ABERCROMBIE & FITCH CO /DE/ 10-Q

Item 1. Financial Statements (Unaudited) Abercrombie & Fitch Co. Condensed Consolidated Statements of Operations and Comprehensive Income (Thousands, except per share amounts) (Unaudited) Thirteen Weeks Ended Thirty-Nine Weeks Ended November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Net sales $ 1,208,966 $ 1,056,431 $ 3,363,670 $ 2,827,770 Cost of sales, exclusive of depreciation and amortization 422,034 370,762 1,163,019 1,047,927 Gross profit 786,932 685,669 2,200,651 1,779,843 Stores and distribution expense 419,235 383,883 1,181,154 1,072,662 Marketing, general and administrative expense 190,001 162,510 538,352 449,643 Other operating (income) loss, net ( 1,586 ) 1,256 ( 3,611 ) ( 4,332 ) Operating income 179,282 138,020 484,756 261,870 Interest expense 569 8,568 11,538 23,661 Interest income ( 9,302 ) ( 7,897 ) ( 30,497 ) ( 18,450 ) Interest (income) expense, net ( 8,733 ) 671 ( 18,959 ) 5,211 Income before income taxes 188,015 137,349 503,715 256,659 Income tax expense 54,151 39,617 119,394 82,349 Net income 133,864 97,732 384,321 174,310 Less: Net income attributable to noncontrolling interests 1,885 1,521 5,324 4,634 Net income attributable to A&F $ 131,979 $ 96,211 $ 378,997 $ 169,676 Net income per share attributable to A&F Basic $ 2.59 $ 1.91 $ 7.43 $ 3.38 Diluted $ 2.50 $ 1.83 $ 7.13 $ 3.25 Weighted-average shares outstanding Basic 50,951 50,504 51,030 50,138 Diluted 52,869 52,624 53,141 52,154 Other comprehensive income Foreign currency translation adjustments, net of tax $ 84 $ ( 5,042 ) $ 1,688 $ ( 8,567 ) Derivative financial instruments, net of tax 1,461 7,259 834 9,906 Other comprehensive income 1,545 2,217 2,522 1,339 Comprehensive income 135,409 99,949 386,843 175,649 Less: Comprehensive income attributable to noncontrolling interests 1,885 1,521 5,324 4,634 Comprehensive income attributable to A&F $ 133,524 $ 98,428 $ 381,519 $ 171,015 The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Abercrombie & Fitch Co. 3 2024 3Q Form 10-Q Table of Contents Abercrombie & Fitch Co. Condensed Consolidated Balance Sheets (Thousands, except par value amounts) (Unaudited) November 2, 2024 February 3, 2024 Assets Current assets: Cash and equivalents $ 683,089 $ 900,884 Marketable securities 55,790 — Receivables 111,583 78,346 Inventories 692,596 469,466 Other current assets 112,709 88,569 Total current assets 1,655,767 1,537,265 Property and equipment, net 570,440 538,033 Operating lease right-of-use assets 798,290 678,256 Other assets 245,375 220,679 Total assets $ 3,269,872 $ 2,974,233 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 466,303 $ 296,976 Accrued expenses 469,148 436,655 Short-term portion of operating lease liabilities 210,335 179,625 Income taxes payable 36,303 53,564 Total current liabilities 1,182,089 966,820 Long-term liabilities: Long-term portion of operating lease liabilities 734,918 646,624 Long-term borrowings, net — 222,119 Other liabilities 92,405 88,683 Total long-term liabilities 827,323 957,426 Stockholders’ equity Class A Common Stock: $ 0.01 par value: 150,000 shares authorized and 103,300 shares issued for all periods presented 1,033 1,033 Paid-in capital 416,640 421,609 Retained earnings 3,009,664 2,643,629 Accumulated other comprehensive loss, net of tax (“AOCL”) ( 133,446 ) ( 135,968 ) Treasury stock, at average cost: 52,929 and 52,800 shares as of November 2, 2024 and February 3, 2024, respectively ( 2,046,758 ) ( 1,895,143 ) Total Abercrombie & Fitch Co. stockholders’ equity 1,247,133 1,035,160 Noncontrolling interests 13,327 14,827 Total stockholders’ equity 1,260,460 1,049,987 Total liabilities and stockholders’ equity $ 3,269,872 $ 2,974,233 The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Abercrombie & Fitch Co. 4 2024 3Q Form 10-Q Table of Contents Abercrombie & Fitch Co. Condensed Consolidated Statements of Stockholders’ Equity (Thousands, except per share amounts) (Unaudited) Thirteen Weeks Ended November 2, 2024 Common Stock Paid-in capital Non-controlling interests Retained earnings AOCL Treasury stock Total stockholders’ equity Shares outstanding Par value Shares At average cost Balance, August 3, 2024 51,069 $ 1,033 $ 408,293 $ 14,624 $ 2,877,969 $ ( 134,991 ) 52,231 $ ( 1,945,778 ) $ 1,221,150 Net income — — — 1,885 131,979 — — — 133,864 Purchase of Common Stock (1) ( 720 ) — — — — — 720 ( 100,056 ) ( 100,056 ) Share-based compensation issuances and exercises 22 — ( 1,180 ) — ( 284 ) — ( 22 ) ( 924 ) ( 2,388 ) Share-based compensation expense — — 9,527 — — — — — 9,527 Derivative financial instruments, net of tax — — — — — 1,461 — — 1,461 Foreign currency translation adjustments, net of tax — — — — — 84 — — 84 Distribution to noncontrolling interests, net — — — ( 3,182 ) — — — — ( 3,182 ) Ending balance at November 2, 2024 50,371 $ 1,033 $ 416,640 $ 13,327 $ 3,009,664 $ ( 133,446 ) 52,929 $ ( 2,046,758 ) $ 1,260,460 Thirteen Weeks Ended October 28, 2023 Common Stock Paid-in capital Non-controlling interests Retained earnings AOCL Treasury stock Total stockholders’ equity Shares outstanding Par value Shares At average cost Balance, July 29, 2023 50,141 $ 1,033 $ 410,398 $ 10,478 $ 2,400,032 $ ( 138,405 ) 53,159 $ ( 1,904,752 ) $ 778,784 Net income — — — 1,521 96,211 — — — 97,732 Share-based compensation issuances and exercises 260 — ( 6,567 ) — ( 10,022 ) — ( 260 ) 6,279 ( 10,310 ) Share-based compensation expense — — 9,684 — — — — — 9,684 Derivative financial instruments, net of tax — — — — — 7,259 — — 7,259 Foreign currency translation adjustments, net of tax — — — — — ( 5,042 ) — — ( 5,042 ) Distribution to noncontrolling interests, net — — — ( 1,994 ) — — — — ( 1,994 ) Ending balance at October 28, 2023 50,401 $ 1,033 $ 413,515 $ 10,005 $ 2,486,221 $ ( 136,188 ) 52,899 $ ( 1,898,473 ) $ 876,113 (1) Includes excise tax on share repurchases Abercrombie & Fitch Co. 5 2024 3Q Form 10-Q Table of Contents Abercrombie & Fitch Co. Condensed Consolidated