What changed in this filing

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Item 1A. Risk Factors

2025-03-31 compared with 2024-04-01 · 120 added, 101 removed, 304 unchanged (42% of the section changed)

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Because we may enter into agreements for the manufacture and purchase of merchandise well in advance of the applicable selling season, we are vulnerable to changes in consumer preferences and demand, pricing shifts, and the sub-optimal selection and timing of merchandise purchases.

We expect continuously changing fashion-related trends and consumer tastes to influence future demand for our products.

Changes in consumer tastes, fashion trends and brand reputation can have an impact on our financial performance.

Moreover, there can be no assurance that we will continue to anticipate consumer demands and macroeconomic events or to be successful in accurately planning inventory in the future.

Changing consumer preferences and fashion trends, and our ability to anticipate, identify and swiftly respond to them, could adversely impact our sales.

Changing consumer preferences, spending patterns, and fashion trends, and our ability to anticipate, identify and swiftly respond to them, could adversely impact our sales.

Inventory levels for certain merchandise styles no longer considered to be “on trend” may increase, leading to higher markdowns to sell through excess inventory and, therefore, lower than planned margins.

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Our failure to operate effectively in a highly competitive and constantly evolving industry could have a material adverse impact on our business.

The sale of apparel, personal care products and accessories for men, women and kids is a highly competitive business with numerous participants, including individual and chain specialty apparel retailers, local, regional, national and global department stores, discount stores and online-exclusive businesses.

Proliferation of the digital channel within the last few years has encouraged the entry of many new competitors and an increase in competition from established companies.

Proliferation of the digital channel has encouraged the entry of many new competitors and an increase in competition from established companies.

These increases in competition could reduce our ability to retain and grow sales, resulting in an adverse impact to our operating results and business.

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• Maintaining favorable brand recognition;

• Effectively marketing our products to consumers across diverse demographic markets, including through social media platforms which have become increasingly important in order to stay connected to our customers, as our digital sales penetration has increased.

• Effectively marketing our products to consumers across varying demographic markets, including through social media platforms which have become increasingly important in order to stay connected to our customers, as our digital sales penetration has increased.

Individual country laws and regulations governing the use and availability of these social media platforms continue to evolve, and if we are unable to effectively use social media platforms as marketing tools our ability to retain or acquire customers and our financial condition may suffer;

• Effectively establishing and maintaining relationships with key brand representatives, influencers, athletes, and other celebrities as part of our marketing strategy to promote our brands and products;

• Retaining customers, including our loyalty club members, and the resulting increased marketing costs to acquire new customers;

• Developing innovative, high-quality merchandise in styles that appeal to consumers and in ways that favorably distinguish us from our competitors;

• Countering the pricing and promotional activities of our competitors without diminishing the aspirational nature of our brands and brand equity;

• Operating in a highly promotional retail environment;

Abercrombie & Fitch Co.

2024 Form 10-K

• Engaging in promotional activity and appropriately pricing our products without diminishing the aspirational nature of our brands and brand equity;

• Identifying and assessing disruptive innovation, by existing or new competitors, that could alter the competitive landscape by:

improving the customer experience and heightening customer expectations;

transforming supply chain and corporate operations through digital technologies and artificial intelligence;

transforming supply chain and corporate operations through changes to digital technologies and innovations, including the use of artificial intelligence (“AI”) and machine learning;

and enhancing management decision-making through use of data analytics to develop new, consumer insights.

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Uncertainty as to, and the state of, the global economy and global financial condition could have an adverse effect on our operating results and business.

Our business is subject to factors that are impacted by worldwide economic conditions, including heightened inflation levels (which has occurred), unemployment levels, consumer credit availability, consumer debt levels, reductions in consumer net worth based on declines in the financial, residential real estate and mortgage markets, bank failures, sales and personal income tax rates, fuel and energy prices, global food supplies, interest rates, consumer confidence in future economic and political conditions, consumer perceptions of personal well-being and security, the value of the U.S.

Our business is subject to factors that are impacted by worldwide economic conditions, including heightened inflation levels (which has occurred), unemployment levels, consumer credit availability, consumer debt levels, reductions in consumer net worth based on declines in the financial, residential real estate and mortgage markets, bank failures, sales and personal income tax rates, fuel and energy prices, global food supplies, rising or uncertain interest rates, new increased tariffs, trade disputes, consumer confidence in future economic and political conditions, consumer perceptions of personal well-being and security, the value of the U.S.

dollar versus foreign currencies, geopolitical conflicts, and other macroeconomic factors.

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In the past, the impact of war, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience and the associated heightened security measures taken in response to these events have disrupted commerce.

Further events of this nature, domestic or abroad, including international and domestic unrest and the ongoing conflicts between Russia and Ukraine or Israel and Hamas and the surrounding areas, may disrupt commerce and undermine consumer confidence and consumer spending by causing a decline in traffic, store closures and a decrease in digital demand adversely affecting our operating results.

Furthermore, the existence or threat of any other unforeseen interruption of commerce, including as a result of geopolitical or armed conflict and the possible interference with international trade, supplier deliveries or freight costs, could negatively impact our business by interfering with the availability of raw materials or our ability to obtain merchandise from foreign manufacturers.

