availability under the ABL Facility of $ 332.5 million, net of $ 0.4 million in outstanding stand-by letters of credit.

Obligations under the ABL Facility are unconditionally guaranteed by A&F and certain of A&F’s subsidiaries.

2 unchanged sentences

At the Company’s option, borrowings under the ABL Facility will bear interest at either (a) an adjusted LIBO rate plus a margin of 1.25 % to 1.50 % per annum, or (b) an alternate base rate plus a margin of 0.25 % to 0.50 % per annum.

As of January 28, 2023, the applicable margins with respect to LIBO rate loans and base rate loans, including swing line loans, under the ABL Facility were 1.25 % and 0.25 % per annum, respectively, and are subject to adjustment each fiscal quarter based on average historical availability during the preceding quarter.

As of February 3, 2024, the applicable margins with respect to LIBO rate loans and base rate loans, including swing line loans, under the ABL Facility were 1.25 % and 0.25 % per annum, respectively, and are subject to adjustment each fiscal quarter based on average historical availability during the preceding quarter.

Following the March 15, 2023 amendment, borrowings under the ABL will bear interest using the current market SOFR rate.

10 unchanged sentences

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 ABL Facility or certain future capital markets indebtedness.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

The Company was in compliance with all debt covenants under the agreements related to the Senior Secured Notes and the ABL Facility as of January 28, 2023.

The Company was in compliance with all debt covenants under the agreements related to the Senior Secured Notes and the ABL Facility as of February 3, 2024.

SHARE-BASED COMPENSATION

As of January 28, 2023, the Company had two primary share-based compensation plans:

As of February 3, 2024, the Company had two primary share-based compensation plans:

(i) the 2016 Directors LTIP, with 900,000 shares of Common Stock authorized for issuance, under which the Company is authorized to grant restricted stock, restricted stock units, stock appreciation rights, stock options and deferred stock awards to non-associate members of the Board of Directors;

2 unchanged sentences

No new shares may be granted under these previously-authorized plans and any outstanding awards continue in effect in accordance with their respective terms.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

The 2016 Directors LTIP, a stockholder-approved plan, permits the Company to annually grant awards to non-associate directors, subject to the following limits:

17 unchanged sentences

4,350 3,515 3,338

(1) No income tax benefit was recognized during Fiscal 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 Fiscal 2023, Fiscal 2022 and Fiscal 2021:

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Income tax discrete benefits (charges) realized for tax deductions related to the issuance of shares during the period $ 1,956 $ 4,198 $ ( 1,719 )

Income tax discrete benefits realized for tax deductions related to the issuance of shares during the period

$ 2,709 $ 1,956 $ 4,198

Income tax discrete charges realized upon cancellation of stock appreciation rights during the period ( 101 ) ( 226 ) ( 204 )

Total income tax discrete benefits (charges) related to share-based compensation awards $ 1,730 $ 3,994 $ ( 3,662 )

Total income tax discrete benefits related to share-based compensation awards

$ 2,608 $ 1,730 $ 3,994

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 Fiscal 2023, Fiscal 2022 and Fiscal 2021:

3 unchanged sentences

(1) Classified within other financing activities on the Consolidated Statements of Cash Flows.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Restricted Stock Units

16 unchanged sentences

Forfeited ( 160,985 ) 26.50 ( 37,481 ) 29.52 ( 18,741 ) 42.55

Unvested at January 28, 2023 (1)

Unvested at February 3, 2024 (1)

1,886,085 $ 27.12 521,212 $ 30.03 260,619 $ 43.90

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 January 28, 2023:

(in thousands) Service-based Restricted

3 unchanged sentences

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

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

Additional information pertaining to restricted stock units for Fiscal 2023, Fiscal 2022 and Fiscal 2021 follows:

12 unchanged sentences

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during Fiscal 2023, Fiscal 2022 and Fiscal 2021 were as follows:

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Fiscal 2023 Fiscal 2022 Fiscal 2021

16 unchanged sentences

Forfeited or expired ( 23,700 ) 45.69

Outstanding at January 28, 2023 190,589 $ 29.43 $ 1,262 1.7

Stock appreciation rights exercisable at January 28, 2023 190,589 $ 29.43 $ 1,262 1.7

No stock appreciation rights were exercised during Fiscal 2022 or Fiscal 2020.

The grant date fair value of awards exercised during Fiscal 2021 follows:

(in thousands) Fiscal 2021

Outstanding at February 3, 2024 25,600 $ 29.29 $ 2,053 0.7

Stock appreciation rights exercisable at February 3, 2024 25,600 $ 29.29 $ 2,053 0.7

The following table provides additional information pertaining to grant date fair value of awards exercised during Fiscal 2023, Fiscal 2022 and Fiscal 2021:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Total grant date fair value of awards exercised $ 1,409 $ — $ 1,069

No stock appreciation rights were exercised during Fiscal 2022.