Statements of Stockholders’ Equity (Thousands, except per share amounts) (Unaudited) Thirty-Nine Weeks Ended November 2, 2024 Common Stock Paid-in capital Non-controlling interests Retained earnings AOCL Treasury stock Total stockholders’ equity Shares outstanding Par value Shares At average cost 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 Net income — — — 5,324 378,997 — — — 384,321 Purchase of Common Stock (1) ( 923 ) — — — — — 923 ( 130,056 ) ( 130,056 ) Share-based compensation issuances and exercises 794 — ( 35,092 ) — ( 12,962 ) — ( 794 ) ( 21,559 ) ( 69,613 ) Share-based compensation expense — — 30,123 — — — — — 30,123 Derivative financial instruments, net of tax — — — — — 834 — — 834 Foreign currency translation adjustments, net of tax — — — — — 1,688 — — 1,688 Distribution to noncontrolling interests, net — — — ( 6,824 ) — — — — ( 6,824 ) Ending balance at November 2, 2024 50,371 $ 1,033 $ 416,640 $ 13,327 $ 3,009,664 $ ( 133,446 ) 52,929 $ ( 2,046,758 ) $ 1,260,460 Thirty-Nine Weeks Ended October 28, 2023 Common Stock Paid-in capital Non-controlling interests Retained earnings AOCL Treasury stock Total stockholders’ equity Shares outstanding Par value Shares At average cost Balance, January 28, 2023 49,002 $ 1,033 $ 416,255 $ 11,728 $ 2,368,815 $ ( 137,527 ) 54,298 $ ( 1,953,735 ) $ 706,569 Net income — — — 4,634 169,676 — — — 174,310 Share-based compensation issuances and exercises 1,399 — ( 32,071 ) — ( 52,270 ) — ( 1,399 ) 55,262 ( 29,079 ) Share-based compensation expense — — 29,331 — — — — — 29,331 Derivative financial instruments, net of tax — — — — — 9,906 — — 9,906 Foreign currency translation adjustments, net of tax — — — — — ( 8,567 ) — — ( 8,567 ) Distribution to noncontrolling interests, net — — — ( 6,357 ) — — — — ( 6,357 ) Ending balance at October 28, 2023 50,401 $ 1,033 $ 413,515 $ 10,005 $ 2,486,221 $ ( 136,188 ) 52,899 $ ( 1,898,473 ) $ 876,113 (1) Includes excise tax on share repurchases The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Abercrombie & Fitch Co. 6 2024 3Q Form 10-Q Table of Contents Abercrombie & Fitch Co. Condensed Consolidated Statements of Cash Flows (Thousands) (Unaudited) Thirty-Nine Weeks Ended November 2, 2024 October 28, 2023 Operating activities Net income $ 384,321 $ 174,310 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 116,610 105,547 Asset impairment 7,066 4,436 Loss on disposal 2,585 5,164 Benefit from deferred income taxes ( 9,881 ) ( 13,620 ) Share-based compensation 30,123 29,331 Loss on extinguishment of debt 1,114 1,276 Changes in assets and liabilities: Inventories ( 222,929 ) ( 91,817 ) Accounts payable and accrued expenses 184,604 126,842 Operating lease right-of-use assets and liabilities ( 2,194 ) ( 30,956 ) Income taxes ( 19,429 ) 37,857 Other assets ( 70,423 ) 8,519 Other liabilities 1,189 ( 6,747 ) Net cash provided by operating activities 402,756 350,142 Investing activities Purchases of marketable securities ( 55,000 ) — Purchases of property and equipment ( 132,040 ) ( 128,601 ) Proceeds from the sale of property and equipment — 615 Net cash used for investing activities ( 187,040 ) ( 127,986 ) Financing activities Repayment/redemption of senior secured notes ( 223,331 ) ( 50,933 ) Payment of debt modification costs and fees ( 3,273 ) ( 180 ) Purchases of Common Stock ( 129,807 ) — Acquisition of Common Stock for tax withholding obligations ( 69,613 ) ( 29,079 ) Other financing activities ( 6,546 ) ( 6,914 ) Net cash used for financing activities ( 432,570 ) ( 87,106 ) Effect of foreign currency exchange rates on cash ( 1,834 ) ( 4,491 ) Net (decrease) increase in cash and equivalents, and restricted cash and equivalents ( 218,688 ) 130,559 Cash and equivalents, and restricted cash and equivalents, beginning of period 909,685 527,569 Cash and equivalents, and restricted cash and equivalents, end of period $ 690,997 $ 658,128 Supplemental information related to non-cash activities Purchases of property and equipment accrued in accounts payable $ 57,005 $ 38,787 Excise tax liability accrued on share repurchases 250 — Operating lease right-of-use assets additions, net of terminations, impairments and other reductions 291,289 117,959 Supplemental information related to cash activities Cash paid for interest 9,527 14,165 Cash paid for income taxes 147,733 60,215 Cash received from income tax refunds 448 916 Cash paid for amounts included in measurement of operating lease liabilities, net of abatements 206,413 210,971 The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Abercrombie & Fitch Co. 7 2024 3Q Form 10-Q Table of Contents Abercrombie & Fitch Co. Index for Notes to Condensed Consolidated Financial Statements (Unaudited) Page No. Note 1. NATURE OF BUSINESS 9 Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 9 Note 3. REVENUE RECOGNITION 11 Note 4. NET INCOME (LOSS) PER SHARE 12 Note 5. FAIR VALUE 12 Note 6. PROPERTY AND EQUIPMENT, NET 13 Note 7. LEASES 13 Note 8. ASSET IMPAIRMENT 14 Note 9. INCOME TAXES 14 Note 10. BORROWINGS 15 Note 11. SHARE-BASED COMPENSATION 16 Note 12. DERIVATIVE INSTRUMENTS 18 Note 13. ACCUMULATED OTHER COMPREHENSIVE LOSS 19 Note 14. SEGMENT REPORTING 20 Abercrombie & Fitch Co. 8 2024 3Q Form 10-Q Table of Contents Abercrombie & Fitch Co. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. NATURE OF BUSINESS Abercrombie & Fitch Co. (“A&F”), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and its subsidiaries are referred to as 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. The Company manages its business on a geographic basis, consisting of three reportable segments: Americas; 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. 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation The accompanying Condensed Consolidated Financial Statements include historical financial statements of, and transactions applicable to, the Company and reflect its financial position, results of operations and cash flows. The Company has interests in Emirati and Kuwaiti business ventures with Majid al Futtaim Lifestyle L.L.C. (“MAF”) and in a United States of America (the “U.S.”) business venture with Dixar L.L.C. (“Dixar”), each of which meets the definition of a variable interest entity (“VIE”). 