Further events of this nature, domestic or abroad, including international and domestic unrest, may disrupt commerce and undermine consumer confidence and consumer spending by causing a decline in traffic, store closures and a decrease in digital demand adversely affecting our operating results.

Furthermore, the existence or threat of any other unforeseen interruption of commerce, including as a result of geopolitical or armed conflict and the possible interference with international trade, supplier deliveries, freight costs, or tariffs, could negatively impact our business by interfering with the availability of raw materials or our ability to obtain merchandise from foreign manufacturers.

With a substantial portion of our merchandise being imported from foreign countries, failure to obtain merchandise from our foreign manufacturers or substitute other manufacturers, at similar costs and in a timely manner, could adversely affect our operating results and financial condition.

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For example, changes in inventory purchase assumptions have resulted in changes in the effectiveness to certain of our hedging instruments, and we could see similar impacts in future periods.

Fluctuations in foreign currency exchange rates could adversely impact consumer spending, delay or prevent successful penetration into new markets or adversely affect the profitability of our global operations.

Certain events, such as the conflicts between Russia and Ukraine or Israel and Hamas and the surrounding areas, uncertainty with respect to trade policies, tariffs and government regulations and actions affecting trade between the U.S.

and other countries, have increased global economic and political uncertainty in recent years and could result in volatility of foreign currency exchange rates as these events develop.

Abercrombie & Fitch Co.

2024 Form 10-K

Certain events could cause uncertainty with respect to trade policies, tariffs and government regulations and actions affecting trade between the U.S.

and other countries, have increased global economic and political uncertainty in recent years and could result in volatility of foreign currency exchange rates as these events develop.

Our ability to attract customers to our stores depends, in part, on the success of the shopping malls or area attractions that our stores are located in or around.

Our stores are primarily located in shopping malls and other shopping centers.

Our sales at these stores, as well as sales at our flagship locations, are partially dependent upon the volume of traffic in those shopping centers and the surrounding area which, for some centers, has been in decline.

Our sales at these stores are partially dependent upon the volume of traffic in those shopping centers and the surrounding area which, for some centers, has been in decline.

Our stores may benefit from the ability of a shopping center’s other tenants and area attractions to generate consumer traffic in the vicinity of our stores and the continuing popularity of the shopping center.

We cannot control the loss of a significant tenant in a shopping mall or area attraction, the development of new shopping malls in the U.S.

or around the world, the availability or cost of appropriate locations or the success of individual shopping malls and there is competition with other retailers for prominent locations.

or around the world, the availability or cost of appropriate locations, the success of individual shopping malls, or the increasing impact of digital channels on shopping mall traffic and there is competition with other retailers for prominent locations.

All of these factors may impact our ability to meet our productivity or our growth objectives for our stores and could have a material adverse impact on our financial condition or results of operations.

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The impact of natural disasters, negative climate patterns, public health crises, political crises and other unexpected and catastrophic events could result in interruptions to our operations, as well as to the operations of our third-party partners, and have a material adverse impact on our business.

Our retail stores, corporate offices, distribution centers, infrastructure projects and digital operations, as well as the operations of our vendors and manufacturers, are vulnerable to disruption from natural disasters, such as hurricanes, tornadoes, floods, earthquakes, extreme cold events and other adverse weather events;

negative climate patterns, such as those in domestic and global water-stressed regions;

public health crises, such as pandemics and epidemics;

political crises, such as terrorists attacks, war, labor, unrest and other political instability;

political crises, such as terrorists attacks, war, geopolitical uncertainty, labor, unrest, and other political instability (including, without limitation, the ongoing conflict between Russia and Ukraine and the conflict in the Middle East);

significant power interruptions or outages;

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STRATEGIC RISKS.

Our failure to successfully execute on our 2025 Always Forward Plan.

In 2022 we introduced our 2025 Always Forward Plan as our long-term strategic plan, as described in “ ITEM 1.

BUSINESS .” While we have successfully executed certain goals in our 2025 Always Forward Plan, our continued ability to effectively execute on and maintain the results of our 2025 Always Forward Plan is subject to various risks and uncertainties as described herein.

We believe that our 2025 Always Forward Plan will lead to long-term revenue growth and profitability, however, there is no assurance regarding the extent to which we will realize the anticipated objectives or sustain the financial objectives, if at all, or regarding the timing of such anticipated benefits.

Our failure to realize the anticipated objectives or sustain the financial objectives, which may be due to our inability to execute on the various elements of our 2025 Always Forward Plan, changes in consumer demand, competition, macroeconomic conditions (including inflation), retention of key talent, and other risks described herein, could have a material adverse effect on our business.

If the continued execution and maintenance of our 2025 Always Forward Plan is not successful, or we do not realize the full objectives to the extent or in the timeline that we anticipate, our financial condition and reputation could be adversely affected.

Our failure to attract, retain, and effectively manage strategic partnerships with third parties.

In order to compete in this highly competitive and constantly evolving industry, at times, we may launch new concepts or brands to expand our portfolio, or we may also enter into strategic partnerships with third parties to expand our global brand reach.

Such partnerships may include wholesale, franchise, licensing arrangements in which we license our brands and intellectual property for use on products produced and marketed by third parties, and licensing arrangements in which we license intellectual property from third parties.