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share-Based Compensation ,” for discussion regarding significant accounting policies related to share-based compensation.

Abercrombie & Fitch Co.

2022 Form 10-K

Abercrombie & Fitch Co.

DERIVATIVE INSTRUMENTS

As of January 28, 2023, 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 February 3, 2024, 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)

1 unchanged sentence

Canadian dollar

Japanese yen 273

(1) Amounts reported are the U.S.

Dollar notional amounts outstanding as of January 28, 2023.

Dollar notional amounts outstanding as of February 3, 2024.

As of February 3, 2024, foreign currency exchange forward contracts that were entered into to hedge foreign-currency-denominated net monetary assets and liabilities were as follows:

(in thousands) Notional Amount (1)

United Arab Emirates dirham $ 5,719

(1) Amounts reported are the U.S.

Dollar notional amounts outstanding as of February 3, 2024.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

The fair value of derivative instruments is determined 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 Consolidated Balance Sheets as of January 28, 2023 and January 29, 2022 were as follows:

(in thousands) Location January 28, 2023 January 29, 2022 Location January 28, 2023 January 29, 2022

The location and amounts of derivative fair values of foreign currency exchange forward contracts on the Consolidated Balance Sheets as of February 3, 2024, and January 28, 2023 were as follows:

(in thousands) Location February 3, 2024 January 28, 2023 Location February 3, 2024 January 28, 2023

Derivatives designated as cash flow hedging instruments

Other current assets $ 1,090 $ 32 Accrued expenses $ 539 $ 4,986

Derivatives not designated as hedging instruments

Other current assets 2 — Accrued expenses — —

$ 1,092 $ 32 $ 539 $ 4,986

Refer to Note 4, “ FAIR VALUE , ” for further discussion of the determination of the fair value of derivative instruments.

3 unchanged sentences

$ 3,618 $ 2,844 $ 11,987

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

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

( 1,846 ) 13,781 1,263

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

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

Substantially all of the unrealized gains or losses related to foreign currency exchange forward contracts designated as cash flow hedging instruments as of January 28, 2023 will be recognized within the Consolidated Statements of Operations and Comprehensive (Loss) Income over the next 12 months.

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

Substantially all of the unrealized gains or losses related to foreign currency exchange forward contracts designated as cash flow hedging instruments as of February 3, 2024 will be recognized within the Consolidated Statements of Operations and Comprehensive Income (Loss) over the next 12 months.

Additional information pertaining to derivative gains or losses from foreign currency exchange forward contracts not designated as hedging instruments for Fiscal 2023, Fiscal 2022 and Fiscal 2021 follows:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Gain recognized in other operating income, net $ 1,226 $ 1,205 $ 742

(Loss) gain recognized in other operating income, net

$ ( 1,206 ) $ 1,226 $ 1,205

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivative Instruments ,” for discussion regarding significant accounting policies related to the Company’s derivative instruments.

8 unchanged sentences

Other comprehensive (loss) income before reclassifications ( 3,879 ) 3,618 ( 261 )

Reclassified gain from AOCL (1)

Reclassified loss from AOCL (1)

— 1,846 1,846

Tax effect — ( 26 ) ( 26 )

Other comprehensive loss after reclassifications ( 11,964 ) ( 10,857 ) ( 22,821 )

Ending balance at January 28, 2023

Other comprehensive (loss) income after reclassifications ( 3,879 ) 5,438 1,559

Ending balance at February 3, 2024

$ ( 136,532 ) $ 564 $ ( 135,968 )

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

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

For Fiscal 2022, the activity in AOCL was as follows:

6 unchanged sentences

Tax effect — 80 80

Other comprehensive (loss) income after reclassifications ( 22,917 ) 10,518 ( 12,399 )

Other comprehensive loss after reclassifications ( 11,964 ) ( 10,857 ) ( 22,821 )

Ending balance at January 28, 2023

$ ( 132,653 ) $ ( 4,874 ) $ ( 137,527 )

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

Fo r Fiscal 2020, the activity in AOCL was as follows:

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

For Fiscal 2021, the activity in AOCL was as follows:

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

Beginning balance at February 1, 2020

Beginning balance at January 30, 2021

$ ( 97,772 ) $ ( 4,535 ) $ ( 102,307 )

Other comprehensive income before reclassifications 12,195 7,619 19,814

Other comprehensive (loss) income before reclassifications ( 22,917 ) 11,987 ( 10,930 )

Reclassified gain from AOCL (1)

— ( 1,263 ) ( 1,263 )

Tax effect (2)

Other comprehensive income (loss) after reclassifications 12,195 ( 5,616 ) 6,579

— ( 206 ) ( 206 )

Other comprehensive (loss) income after reclassifications ( 22,917 ) 10,518 ( 12,399 )

Ending balance at January 29, 2022

$ ( 120,689 ) $ 5,983 $ ( 114,706 )

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

(2) No income tax benefit was recognized during Fiscal 2020 due to the establishment of a valuation allowance.