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 Company is deemed to be the primary beneficiary of these VIEs; therefore, the Company has consolidated the operating results, assets and liabilities of these VIEs, with the noncontrolling interests’ (“NCI”) portions of net income presented as net income attributable to NCI on the Condensed Consolidated Statements of Operations and Comprehensive Income and the NCI portion of stockholders’ equity presented as NCI on the Condensed Consolidated Balance Sheets. Fiscal year The Company’s fiscal year ends on the Saturday closest to January 31. This typically results in a fifty-two week year, but occasionally gives rise to an additional week, resulting in a fifty-three week year. Fiscal years are designated in the Condensed Consolidated Financial Statements and notes, as well as the remainder of this Quarterly Report on Form 10-Q, by the calendar year in which the fiscal year commences. All references herein to the Company’s fiscal years are as follows: Fiscal year Year ended/ending Number of weeks Fiscal 2023 February 3, 2024 53 Fiscal 2024 February 1, 2025 52 Fiscal 2025 January 31, 2026 52 Interim financial statements The Condensed Consolidated Financial Statements as of November 2, 2024, and for the thirteen and thirty-nine week periods ended November 2, 2024 and October 28, 2023, are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim consolidated financial statements. Accordingly, the Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto contained in A&F’s Annual Report on Form 10-K for Fiscal 2023 filed with the SEC on April 1, 2024 (the “Fiscal 2023 Form 10-K”). The February 3, 2024 consolidated balance sheet data, included herein, were derived from audited consolidated financial statements, but do not include all disclosures required by accounting principles generally accepted in the U.S. (“GAAP”). In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all adjustments (which are of a normal recurring nature) necessary to state fairly, in all material respects, the financial position, results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for Fiscal 2024. Abercrombie & Fitch Co. 9 2024 3Q Form 10-Q Table of Contents Use of estimates The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Due to the inherent uncertainty involved with estimates, actual results may differ. 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, and geopolitical concerns, all of which could result in material impacts to the Company’s consolidated financial statements in future reporting periods. Recent accounting pronouncements The Company reviews recent accounting pronouncements on a quarterly basis and has excluded discussion of those not applicable to the Company and those that did not have, or are not expected to have, a material impact on the Company’s consolidated financial statements. The following table provides a brief description of certain accounting pronouncements the Company has not yet adopted and that could affect the Company’s financial statements. Accounting Standards Update (ASU) Description Effect on the financial statements or other significant matters 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 update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The update 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. ASU 2024-03 - Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses The update requires a disaggregated disclosure of income statement expenses. The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The update is effective for fiscal years beginning after December 15, 2026 and interim period periods for fiscal years beginning after December 15, 2027. 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. Condensed Consolidated Statements of Cash Flows reconciliation The following table provides a reconciliation of cash and equivalents and restricted cash and equivalents to the amounts shown on the Condensed Consolidated Statements of Cash Flows: (in thousands) Location November 2, 2024 February 3, 2024 October 28, 2023 January 28, 2023 Cash and equivalents Cash and equivalents $ 683,089 $ 900,884 $ 649,489 $ 517,602 Restricted cash and equivalents Other assets 7,908 8,801 8,639 9,967 Cash and equivalents and restricted cash and equivalents $ 690,997 $ 909,685 $ 658,128 $ 527,569 Abercrombie & Fitch Co. 10 2024 3Q Form 10-Q Table of Contents 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 November 2, 2024 and February 3, 2024, $ 109.3 million and $ 72.4 million of SCF program liabilities were recorded in accounts payable in the Condensed Consolidated Balance Sheets, respectively, and reflected as a cash flow from operating activities in the Condensed Consolidated Statements of Cash Flows when settled. The following table provides activity in the SCF program for the thirty-nine weeks ended November 2, 2024: Thirty-Nine Weeks Ended (in thousands) November 2, 2024 Confirmed obligations outstanding at the beginning of the period $ 72,376 Invoices confirmed during the period 326,109 Confirmed invoices paid during the period ( 289,164 ) Confirmed obligations outstanding at the end of the period $ 109,321 3. REVENUE RECOGNITION Disaggregation of revenue All revenues are recognized in net sales in the Condensed Consolidated Statements of Operations and Comprehensive Income. For information regarding the disaggregation of revenue, refer to Note 14, “ SEGMENT REPORTING . ” Contract liabilities The following table details certain contract liabilities representing unearned revenue as of November 2, 2024, February 3, 2024, October 28, 2023 and January 28, 2023: (in thousands) November 2, 2024 February 3, 2024 October 28, 2023 