Changes to our long-term business strategy or a failure to successfully execute on our long-term strategic plans could adversely impact our financial condition and reputation.

While we have successfully executed certain goals in our Always Forward Plan, our continued ability to effectively execute on and maintain the results of our Always Forward Plan is subject to various risks and uncertainties as described herein.

In addition, we may modify or adjust future long-term strategies to meet changes in our business environment.

While we believe that our successful execution and ability to attain certain established goals and targets of our Always Forward Plan led to long-term revenue growth and profitability, there is no assurance regarding the extent to which we will realize the anticipated objectives or sustain the financial objectives, if at all, or regarding the timing of such anticipated benefits.

Our failure to realize the anticipated objectives or sustain the financial objectives established in our long-term strategic plans, which may be due to our inability to execute established long-term target or goals, changes in consumer demand, competition, macroeconomic conditions (including inflation or tariffs), retention of key talent, and other risks described herein, could have a material adverse effect on our business.

If the continued execution and maintenance of our long-term business strategy is not successful, or we do not realize the full objectives to the extent or in the timeline that we anticipate, our financial condition and reputation could be adversely affected.

Our failure to attract, retain, and effectively manage strategic partnerships with third parties could have a material adverse impact on our business.

In order to compete in this highly competitive and constantly evolving industry, at times, we may enter into new strategic partnerships with third parties to expand our global brand reach, or we may launch new concepts or brands to expand our portfolio.

Such strategic partnerships may include wholesale, franchise, or licensing arrangements in which we license our brands and intellectual property for use on products produced, marketed and/or sold by third parties, and licensing arrangements in which we license intellectual property from third parties.

Such arrangements are subject to additional risks, including our ability to comply with obligations under license agreements that we have with third-party licensors, the abrupt termination of such arrangements, or actions taken by third-party wholesale, franchise, or licensee partners that may materially diminish the value of our intellectual property or our brands’ reputations.

These initiatives, and others that we may engage in to respond to the highly competitive and evolving industry in which we operate, could result in significant financial and operational investments that do not provide the anticipated benefits or desired rates of return and there can be no guarantee that pursuing these investments or strategic partnerships will result in improved operating results.

Our failure to optimize our global store network could have a material adverse impact on our business.

Our failure to evaluate and manage our global store network could have a material adverse impact on our business.

With the evolution of digital and omnichannel capabilities, customer expectations have shifted and there has been greater pressure for a seamless omnichannel experience across all channels.

As a result, global store network optimization is an important part of our business and failure to optimize our global store network could have an adverse impact on our results of operations.

Through our multi-year global store network optimization initiative, we have taken actions to optimize our store productivity by remodeling, right-sizing or relocating stores to smaller square footage locations, and closing legacy stores.

Modernizing and growing our store fleet is an important part of our business strategy and failure to evaluate and manage our global store network could have an adverse impact on our results of operations.

The ability to modify existing leases, to remodel or repurpose existing locations, and to open new stores experiences requires partnership with our landlords.

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Although we attempt to open new stores in prominent locations, it is possible that locations which were prominent when we opened our stores may lose favor over time.

Abercrombie & Fitch Co.

2024 Form 10-K

Our failure to realize the anticipated benefits of our recent transition to a regional-based organizational model could have a negative impact on our business.

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

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

the Middle East and Africa (EMEA) and Asia-Pacific (APAC).

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In addition, realization of the anticipated benefits of this new regional-based organizational model is dependent on the effectiveness of this new operating structure.

Abercrombie & Fitch Co.

2023 Form 10-K

Our inability to effectively conduct business in global markets, including as a result of legal, tax, regulatory, political and economic risks could have a material adverse impact on our business.

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• managing inventory effectively to meet the needs of existing stores on a timely basis;

• political, civil and social unrest, such as the conflicts between Russia and Ukraine or Israel and Hamas and conflict in the surrounding areas;

• political, civil and social unrest, such as the conflict between Russia and Ukraine or conflict in the Middle East;

• government regulations affecting trade between the U.S.

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• substantial investments of time and resources in our global operations may not result in achievement of acceptable levels of returns;

for example, we recently have experienced year-over-year declines in revenues from our global operations;

for example, we have experienced year-over-year declines in revenues from our global operations;

• continued and sustained declines in our global revenues could lead to store closures, restructuring costs, and impairment losses, all of which could adversely impact our business, profitability, and results of operations.

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If any of our overseas operations, or our associates or agents, violate such laws, we could become subject to sanctions or other penalties that could negatively affect our reputation, business and operating results.

Our failure to appropriately address Environmental, Social, and Governance (ESG) matters could have a material adverse impact on our reputation and, as a result, our business.

There is an increased focus from certain government regulators, investors, customers, associates, business partners and other stakeholders concerning ESG matters.

The expectations related to ESG matters are rapidly evolving.

The increased focus by investors and other stakeholders on the ESG practices of publicly traded companies, like us, has included or may in the future include expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, labor and risk oversight, and could expand the nature, scope, and complexity of matters that we are required to control, assess and report.

If we announce certain initiatives and goals, related to ESG matters, such as those through our participation in the United Nations Global Compact, we could fail, or be perceived to fail, to accurately set, meet or accurately report our progress on such initiatives and goals.