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

Abercrombie & Fitch Co.

11 unchanged sentences

In addition, the Company maintains the Supplemental Executive Retirement Plan which provides retirement income to its former Chief Executive Officer for life, based on averaged compensation before retirement, including base salary and cash incentive compensation.

As of January 28, 2023 and January 29, 2022, the Company has recorded $ 7.2 million and $ 8.4 million, respectively, in other liabilities on the Consolidated Balance Sheets related to future Supplemental Executive Retirement Plan distributions.

As of February 3, 2024 and January 28, 2023, the Company has recorded $ 6.7 million and $ 7.2 million, respectively, in other liabilities on the Consolidated Balance Sheets related to future Supplemental Executive Retirement Plan distributions.

SEGMENT REPORTING

The Company’s two operating segments are brand-based:

Hollister, which includes the Company’s Hollister, Gilly Hicks and Social Tourist brands, and Abercrombie, which includes the Company’s Abercrombie & Fitch and abercrombie kids brands.

These operating segments have similar economic characteristics, classes of consumers, products, and production and distribution methods, operate in the same regulatory environments, and have been aggregated into one reportable segment.

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 Fiscal 2022, Fiscal 2021 and Fiscal 2020 were as follows:

The Company’s reportable segments are based on the financial information the chief operating decision maker (“CODM”) uses to allocate resources and assess performance of its business.

Europe, the Middle East and Africa (EMEA);

and Asia-Pacific (APAC).

The Americas reportable segment includes the results of operations in North America and South America.

The EMEA reportable segment includes the results of operations in Europe, the Middle East and Africa.

The APAC reportable segment includes the results of operations in the Asia-Pacific region, including Asia and Oceania.

Intersegment sales and transfers are recorded at cost and are treated as a transfer of inventory.

All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance.

All prior periods presented are recast to conform to the new segment presentation.

The group comprised of the Company’s (i) Chief Executive Officer and (ii) Chief Financial Officer and Chief Operating Officer functions as the Company’s CODM.

The Company’s CODM manages business operations and evaluates the performance of each segment based on the net sales and operating income (loss) of the segment.

Net sales by segment are presented by attributing revenues on the basis of the segment that fulfills the order.

Operating income (loss) for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributed to the segment.

Corporate/other expenses include expenses incurred that are not directly attributed to a reportable segment and primarily relate to corporate or global functions such as design, sourcing, brand management, corporate strategy, information technology, finance, treasury, legal, human resources, and other corporate support services, as well as certain globally managed components of the planning, merchandising, and marketing functions.

The Company reports inventories by segment as that information is used by the CODM in determining allocation of resources to the segments.

The Company does not report its other assets by segment as that information is not used by the CODM in assessing segment performance or allocating resources.

The following tables provide the Company’s segment information as of February 3, 2024 and January 28, 2023, and for Fiscal 2023, Fiscal 2022 and Fiscal 2021.

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Hollister $ 1,962,885 $ 2,147,979 $ 1,834,349

Abercrombie 1,734,866 1,564,789 1,291,035

$ 3,455,674 $ 2,920,157 $ 2,803,791

EMEA 687,095 658,794 747,356

APAC 137,908 118,800 161,621

Total $ 4,280,677 $ 3,697,751 $ 3,712,768

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 Fiscal 2022, Fiscal 2021 and Fiscal 2020 were as follows:

(1) Includes the U.S., Canada, and Latin America.

Net sales in the U.S.

were $ 3.3 billion, $ 2.8 billion, and $ 2.7 billion in Fiscal 2023, Fiscal 2022, and Fiscal 2021, respectively.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Depreciation and amortization

Americas $ 73,779 $ 75,231 $ 79,189

EMEA 26,782 21,497 23,276

APAC 5,921 8,123 10,892

Segment total $ 106,482 $ 104,851 $ 113,357

Depreciation and amortization not attributed to Segments

34,622 27,392 30,678

Total depreciation and amortization

$ 141,104 $ 132,243 $ 144,035

Capital expenditures

Americas $ 78,062 $ 102,030 $ 40,774

EMEA 26,019 32,206 20,727

APAC 4,331 1,249 6,210

Segment total $ 108,412 $ 135,485 $ 67,711

Capital expenditures not attributed to Segments

49,385 29,081 29,268

Total international $ 939,457 $ 1,060,610 $ 997,981

Total $ 3,697,751 $ 3,712,768 $ 3,125,384

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

The Company’s long-lived assets and intellectual property, which primarily relates to trademark assets associated with the Company’s international operations, by geographic area as of January 28, 2023 and January 29, 2022 were as follows:

(in thousands) January 28, 2023 January 29, 2022

Total capital expenditures

$ 157,797 $ 164,566 $ 96,979

Operating Income

Americas $ 940,292 $ 483,445 $ 637,308

EMEA 81,216 45,185 118,235

APAC ( 10,558 ) ( 29,107 ) ( 20,240 )

Segment total $ 1,010,950 $ 499,523 $ 735,303

Operating (loss) income not attributed to Segments:

Stores and distribution expense ( 12,066 ) ( 9,051 ) ( 5,880 )

Marketing, general and administrative expense ( 520,082 ) ( 400,508 ) ( 403,622 )

Other operating (loss) income, net 5,869 2,684 17,283

Total operating income $ 484,671 $ 92,648 $ 343,084

(in thousands) February 03, 2024 January 28, 2023

Americas $ 372,371 $ 404,040

EMEA 77,125 80,447

APAC 19,970 21,134

Total inventories $ 469,466 $ 505,621

Assets not attributed to Segments 2,504,767 2,207,479

Total assets $ 2,974,233 $ 2,713,100

The Company’s long-lived assets and intellectual property, which primarily relates to trademark assets associated with the Company’s global operations, by geographic area as of February 3, 2024 and January 28, 2023 were as follows:

(in thousands) February 3, 2024 January 28, 2023

Americas (1) (2)

$ 897,315 $ 929,381

Total international $ 386,168 $ 379,777

288,967 317,712

APAC 50,324 49,771

Total $ 1,236,606 $ 1,296,864

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

(1) Includes the U.S., Canada, and Latin America.

Long-lived assets and intellectual property located in the U.S.

were $ 880 million and $ 911 million as of February 3, 2024 and January 28, 2023, respectively.

(2) Includes intellectual property of $ 2.9 million and $ 3.4 million at February 3, 2024 and January 28, 2023, respectively.

(3) Includes intellectual property of $ 17.4 million and $ 18.3 million at February 3, 2024 and January 28, 2023, respectively.

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

Brand Information

The following table provides additional disaggregated revenue information, which is categorized by brand, for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were as follows:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Abercrombie (1)

$ 2,201,686 $ 1,734,866 $ 1,564,789

Hollister (2)

2,078,991 1,962,885 2,147,979

Total $ 4,280,677 $ 3,697,751 $ 3,712,768

(1) Abercrombie brands includes Abercrombie & Fitch and abercrombie kids.

(2) Hollister brands includes Hollister and Gilly Hicks

CONTINGENCIES

The Company is a defendant in lawsuits and other adversarial proceedings arising in the ordinary course of business.

The Company and its affiliates are defendants in lawsuits and other adversary proceedings that may range from individual actions involving a single plaintiff to class action lawsuits.

The Company’s legal costs incurred in connection with the resolution of claims and lawsuits are generally expensed as incurred, and the Company establishes estimated liabilities for the outcome of litigation where losses are deemed probable and the amount of loss, or range of loss, is reasonably estimable.

10 unchanged sentences

We have audited the accompanying consolidated balance sheets of Abercrombie & Fitch Co.

and its subsidiaries (the “Company”) as of January 28, 2023 and January 29, 2022, and the related consolidated statements of operations and comprehensive (loss) income, of stockholders’ equity and of cash flows for each of the three years in the period ended January 28, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 28, 2023 and January 29, 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 28, 2023 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

and its subsidiaries (the “Company”) as of February 3, 2024 and January 28, 2023, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended February 3, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

13 unchanged sentences

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

8 unchanged sentences

Impairment of Long-Lived Assets – Stores

As described in Notes 2, 6 and 8 to the consolidated financial statements, the Company’s consolidated property and equipment, net balance was $551.6 million and consolidated operating lease right-of-use assets balance was $723.6 million as of January 28, 2023.

During the year ended January 28, 2023, the Company recognized long-lived asset store impairment charges of

$11.0 million.

As described in Notes 2, 6 and 8 to the consolidated financial statements, the Company’s consolidated property and equipment, net balance was $538.0 million and consolidated operating lease right-of-use assets balance was $678.3 million as of February 3, 2024.

During the year ended February 3, 2024, the Company recognized long-lived asset store impairment charges of $8.3 million.

The Company’s long-lived assets, primarily operating lease right-of-use assets, leasehold improvements, furniture, fixtures and equipment, are grouped with other assets and liabilities at the store level, which is the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

20 unchanged sentences

Columbus, Ohio

March 27, 2023

April 1, 2024

We have served as the Company’s auditor since 1996.

3 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data