January 28, 2023 Gift card liability (1) $ 39,096 $ 41,144 $ 36,506 $ 39,235 Loyalty programs liability 30,648 27,937 24,521 25,640 (1) Includes $ 17.7 million and $ 15.5 million of revenue recognized during the thirty-nine weeks ended November 2, 2024 and October 28, 2023, respectively, that was included in the gift card liability at the beginning of February 3, 2024 and January 28, 2023, respectively. The following table details recognized revenue associated with the Company’s gift card program and loyalty programs for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Revenue associated with gift card redemptions and gift card breakage $ 32,680 $ 24,741 $ 96,172 $ 73,391 Revenue associated with reward redemptions and breakage related to the Company’s loyalty programs 16,697 13,710 45,367 37,628 Abercrombie & Fitch Co. 11 2024 3Q Form 10-Q Table of Contents 4. NET INCOME PER SHARE Net income per basic and diluted share attributable to A&F is computed based on the weighted-average number of outstanding shares of A&F’s Class A Common Stock, $0.01 par value (“Common Stock”). The following table provides additional information pertaining to net income per share attributable to A&F for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Shares of Common Stock issued 103,300 103,300 103,300 103,300 Weighted-average treasury shares ( 52,349 ) ( 52,796 ) ( 52,270 ) ( 53,162 ) Weighted-average — basic shares 50,951 50,504 51,030 50,138 Dilutive effect of share-based compensation awards 1,918 2,120 2,111 2,016 Weighted-average — diluted shares 52,869 52,624 53,141 52,154 Anti-dilutive shares (1) 250 445 329 609 (1) Reflects the total number of shares related to outstanding share-based compensation awards that have been excluded from the computation of net income 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 achieved from zero up to 200% of their target vesting amount and are reflected at the maximum vesting amount less any dilutive portion. 5. FAIR VALUE Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are prioritized based on a three-level hierarchy. The three levels of inputs to measure fair value are as follows: • Level 1—inputs are unadjusted quoted prices for identical assets or liabilities that are available in active markets that the Company can access at the measurement date. • Level 2—inputs are other than quoted market prices included within Level 1 that are observable for assets or liabilities, directly or indirectly. • Level 3—inputs to the valuation methodology are unobservable. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. The following table provides the three levels of the hierarchy and the distribution of the Company’s assets measured at fair value on a recurring basis, as of November 2, 2024 and February 3, 2024: Assets and Liabilities at Fair Value as of November 2, 2024 (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) $ 149,605 $ 42,209 $ — $ 191,814 Marketable securities (2) — 55,790 — 55,790 Derivative instruments (3) — 2,143 — 2,143 Rabbi Trust assets (4) 1,164 53,553 — 54,717 Restricted cash equivalents (1) 3,317 1,480 — 4,797 Total assets $ 154,086 $ 155,175 $ — $ 309,261 Liabilities: Derivative instruments (3) $ — $ 419 $ — $ 419 Total liabilities $ — $ 419 $ — $ 419 Assets and Liabilities at Fair Value as of February 3, 2024 (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents (1) $ 349,174 $ 26,975 $ — $ 376,149 Derivative instruments (3) — 1,092 — 1,092 Rabbi Trust assets (4) 1,164 52,521 — 53,685 Restricted cash equivalents (1) 4,282 1,420 — 5,702 Total assets $ 354,620 $ 82,008 $ — $ 436,628 Liabilities: Derivative instruments (3) $ — $ 539 $ — $ 539 Total liabilities $ — $ 539 $ — $ 539 Abercrombie & Fitch Co. 12 2024 3Q Form 10-Q Table of Contents (1) Level 1 assets consisted of investments in money market funds and U.S. treasury bills. Level 2 assets consisted of time deposits with original maturities of less than three months . ( 2) Level 2 assets consisted of time deposits with original maturities greater than three months, but less than one year. (3) Level 2 assets and liabilities consisted primarily of foreign currency exchange forward contracts. (4) Level 1 assets consisted of investments in money market funds. Level 2 assets consisted of trust-owned life insurance policies. The Company’s Level 2 assets and liabilities consisted of: • Trust-owned life insurance policies, which were valued using the cash surrender value of the life insurance policies; • Time deposits with original maturities of three months or less, which were recorded at cost, approximating fair value, due to the short-term nature of these investments; • Time deposits with original maturities greater than three months, which were recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets; and • Derivative instruments, primarily foreign currency exchange forward contracts, which were valued using quoted market prices of the same or similar instruments, adjusted for counterparty risk. Fair value of long-term borrowings The Company’s borrowings were carried at historical cost in the accompanying Condensed Consolidated Balance Sheet as of February 3, 2024. On July 15, 2024 (the “Redemption Date”), Abercrombie & Fitch Management Co. (“A&F Management”) redeemed all of its outstanding senior secured notes at par value, which had a fixed 8.75 % interest rate and were scheduled to mature on July 15, 2025 (the “Senior Secured Notes”). As of the Redemption Date, the Senior Secured Notes were no longer deemed outstanding. 6. PROPERTY AND EQUIPMENT, NET The following table provides property and equipment, net as of November 2, 2024 and February 3, 2024: (in thousands) November 2, 2024 February 3, 2024 Property and equipment, at cost $ 2,602,101 $ 2,509,184 Less: Accumulated depreciation and amortization ( 2,031,661 ) ( 1,971,151 ) Property and equipment, net $ 570,440 $ 538,033 R efer to Note 8, “ ASSET IMPAIRMENT ,” for details related to property and equipment impairment charges incurred during the thirteen and thirty-nine ended November 2, 2024 and October 28, 2023. 