We could fail, or be perceived to fail, to act responsibly in our ESG efforts.

In addition, we could be criticized for the speed of adoption of such initiatives or goals, or the scope of such initiatives or goals.

Our failure to appropriately address environmental, social, and governance (ESG) topics could have a material adverse impact on our reputation and, as a result, our business.

There is increased focus from certain government regulators, investors, customers, associates, business partners and other stakeholders concerning ESG matters.

The expectations related to ESG matters continue to rapidly evolve and diverge.

The focus by investors and other stakeholders on the ESG practices of publicly traded companies, like us, has included or may in the future include expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, labor and risk oversight, and could expand the nature, scope, and complexity of matters that we are required to control, assess and report.

Furthermore, if we announce certain initiatives and goals related to ESG matters we could fail, or be perceived to fail, to accurately set, meet or report our progress on such initiatives and goals and/or we could fail, or be perceived to fail, to act responsibly in our ESG efforts.

In addition, we could be criticized for the speed of adoption of such initiatives and goals, or the scope of such initiatives or goals.

As a result, we could suffer negative publicity and our reputation could be adversely impacted, which in turn could have a negative impact on investor perception and our products' acceptance by consumers.

In addition, in recent years there has been a rise in the prevalence of the anti-ESG movement, and we could be criticized for the scope or nature of our ESG initiatives and goals or for any revisions to our goals.

We may not be able to meet the diverging expectations and perspectives on these topics, and we could be subjected to negative responses by consumers (such as boycotts or negative publicity campaigns) that could adversely affect our reputation, results of operations, financial condition and cash flows.

This may also impact our ability to attract and retain talent to compete in the marketplace

In addition, we could be criticized by ESG detractors for the scope or nature of our ESG initiatives or goals or for any revisions to these goals.

We could also be subjected to negative responses by governmental actors (such as anti-ESG legislation or retaliatory legislative treatment) or consumers (such as boycotts or negative publicity campaigns) that could adversely affect our reputation, results of operations, financial condition and cash flows.

There is also uncertainty regarding the implementation of laws, regulations, and policies related to ESG and global environmental sustainability matters, including disclosure obligations and reporting on such matters, and appropriately responding to potentially competing and/or contradictory regulatory requirements and expectations in the jurisdictions in which we operate.

Changes in the legal or regulatory environment affecting ESG disclosure, responsible sourcing, supply chain transparency, or environmental protection, among others, including regulations to limit carbon dioxide and other greenhouse gas emissions, to discourage the use of plastic or to limit or to impose additional costs on commercial water use may result in increased costs for us and our business partners, all of which may negatively impact our results of operations, financial condition and cash flows.

Abercrombie & Fitch Co.

2024 Form 10-K

OPERATIONAL RISKS.

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• Third parties with which we have a business relationship, including our brand representatives and influencer network, and our wholesale, franchise licensing, or marketplace partners, fail to represent our brands in a manner consistent with our brand image or act in a way that harms their reputation;

• Misconduct or illegal activities by our current and former associates, directors, advisors, third-party business partners, or others affiliated, or perceived to be affiliated, with the Company;

• Third-party vendors fail to comply with our Vendor Code of Conduct or any third parties with which we have a business relationship fail to represent our brands in a manner consistent with our brand image;

• Unfavorable media publicity and consumer perception of our products, operations, brand or experience;

• Our position or perceived lack of position on ESG, public policy or other similar issues and any perceived lack of transparency about those matters.

• Unfavorable media publicity, influencer reviews on social media, or negative consumer perception of our products, operations, brand or experience;

• Our position or perceived lack of position on ESG topics, public policy or other similar issues and any perceived lack of transparency about those matters.

In addition, in recent years there has been an increase in media platforms, particularly, social media and our use of social media platforms is an important element of our omnichannel marketing efforts.

For example, we maintain various social media accounts for our brands, including Instagram, TikTok, Facebook, Twitter and Pinterest accounts.

For example, we maintain various social media accounts for our brands, including Instagram, TikTok, Facebook, X (f/k/a Twitter), SnapChat, and Pinterest accounts.

Negative publicity or actions taken by individuals that we partner with, such as brand representatives, influencers or our associates, that fail to represent our brands in a manner consistent with our brand image or act in a way that harms their reputation, whether through our social media accounts or their own, could harm our brand reputation and materially impact our business.

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Such investments and operational changes include the development of localized fulfillment, shipping and customer service operations, investments in digital media to attract new customers, and the rollout of omnichannel capabilities listed in “ ITEM 1.

BUSINESS ” of this Annual Report on Form 10-K.

Abercrombie & Fitch Co.

2024 Form 10-K

While we must keep up to date with technology trends in the retail environment in order to manage our successful omnichannel shopping experience, it is possible these initiatives may not provide the anticipated benefits or desired rates of return.

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Failure to successfully respond to these risks may adversely affect sales as well as damage the reputation of our brands.

Abercrombie & Fitch Co.

2023 Form 10-K

If our information technology systems are disrupted or cease to operate effectively, it could have a material adverse impact on our business.

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Given the significant number of transactions that are completed annually, it is vital to maintain constant operation of our computer hardware, telecommunication systems and software systems, and maintain data security.

Despite efforts to prevent such an occurrence, our information technology systems may be vulnerable, from time to time, to damage or interruption from computer viruses, power interruptions or outages or other system failures, third-party intrusions, inadvertent or intentional breaches by our associates or third-party service providers, and other technical malfunctions.

Further, the sophistication, availability and use of artificial intelligence by threat actors present an increased level of risk.

If our systems are damaged, fail to function properly, or are obsolete in comparison to those of our competition, we may have to make monetary investments to repairs or replace the systems and we could endure delays in our operations.

Despite efforts to prevent such an occurrence, our information technology systems may be vulnerable, from time to time, to damage or interruption from computer viruses, power interruptions or outages or other system failures, third-party intrusions, inadvertent or intentional breaches by our associates, third-party service providers or business partners, or threat actors, and other technical malfunctions.

Further, the sophistication, availability and use of AI by threat actors present an increased level of risk.

If our systems are damaged, fail to function properly, or are outdated in comparison to those of our competition, we may have to make monetary investments to repairs or replace the systems and we could endure delays in our operations.

We have made and expect to continue to make significant monetary investments and devote significant attention to modernizing our core systems, and the effectiveness of these investments can be less predictable than others and may fail to provide the expected benefits.

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We regularly evaluate our information technology systems and requirements to ensure appropriate functionality and use in response to business demands.

For example, in 2022 we started a multi-year process of upgrading our merchandising enterprise resource planning ("ERP") system.

We are aware of the inherent risks associated with replacing and modifying these systems, including inaccurate system information, system disruptions and user acceptance and understanding.

For example, in 2022, we began the multi-year process of upgrading our ERP system.

We are continuing to execute this plan in Fiscal 2025 and currently anticipate implementation in Fiscal 2026.

We are aware of the inherent risks associated with replacing and modifying these systems, including system disruptions, inaccurate system information, and user acceptance and understanding.

Any material disruption or slowdown of our systems, including a disruption or slowdown caused by our failure to successfully upgrade or replace our systems could impact our ability to effectively manage and maintain our inventory, to ship products to customers on a timely basis, and may cause information to be lost or delayed, including data related to customer orders.

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The protection of this information is critical to our business and subjects us to numerous laws, rules and regulations domestically and in foreign jurisdictions.

The retail industry in particular has been the target of many cyber-attacks and it is possible that an individual or group could defeat our security measures, or those of a third-party service provider, and access confidential information about our business, customers and associates.

The retail industry in particular has been the target of many cyber-attacks and it is possible that an individual or group could defeat our security measures, or those of a third-party service provider or business partner, and access confidential information about our business, customers and associates.

Further, like other companies in the retail industry, during the ordinary course of business, we and our vendors have in the past experienced, and we expect to continue to experience, cyber-attacks of varying degrees and types, including phishing, and other attempts to breach, or gain unauthorized access to, our systems.

To date, cyber-attacks have not had a material impact on our operations, but we cannot provide assurance that cyber-attacks will not have a material impact in the future.

Abercrombie & Fitch Co.

2024 Form 10-K

We have experienced, and expect to continue to experience, increased costs associated with protecting confidential information through the implementation of security technologies, processes and procedures, including training programs for associates to raise awareness about phishing, malware and other cyber risks, especially as we implement new technologies, such as new payment capabilities or updates to our mobile apps and websites.

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We may incur significant costs related to compliance with these laws and failure to comply with these regulatory standards, and others, could have a material adverse impact on our business.

Abercrombie & Fitch Co.

2023 Form 10-K

We have also implemented a flexible work policy allowing most of our corporate associates to work remotely, from time to time, as have certain of our third-party vendors.

Offsite working by associates, which requires increased use of public internet connection, and use of office equipment off premises may make our business more vulnerable to cybersecurity breach attempts, phishing and other scams, fraud, money laundering, theft and other criminal activity.

If we, or a third-party partner, were to fall victim to a successful cyber-attack or suffer intentional or unintentional data and security breaches by associates or third-parties, it could have a material adverse impact on our business, especially an event that compromises customer data or results in the unauthorized release of confidential business or customer information.

If we, or a third-party who has access to our info, were to fall victim to a successful cyber-attack or suffer intentional or unintentional data and security breaches by associates or third-parties, it could have a material adverse impact on our business, especially an event that compromises customer data or results in the unauthorized release of confidential business or customer information.

In addition, if we are unable to avert a denial of service attack that renders our website inoperable, it could result in negative consequences, such as lost sales and customer dissatisfaction.

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For example, significant inflationary pressures have and may continue to impact the cost of labor, cotton and other raw materials.

Increased global uncertainty has also impacted and may in the future impact the cost, availability and quality of the fabrics or other raw materials used to manufacture our merchandise, and compliance with sanctions, customs trade orders and sourcing laws, such as those issued by the U.S.

government related to the ongoing conflict in Russia and Ukraine and entities and individuals connected to China’s Xinjiang Uyghur Autonomous Region, could impact the price of cotton in the marketplace and the global supply chain.

Abercrombie & Fitch Co.

2024 Form 10-K

Fluctuations in the cost of transportation could also have a material adverse effect on our cost of sales and ability to meet customer demand.

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We may not be able to pass all or a portion of higher labor costs on to our customers, which could adversely affect our gross margin and results of operations.