7. LEASES The Company is a party to leases related to its Company-operated retail stores as well as for certain of its distribution centers, office space, information technology and equipment. The following table provides a summary of the Company’s operating lease costs for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Single lease cost (1) $ 69,167 $ 63,177 $ 193,310 $ 184,172 Variable lease cost (2) 45,715 32,332 137,081 119,809 Operating lease right-of-use asset impairment (3) 233 — 1,043 1,414 Sublease income ( 1,003 ) ( 979 ) ( 2,973 ) ( 2,959 ) Total operating lease cost $ 114,112 $ 94,530 $ 328,461 $ 302,436 (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. (3) Refer to Note 8, “ ASSET IMPAIRMENT ,” for details related to operating lease right-of-use asset impairment charges. The Company had minimum commitments related to operating lease contracts that have not yet commenced, primarily for certain Company-operated retail stores, of approximately $ 66.5 million as of November 2, 2024. Abercrombie & Fitch Co. 13 2024 3Q Form 10-Q Table of Contents 8. ASSET IMPAIRMENT The following table provides asset impairment charges for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Operating lease right-of-use asset impairment $ 233 $ — $ 1,043 $ 1,414 Property and equipment asset impairment 5,266 — 6,023 3,022 Total asset impairment $ 5,499 $ — $ 7,066 $ 4,436 Asset impairment charges for the thirty-nine weeks ended November 2, 2024 and October 28, 2023 related to certain of the Company’s store assets, primarily in the APAC segment. The store impairment charges for the thirty-nine weeks ended November 2, 2024 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 6.4 million, including $ 5.1 million related to operating lease right-of-use assets. 9. INCOME TAXES The quarterly provision for income taxes is based on the current estimate of the annual effective income tax rate and the tax effect of discrete items occurring during the quarter. The Company’s quarterly provision and the estimate of the annual effective tax rate are subject to significant variation due to several factors. These factors include variability in the pre-tax jurisdictional mix of earnings, changes in how the Company does business including entering into new businesses or geographies, changes in foreign currency exchange rates, changes in laws, regulations, interpretations and administrative practices, relative changes in expenses or losses for which tax benefits are not recognized and the impact of discrete items. In addition, jurisdictions where the Company anticipates an ordinary loss for the fiscal year for which the Company does not anticipate future tax benefits are excluded from the overall computation of estimated annual effective tax rate and no tax benefits are recognized in the period related to losses in such jurisdictions. The impact of these items on the effective tax rate will be greater at lower levels of pre-tax earnings. Impact of valuation allowances During the thirteen and thirty-nine weeks ended November 2, 2024, the Company did not recognize income tax benefits on $ 7.7 million and $ 22.3 million respectively, of pretax losses, primarily in Switzerland, resulting in adverse tax impacts of $ 1.2 million and $ 3.4 million, respectively. As of November 2, 2024, the Company had foreign net deferred tax assets of approximately $ 39.5 million, including $ 10.0 million, $ 6.1 million, and $ 13.1 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. During the thirteen and thirty-nine weeks ended October 28, 2023, the Company did not recognize income tax benefits on $ 20.0 million and $ 63.0 million of pretax losses, primarily in Switzerland, resulting in adverse tax impacts of $ 3.0 million and $ 9.6 million, respectively. As of February 3, 2024, there were approximately $ 7.6 million, $ 7.5 million, and $ 12.6 million of net deferred tax assets in China, Japan, and the United Kingdom, respectively. Share-based compensation Refer to Note 11, “ SHARE-BASED COMPENSATION ,” for details on income tax benefits and charges related to share-based compensation awards during the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023. Abercrombie & Fitch Co. 14 2024 3Q Form 10-Q Table of Contents 10. BORROWINGS Senior Secured Notes On July 15, 2024 (the “Redemption Date”), A&F redeemed all of its outstanding 8.75 % Senior Secured Notes due July 15, 2025 , which had an aggregate principal amount of $ 214 million, at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to, but excluding, the Redemption Date, and incurred a $ 0.9 million loss on extinguishment of debt, recognized in interest expense on the Condensed Consolidated Statements of Operations and Comprehensive Income. For the year-to-date period through the Redemption date, A&F Management repurchased $ 9.3 million in the open market and redeemed $ 214 million of its Senior Secured Notes and incurred a loss on extinguishment of debt of $ 1.1 million. As of the Redemption Date, the Senior Secured Notes were no longer deemed outstanding and interest on the Senior Secured Notes ceased to accrue. ABL Facility On August 2, 2024, A&F, as parent and a guarantor, A&F Management, as lead borrower, and certain of A&F’s direct and indirect wholly-owned subsidiaries, as additional borrowers and guarantors, entered into the Second Amendment to the Amended and Restated Credit Agreement (the “Second Amendment”), together with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent for the lenders. The Second Amendment amends the existing Amended and Restated Credit Agreement, dated as of April 29, 2021 (the “ABL Credit Agreement”), which provided for a $ 400 million senior secured asset-based revolving credit facility. The Company incurred customary fees and expenses in connection with the entry into the Second