Abercrombie & Fitch Co.

2023 Form 10-K

We depend upon independent third parties for the manufacture and delivery of all our merchandise, and a disruption of the manufacture or delivery of our merchandise could have a material adverse impact on our business.

We do not own or operate any manufacturing facilities.

Changes in tax or tariff policy regarding merchandise produced in, and raw materials sourced from, certain countries could adversely affect our business.

A predominant portion of the merchandise we sell is originally manufactured in countries other than the United States.

Refer to Note 6, “ INVENTORIES ,” of the Notes to Consolidated Financial Statements included in “ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this Annual Report on Form 10-K for a summary of inventory sourced based on vendor location during Fiscal 2024.

Additionally, many of the raw materials used to manufacture our apparel is sourced internationally.

International trade disputes that result in tariffs and other protectionist measures could adversely affect our business, including disruption and cost increases in our established patterns for sourcing raw materials and our merchandise and increased uncertainties in planning our sourcing strategies and forecasting our margins.

For example, the United States has imposed significant new tariffs on China related to the importation of certain product categories.

It is also possible that additional tariffs may be imposed on imports from other countries, including the foreign countries where our apparel is predominantly manufactured.

The imposition of any such tariffs would likely increase the cost of our merchandise and negatively impact our operating results.

Although such changes would have implications across the entire industry, we may fail to effectively adapt to and manage the adjustments in strategy that would be necessary in response to those changes.

We are working with our current suppliers to mitigate our exposure to current or potential tariffs and seeking opportunities to engage other suppliers, but there can be no assurance that we will be able to offset any increased costs or secure other suppliers.

In addition, other countries may change their business and trade policies in anticipation of or in response to the U.S.’s increased import tariffs and other changes in U.S.

trade policy and regulations already enacted or that may be enacted in the future.

In addition to the general uncertainty and overall risk from potential changes in trade laws and policies, as we make business decisions in the face of such uncertainty, we may incorrectly anticipate the outcomes, miss out on business opportunities, or fail to effectively adapt our business strategies and manage the adjustments that are necessary in response to those changes.

These risks could adversely affect our revenues, reduce our profitability, and negatively impact our business.

We depend upon independent third parties for the manufacture and delivery of our merchandise, and a disruption of the manufacture or delivery of our merchandise could have a material adverse impact on our business.

We depend on third parties for the manufacture and delivery of our merchandise.

As a result, the continued success of our operations is tied to our timely receipt of quality merchandise from third-party manufacturers.

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A manufacturer’s inability to ship orders in a timely manner or meet our quality standards could cause delays in responding to consumer demand and negatively affect consumer confidence or negatively impact our competitive position, any of which could have a material adverse effect on our financial condition and results of operations.

For example, the recent attacks on cargo vessels in the Red Sea have resulted in delayed deliveries and may result in increased freight costs, and a prolonged or escalating armed conflict may result in additional costs, including any impact from using air freight instead of ocean freight to mitigate inventory delays.

For example, the attacks on cargo vessels in the Red Sea have resulted in delayed deliveries and increased freight costs, and a prolonged or escalating armed conflict may result in additional costs, including any impact from using air freight instead of ocean freight to mitigate inventory delays.

It is possible that the adverse impact of these and future attacks, including additional costs associated with mitigation efforts, could materially adversely affect our business and results of operation.

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If these factories are unwilling or not able to meet the standards set forth within the Company’s Vendor Code of Conduct, it could limit the options available to us and could result in an increase of costs of manufacturing, which we may not be able to pass on to our customers.

Abercrombie & Fitch Co.

2024 Form 10-K

Other events that could disrupt the timely delivery of our merchandise include new trade law provisions or regulations, reliance on a limited number of shipping carriers and associated alliances, weather events, significant labor disputes, port congestion and other unexpected events.

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Refer to “ ITEM 1.

BUSINESS ,” for a listing of certain distribution centers on which we rely.

We rely on the experience and skills of our executive officers and associates, and the failure to attract or retain this talent, effectively manage succession, and establish a diverse workforce could have a material adverse impact on our business.

BUSINESS ” of this Annual Report on Form 10-K, for a listing of certain distribution centers on which we rely.

We rely on the experience and skills of our executive officers and associates, and the failure to attract or retain this talent, effectively manage succession, and establish a workforce that can best serve the communities in which we operate could have a material adverse impact on our business.

Our ability to succeed may be adversely impacted if we are not able to attract, retain and develop talent and future leaders, including our executive officers.

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In addition, we cannot guarantee that we will be able to find adequate temporary or seasonal personnel to staff our operations when needed.

For example, as automation, artificial intelligence and similar technological advancements continue to evolve, we may need to compete for talent that is familiar with these advancements in technologies in order to compete effectively with our industry peers.

For example, as automation, AI and similar technological advancements continue to evolve, we may need to compete for talent that is familiar with these advancements in technologies in order to compete effectively with our industry peers.

If we are not successful in these efforts, our business may be adversely affected.

If we are not successful in these efforts or fail to successfully execute against the key human capital management initiatives discussed in “ ITEM 1.

BUSINESS ,” our business could be adversely impacted.

Abercrombie & Fitch Co.

2023 Form 10-K

BUSINESS ” of this Annual Report on Form 10-K, our business could be adversely impacted.

I f we identify a material weakness in our internal control over financial reporting, fail to remediate a material weakness, or fail to establish and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.

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Additionally, we could fail to meet our public reporting requirements on a timely basis, and be subject to fines, penalties, investigations or judgements, all of which could negatively affect investor confidence and adversely impact our stock price.

Abercrombie & Fitch Co.

2024 Form 10-K

LEGAL, TAX, REGULATORY AND COMPLIANCE RISKS.

Misconduct or illegal activities by our current and former associates, directors, advisers, third-party service providers, or others affiliated, or perceived to be affiliated, with the Company could subject to us to reputational harm, regulatory scrutiny or inquiries, or legal liability .

There is a risk that current or former associates, executives, directors, advisers or third party-service providers of the Company, or others who are actually or perceived to be affiliated with us, could engage, deliberately or recklessly, in misconduct or fraud that creates legal exposure for us and adversely affects our business.

Misconduct or illegal activities by our current and former associates, directors, advisers, third-party service providers or business partners, or others affiliated, or perceived to be affiliated, with the Company could subject to us to reputational harm, regulatory scrutiny or inquiries, or legal liability .

There is a risk that current or former associates, executives, directors, advisers, third party-service providers or business partners of the Company, or others who are actually or perceived to be affiliated with us, could engage, deliberately or recklessly, in misconduct or fraud that creates legal exposure for us and adversely affects our business.

If such individuals were to engage, or be accused of engaging in, illegal or suspicious activities, sexual misconduct or harassment, racial or gender discrimination, improper use or disclosure of confidential information, fraud, payment or solicitation of bribes, or any other type of similar misconduct or violation of other laws and regulations, during their employment or service with us, we could suffer serious harm to our brand, reputation, be subject to penalties or sanctions, suffer serious harm to our financial position and current and future business relationships, and face potentially significant litigation or investigations.

For example, Michael Jeffries, who served as chief executive officer of the Company from 1992 to 2014, has been accused of sexual abuse and exploitation, which include claims relating to behavior that is alleged to have occurred during his tenure with us.

Litigation has been filed against Mr.

Jeffries and the Company that relates to this alleged behavior.

In particular, Michael Jeffries, who served as chief executive officer of the Company from 1992 to 2014, has been accused of sexual abuse and exploitation, which accusations include claims relating to behavior that is alleged to have occurred during his prior tenure with us.

Criminal charges have been filed against Mr.

Jeffries, and there are multiple pending civil actions against Mr.

Jeffries and the Company that relate to this alleged behavior.

Although we believe the claims against us are without merit, the allegations against this former executive, as well as the claims brought against us, have resulted in negative media attention and may result in additional litigation or may result in other adverse consequences to our reputation, brand, and business.

In addition, in early March 2024, the Delaware Court of Chancery ruled that Mr.

Jeffries was entitled to advancement by the Company of his defense costs for the litigation.

In addition, in March 2024 and March 2025, the Delaware Court of Chancery ruled that Mr.

Jeffries was entitled to advancement by the Company of his defense costs for the civil litigation and for his defense costs for the criminal prosecution against him, respectively.

Fluctuations in our tax obligations and effective tax rate may result in volatility in our results of operations could have a material adverse impact on our business.

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Although the U.S.

has not yet enacted legislation implementing Pillar Two Rules, other countries where the Company does business, including the U.K.

effectively withdrew from the OECD global tax agreement in January 2025, other countries where the Company does business, including the U.K.

and Germany, have enacted legislation implementing Pillar Two Rules, which are effective from January 1, 2024.

The Company does not expect The Pillar Two Rules will have a material impact on the effective tax rate for fiscal 2024, but the rules will likely increase tax complexity, and may adversely affect our provision for income taxes.

The implementation of the Pillar Two Rules in each jurisdiction in which the Company operates did not have a material impact on its effective tax rate for Fiscal 2024, and the Company does not project a material impact on the effective tax rate for Fiscal 2025.

In some global markets, we are required to withhold and remit VAT to the appropriate local tax authorities.

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Tax law may be enacted in the future, domestically or abroad, that impacts our current or future tax structure and effective tax rate.

Abercrombie & Fitch Co.

2023 Form 10-K

Litigation and any future stockholder activism could have a material adverse impact on our business.

We, along with third parties we do business with, are involved, from time to time, in litigation arising in the ordinary course of business.

Litigation matters may include, but are not limited to, contract disputes, employment-related actions, labor relations, commercial litigation, intellectual property rights, product safety, environmental matters and shareholder actions.

Litigation matters may include, but are not limited to, contract disputes, employment-related actions, alleged misconduct by current or former associates, labor relations, commercial litigation, intellectual property rights, privacy litigation, product safety, environmental matters and shareholder actions.

Abercrombie & Fitch Co.

2024 Form 10-K

Litigation, in general, may be expensive and disruptive.

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Stockholder activism, which could take many forms or arise in a variety of situations, remains popular with many public investors.

Due to the potential volatility of our stock price and for a variety of other reasons, we may become the target of securities litigation or stockholder activism.

Due to the volatility of our stock price and for a variety of other reasons, we may become the target of securities litigation or stockholder activism.

Responding to stockholder activists’ campaigns may involve significant expense and diversion of management’s attention and resources without yielding any improvement in our results of operations or financial condition.