Amendment. The Second Amendment amended the ABL Credit Agreement to, among other things: • increase the aggregate commitments thereunder to $ 500 million; • establish a $100 million sub-facility for the benefit of Abfico Netherlands Distribution B.V. (“Abfico”) and AFH Stores UK Limited (“AFH UK”) that is (i) secured by a first priority security interest in all assets (subject to specified exclusions) of each of Abfico and AFH UK, (ii) guaranteed by A&F and certain of its domestic direct and indirect wholly-owned subsidiaries, and (iii) subject to a borrowing base as described therein; • extend the maturity date from April 29, 2026 to August 2, 2029 ; • increase the letter of credit sub-limit from $ 50 million to $ 62.5 million; • decrease the swing line availability from $ 50 million to $ 30 million; • decrease the unused line fee from a variable rate of 25 basis points to 37.5 basis points to a flat rate of 25 basis points; and • increase pricing of the interest rate margin applicable to borrowings as follows: ◦ from 1.25 % to 1.50 % when average availability is greater than or equal to 50% of the Loan Cap (as defined in the Second Amendment); and ◦ from 1.50 % to 1.75 % when average availability is less than 50% of the Loan Cap. The ABL Facility is subject to a borrowing base, consisting primarily of inventory located in the U.S., the United Kingdom and the Netherlands, with a letter of credit sub-limit of $ 62.5 million, a swing line loan sub-limit of $ 30 million, and an accordion feature allowing A&F to increase the revolving commitment by up to $ 150 million subject to specified conditions. The ABL Facility is available for working capital, capital expenditures, and other general corporate purposes. As of November 2, 2024, availability under the ABL Facility was $ 499.6 million, net of $ 0.4 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 $36 million under the ABL Facility, borrowing capacity available to the Company under the ABL Facility was $ 449.6 million as of November 2, 2024. Representations, warranties and covenants The agreements related to the ABL Facility contain various representations, warranties and restrictive covenants that, among other things and subject to specified exceptions, restrict the ability of the Company and its subsidiaries to: grant or incur liens; incur, assume or guarantee additional indebtedness; sell or otherwise dispose of assets, including capital stock of subsidiaries; make investments in certain subsidiaries; pay dividends, make distributions or redeem or repurchase capital stock; change the nature of their business; and consolidate or merge with or into, or sell substantially all of the assets of the Company or A&F Management to another entity. Certain of the agreements related to the ABL Facility also contain certain affirmative covenants, including reporting requirements such as delivery of financial statements, certificates and notices of certain events, maintaining insurance and providing additional guarantees and collateral in certain circumstances. The Company was in compliance with all debt covenants under these agreements as of November 2, 2024. Abercrombie & Fitch Co. 15 2024 3Q Form 10-Q Table of Contents 11. SHARE-BASED COMPENSATION Financial statement impact The following table provides share-based compensation expense and the related income tax impacts for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Share-based compensation expense $ 9,527 $ 9,684 $ 30,123 $ 29,331 Income tax benefits associated with share-based compensation expense recognized 1,287 1,080 3,805 3,163 The following table provides discrete income tax benefits and charges related to share-based compensation awards during the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Income tax discrete benefits realized for tax deductions related to the issuance of shares $ 581 $ 861 $ 17,913 $ 2,303 Income tax discrete charges realized upon cancellation of stock appreciation rights — — — ( 101 ) Total income tax discrete benefits related to share-based compensation awards $ 581 $ 861 $ 17,913 $ 2,202 The following table provides the amount of employee tax withheld by the Company upon the issuance of shares associated with restricted stock units vesting and the exercise of stock appreciation rights for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Employee tax withheld upon issuance of shares (1) $ 2,388 $ 10,310 $ 69,613 $ 29,079 (1) Classified within financing activities on the Condensed Consolidated Statements of Cash Flows. Restricted stock units The following table provides the summarized activity for restricted stock units for the thirty-nine weeks ended November 2, 2024: Service-based Restricted Stock Units Performance-based Restricted Stock Units Market-based Restricted Stock Units Number of Underlying Shares Weighted- Average Grant Date Fair Value Number of Underlying Shares Weighted- Average Grant Date Fair Value Number of Underlying Shares Weighted- Average Grant Date Fair Value Unvested at February 3, 2024 1,886,085 $ 27.12 521,212 $ 30.03 260,619 $ 43.90 Granted 236,530 123.01 53,775 120.56 26,895 180.71 Adjustments for performance achievement — — 150,446 32.10 75,227 50.34 Vested ( 866,119 ) 25.03 ( 300,892 ) 32.10 ( 150,454 ) 50.34 Forfeited ( 75,993 ) 35.65 — — — — Unvested at November 2, 2024 (1) 1,180,503 $ 47.41 424,541 $ 40.76 212,287 $ 58.95 (1) Unvested shares related to restricted stock units with performance-based and market-based vesting conditions are reflected at 100% of their target vesting amount in the table above. Unvested shares related to restricted stock units with performance-based and market-based vesting conditions can be achieved from zero up to 200% of their target vesting amount. The following table provides the unrecognized compensation cost and the remaining weighted-average period over which these costs are expected to be recognized for restricted stock units as of November 2, 2024: Service-based Restricted Stock Units Performance-based Restricted Stock Units Market-based Restricted Stock Units Unrecognized compensation cost (in thousands) $ 41,966 $ 16,647 $ 6,163 Remaining weighted-average period cost is expected to be recognized (years) 1.1 1.1 1.1 Abercrombie & Fitch Co. 16 2024 3Q Form 10-Q Table of Contents The following table provides additional information pertaining to restricted stock units for the thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 Service-based restricted stock units: Total grant date fair value of awards granted $ 29,096 $ 26,237 Total grant date fair value of awards vested 21,679 23,051 Performance-based restricted stock units: Total grant date fair value of awards granted 6,483 6,300 Total grant date fair value of awards vested 9,659 — Market-based restricted stock units: Total grant date fair value of awards granted 4,860 4,576 Total grant date fair value of awards vested 7,574 16,040 The following table provides the weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during the thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirty-Nine Weeks Ended November 2, 2024 October 28, 2023 Grant date market price $ 120.56 $ 28.36 Fair value 180.71 41.20 Price volatility 59 % 63 % Expected term (years) 2.9 2.9 Risk-free interest rate 4.3 % 4.6 % Dividend yield — — Average volatility of peer companies 51.8 66.0 Average correlation coefficient of peer companies 0.4866 0.5295 Stock appreciation rights The following table provides the summarized stock appreciation rights activity for the thirty-nine weeks ended November 2, 2024: Number of Underlying Shares Weighted-Average Exercise Price Aggregate Intrinsic Value (in thousands) Weighted-Average Remaining Contractual Life (years) Outstanding at February 3, 2024 25,600 $ 29.29 Exercised ( 25,600 ) 29.29 Forfeited or expired — — Outstanding at November 2, 2024 — $ — $ — 0.0 Stock appreciation rights exercisable at November 2, 2024 — $ — $ — 0.0 As of November 2, 2024, no stock appreciation rights remain outstanding. The following table provides additional information pertaining to stock appreciation rights exercised during the thirty-nine weeks ended November 2, 2024 and October 28, 2023: (in thousands) November 2, 2024 October 28, 2023 Total grant date fair value of awards exercised $ 267 $ 1,292 Abercrombie & Fitch Co. 17 2024 3Q Form 10-Q Table of Contents 12. DERIVATIVE INSTRUMENTS The Company is exposed to risks associated with changes in foreign currency exchange rates and uses derivative instruments, primarily forward contracts, to manage the financial impacts of these exposures. The Company does not use forward contracts to engage in currency speculation and does not enter into derivative financial instruments for trading purposes. The Company uses derivative instruments, primarily foreign currency exchange forward contracts designated as cash flow hedges, to hedge the foreign currency exchange rate exposure associated with forecasted foreign-currency-denominated intercompany inventory sales to foreign subsidiaries and the related settlement of the foreign-currency-denominated intercompany receivables. Fluctuations in foreign currency exchange rates will either increase or decrease the Company’s intercompany equivalent cash flows and affect the Company’s U.S. dollar earnings. Gains or losses on the foreign currency exchange forward contracts that are used to hedge these exposures are expected to partially offset this variability. Foreign currency exchange forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed upon settlement date. These foreign currency exchange forward contracts typically have a maximum term of twelve months. The sale of the inventory to the Company’s customers will result in the reclassification of related derivative gains and losses that are reported in AOCL into earnings. The Company also uses foreign currency exchange forward contracts to hedge certain foreign-currency-denominated net monetary assets/liabilities. Examples of monetary assets/liabilities include cash balances, receivables and payables. Fluctuations in foreign currency exchange rates result in transaction gains or losses being recorded in earnings, as GAAP requires that monetary assets/liabilities be remeasured at the spot exchange rate at quarter-end and upon settlement. The Company has chosen not to apply hedge accounting to these instruments because there are no anticipated differences in the timing of gain or loss recognition on the hedging instruments and the hedged items. As of November 2, 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 transactions: (in thousands) Notional Amount (1) Euro $ 69,300 British pound 84,134 Canadian dollar 28,480 (1) Amounts reported are the U.S. dollar notional amounts outstanding as of November 2, 2024. The fair value of derivative instruments is determined using quoted market prices of the same or similar instruments, adjusted for counterparty risk. The following table provides the location and amounts of derivative fair values of foreign currency exchange forward contracts on the Condensed Consolidated Balance Sheets as of November 2, 2024 and February 3, 2024: (in thousands) Location November 2, 2024 February 3, 2024 Location November 2, 2024 February 3, 2024 Derivatives designated as cash flow hedging instruments Other current assets $ 2,143 $ 1,090 Accrued expenses $ 419 $ 539 Derivatives not designated as hedging instruments Other current assets — 2 Accrued expenses — — Total $ 2,143 $ 1,092 $ 419 $ 539 The following table provides information pertaining to derivative gains or losses from foreign currency exchange forward contracts designated as cash flow hedging instruments for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Gain recognized in AOCL (1) $ 1,162 $ 7,151 $ 1,604 $ 7,202 (Loss) gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization (2) ( 351 ) ( 326 ) 659 ( 2,940 ) (1) Amount represents the change in fair value of derivative instruments. (2) Amount represents (loss) gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) when the hedged item affects earnings, which is when merchandise is converted to cost of sales, exclusive of depreciation and amortization. Substantially all of the unrealized gain will be recognized in costs of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income over the next twelve months . Abercrombie & Fitch Co. 18 2024 3Q Form 10-Q Table of Contents The following table provides additional information pertaining to derivative gains or losses from foreign currency exchange forward contracts not designated as hedging instruments for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Gain (loss) recognized in other operating (income) loss, net $ 11 $ 2,193 $ 454 $ ( 239 ) 13. ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables provide activity in AOCL fo r the thirteen and thirty-nine weeks ended November 2, 2024: Thirteen Weeks Ended November 2, 2024 (in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total Beginning balance at August 3, 2024 $ ( 134,928 ) $ ( 63 ) $ ( 134,991 ) Other comprehensive income before reclassifications 84 1,162 1,246 Reclassified loss from AOCL (1) — 351 351 Tax effect — ( 52 ) ( 52 ) Other comprehensive income after reclassifications 84 1,461 1,545 Ending balance at November 2, 2024 $ ( 134,844 ) $ 1,398 $ ( 133,446 ) Thirty-Nine Weeks Ended November 2, 2024 (in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total Beginning balance at February 3, 2024 $ ( 136,532 ) $ 564 $ ( 135,968 ) Other comprehensive income before reclassifications 1,688 1,604 3,292 Reclassified gain from AOCL (1) — ( 659 ) ( 659 ) Tax effect — ( 111 ) ( 111 ) Other comprehensive income after reclassifications 1,688 834 2,522 Ending balance at November 2, 2024 $ ( 134,844 ) $ 1,398 $ ( 133,446 ) (1) Amount represents loss reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income. The following tables provide activity in AOCL for the thirteen and thirty-nine weeks ended October 28, 2023: Thirteen Weeks Ended October 28, 2023 (in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total Beginning balance at July 29, 2023 $ ( 136,178 ) $ ( 2,227 ) $ ( 138,405 ) Other comprehensive (loss) income before reclassifications ( 5,042 ) 7,151 2,109 Reclassified loss from AOCL (1) — 326 326 Tax effect — ( 218 ) ( 218 ) Other comprehensive (loss) income after reclassifications ( 5,042 ) 7,259 2,217 Ending balance at October 28, 2023 $ ( 141,220 ) $ 5,032 $ ( 136,188 ) Thirty-Nine Weeks Ended October 28, 2023 (in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total Beginning balance at January 28, 2023 $ ( 132,653 ) $ ( 4,874 ) $ ( 137,527 ) Other comprehensive (loss) income before reclassifications ( 8,567 ) 7,202 ( 1,365 ) Reclassified loss from AOCL (1) — 2,940 2,940 Tax effect — ( 236 ) ( 236 ) Other comprehensive (loss) income after reclassifications ( 8,567 ) 9,906 1,339 Ending balance at October 28, 2023 $ ( 141,220 ) $ 5,032 $ ( 136,188 ) (1) Amount represents loss reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Condensed Consolidated Statements of Operations and Comprehensive Income. Abercrombie & Fitch Co. 19 2024 3Q Form 10-Q Table of Contents 14. SEGMENT REPORTING The Company’s reportable segments are based on the financial information the CODM uses to allocate resources and assess performance of its business. The Company manages its business on a geographic basis, consisting of three reportable segments: Americas; EMEA; and 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. 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. The group comprised of the Company’s (i) Chief Executive Officer and (ii) Chief Financial Officer and Chief Operating Officer functioned as the Company’s CODM as of November 2, 2024. 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 to a physical store location or geographical region that fulfills the order. Operating income 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 November 2, 2024 and February 3, 2024, and for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Net Sales Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Americas $ 986,449 $ 867,566 $ 2,707,794 $ 2,264,415 EMEA 181,592 157,976 546,052 468,045 APAC 40,925 30,889 109,824 95,310 Segment total $ 1,208,966 $ 1,056,431 $ 3,363,670 $ 2,827,770 Operating Income (Loss) Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Operating Income (loss) Americas $ 304,542 $ 257,440 $ 832,009 $ 590,948 EMEA 21,708 20,795 84,249 49,170 APAC ( 4,181 ) ( 3,261 ) ( 7,748 ) ( 6,272 ) Segment total $ 322,069 $ 274,974 $ 908,510 $ 633,846 Operating (loss) income not attributed to segments: Stores and distribution expense ( 4,671 ) ( 3,202 ) ( 13,044 ) ( 8,205 ) Marketing, general and administrative expense ( 139,691 ) ( 132,496 ) ( 414,310 ) ( 368,099 ) Other operating income (loss), net 1,575 ( 1,256 ) 3,600 4,328 Total operating income $ 179,282 $ 138,020 $ 484,756 $ 261,870 Abercrombie & Fitch Co. 20 2024 3Q Form 10-Q Table of Contents Assets (in thousands) November 2, 2024 February 3, 2024 Inventories Americas $ 569,713 $ 372,371 EMEA 98,842 77,125 APAC 24,041 19,970 Total inventories $ 692,596 $ 469,466 Assets not attributed to segments 2,577,276 2,504,767 Total assets $ 3,269,872 $ 2,974,233 Brand Information The following table provides additional disaggregated revenue information, which is categorized by brand, for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023: Thirteen Weeks Ended Thirty-Nine Weeks Ended (in thousands) November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023 Abercrombie (1) $ 629,835 $ 547,728 $ 1,783,764 $ 1,446,483 Hollister (2) 579,131 508,703 1,579,906 1,381,287 Total $ 1,208,966 $ 1,056,431 $ 3,363,670 $ 2,827,770 (1) Includes Abercrombie & Fitch and abercrombie kids. (2) Includes Hollister and Gilly Hicks Abercrombie & Fitch Co. 21 2024 3Q Form 10-Q Table of Contents