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We have obtained or applied for federal registration of these trademarks with the U.S.

Patent and Trademark Office and the registries of countries in key markets within the Company’s sales and distribution channels.

Patent and Trademark Office and the registries of countries in key markets within the Company’s owned and operated sales and distribution channels, and those in which the Company’s franchise, wholesale, and licensing partners have sales and distribution rights.

In addition, these trademarks are either registered, or the Company has applications for registration pending, with the registries of many of the foreign countries in which the manufacturers of the Company’s products are located.

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Accordingly, it may be possible, in those foreign countries where the status of various applications is pending or unclear, for a third-party owner of the national trademark registration for a similar mark to prohibit the manufacture, sale or exportation of branded goods in or from that country.

Failure to register our trademarks or purchase or license the right to use our trademarks or logos in these jurisdictions could limit our ability to obtain supplies from, or manufacture in, less costly markets or penetrate new markets should our business plan include selling our merchandise in those non-U.S.

jurisdictions.

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These risks may be magnified if we increase our use of licensing arrangements or partnerships with third parties.

Abercrombie & Fitch Co.

2023 Form 10-K

Changes in the regulatory or compliance landscape could have a material adverse impact on our business.

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Any changes in regulations, the imposition of additional regulations, or the enactment of any new or more stringent legislation including the areas referenced above, could adversely affect our business and results of operations.

Abercrombie & Fitch Co.

2024 Form 10-K

Laws and regulations at the local, state, federal and various global levels frequently change, and the ultimate cost of compliance cannot be precisely estimated.

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Failure to comply with such regulations could result in fines, penalties, or lawsuits and could have a material adverse impact on our business.

The agreements related to A&F Management’s senior secured asset-based revolving credit facility and senior secured notes include restrictive covenants that limit our flexibility in operating our business and our inability to obtain additional credit on reasonable terms in the future could have an adverse impact on our business.

The Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) of Abercrombie & Fitch Management Co.

(“A&F Management”), a wholly-owned indirect subsidiary of A&F, provides for a senior secured asset-based revolving credit facility of up to $400 million (the “ABL Facility”), which matures on April 29, 2026.

A&F Management’s senior secured notes (the “Senior Secured Notes””) have a fixed 8.75% interest rate and mature on July 15, 2025.

The agreements related to the ABL Facility and the Senior Secured Notes contain restrictive covenants that, subject to specified exemptions, restrict, among other things, the ability of the Company and its subsidiaries to:

The agreements related to A&F Management’s senior secured asset-based revolving credit facility includes restrictive covenants that limit our flexibility in operating our business and our inability to obtain additional credit on reasonable terms in the future could have an adverse impact on our business.

The Amended and Restated Credit Agreement (as amended, the “ABL Credit Agreement”) of Abercrombie & Fitch Management Co.

(“A&F Management”), a wholly-owned indirect subsidiary of A&F, provides for a senior secured asset-based revolving credit facility of up to $500 million (the “ABL Facility”), which matures on August 2, 2029.

The agreements related to the ABL Facility contain restrictive covenants that, subject to specified exemptions, restrict, among other things, the ability of the Company and its subsidiaries to:

incur, assume or guarantee additional indebtedness;

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

If an event of default under either related agreement occurs, any outstanding obligations under the Senior Secured Notes and the ABL Facility could be declared immediately due and payable or the lenders or noteholders could foreclose on or exercise other remedies with respect to the assets securing the indebtedness under the Senior Secured Notes and the ABL Facility.

If an event of default under either related agreement occurs, any outstanding obligations under the ABL Facility could be declared immediately due and payable or the lenders or noteholders could foreclose on or exercise other remedies with respect to the assets securing the indebtedness under the ABL Facility.

In addition, there is no assurance that we would have the cash resources available to repay such accelerated obligations.

Moreover, the Senior Secured Notes and ABL Facility are secured by certain of our real property, inventory, intellectual property, general intangibles and receivables, among other things, and lenders may exercise remedies against the collateral in an event of default.

We have, and expect to continue to have, a level of indebtedness.

In addition, we may, from time to time, incur additional indebtedness.

We may need to refinance all or a portion of our existing indebtedness before maturity, including the Senior Secured Notes, and any indebtedness under the ABL Facility.

There can be no assurance that we would be able to obtain sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all.

Moreover, the ABL Facility is secured by certain of our real property, inventory, intellectual property, general intangibles and receivables, among other things, and lenders may exercise remedies against the collateral in an event of default.

We may, from time to time, incur indebtedness.

There can be no assurance that we would be able to obtain sufficient funds to enable us to repay or refinance any future obligations on commercially reasonable terms, or at all.

Changes in market conditions could potentially impact the size and terms of a replacement facility or facilities in the future.

The inability to obtain credit on commercially reasonable terms in the future could adversely impact our liquidity and results of operations as well as limit our ability to take advantage of business opportunities that may arise.

Abercrombie & Fitch Co.

2023 Form 10-K

Our amended and restated bylaws provide that certain courts in the State of Delaware or the federal district courts of the United States will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

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The exclusive forum provisions will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions.

Section 27 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.

As a result, the exclusive forum provisions will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

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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 1A. Risk Factors