What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-06-06 compared with 2024-12-06 · 163 added, 369 removed, 268 unchanged (67% of the section changed)

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The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Quarterly Report on Form 10-Q or made by the Company or its management and spokespeople involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company’s control.

Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “should,” “are confident,” “will,” “could,” “outlook,” or the negative versions of these words or other comparable words, and similar expressions may identify forward-looking statements.

Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “should,” “are confident,” “will,” “could,” “outlook,” or the negative versions of those words or other comparable words, and similar expressions may identify forward-looking statements.

Future economic and industry trends that could potentially impact revenue and profitability are difficult to predict.

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Factors that could cause results to differ from those expressed in the Company’s forward-looking statements include, but are not limited to, the risks described or referenced in Part I, Item 1A.

“Risk Factors,” in the Company’s Fiscal 2023 Form 10-K and in our subsequent reports and filings with the SEC, as well as the following:

• risks related to changes in global economic and financial conditions, including inflation, and the resulting impact on consumer spending generally and on our operating results, financial condition, and expense management, and our ability to adequately mitigate the impact;

• risks related to the geopolitical landscape and conflicts, such as the recent attacks on marine vessels in the Red Sea and the potential escalation of such conflicts, and the impact of such conflicts on international trade, supplier delivery or increased freight costs, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience;

“Risk Factors,” in the Company’s Fiscal 2024 Form 10-K and otherwise in our subsequent reports and filings with the SEC, as well as the following:

• risks related to global trade policy, including the impact of the imposition or threat of imposition of new or increased tariffs by the United States or foreign governments, other changes to trade policies or arrangements and continued uncertainties relating to such policies and arrangements, or a global trade war;

• risks related to changes in global economic and financial conditions, including inflation, and the resulting impact on consumer spending and our operating results, financial condition, and expense management;

• risks related to global operations, including changes in the economic or political conditions where we sell or source our products;

• risks related to the geopolitical landscape and ongoing armed conflicts, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience and the impact of such conflicts or events on international trade, supplier delivery or increased freight costs;

• risks related to natural disasters and other unforeseen catastrophic events;

• risks related to our failure to engage our customers, anticipate customer demand, expectations, and changing fashion trends, and manage our inventory and product delivery;

• risks related to our failure to operate effectively in a highly competitive and constantly evolving industry;

• risks related to our ability to successfully invest in and execute on our customer, digital and omnichannel initiatives;

• risks related to our ability to execute on, and maintain the success of, our strategic and growth initiatives;

• risks related to the effects of seasonal fluctuations on our sales and our performance during the back-to-school and holiday selling seasons;

• risks related to fluctuations in foreign currency exchange rates;

• risks related to fluctuations in our tax obligations and effective tax rate, including as a result of earnings and losses generated from our international operations;

• risks related to our ability to execute on, and maintain the success of, our strategic and growth initiatives, including those outlined in our 2025 Always Forward Plan;

• risks related to global operations, including changes in the economic or political conditions where we sell or source our products or changes in import tariffs or trade restrictions, including implications related to the change in administration as a result of the 2024 U.S.

presidential election;

• risks related to fluctuations in our tax obligations and effective tax rate, including as a result of earnings and losses generated from our global operations, may result in volatility in our results of operations;

• risks related to our ability to execute on, and maintain the success of, our strategic and growth initiatives;

• risks and uncertainty related to adverse public health developments;

• risks related to cybersecurity threats and privacy or data security breaches;

• risks related to the potential loss or disruption of our information systems;

• risks related to cybersecurity threats and privacy or data security breaches, and the potential loss or disruption of our information technology systems;

• risks related to the continued validity of our trademarks and our ability to protect our intellectual property;

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• risks related to actual or threatened litigation;

• uncertainties related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing legislation.

• uncertainties related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing laws and regulations.

In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company, or any other person, that the objectives of the Company will be achieved.

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• Current Trends and Outlook .

A discussion related to certain of the Company’s focus areas for the current fiscal year and a discussion of certain risks and challenges, as well as a summary of the Company’s performance for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023.

• Results of Operations .

An analysis of certain components of the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023.

An analysis of certain components of the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income for the thirteen weeks ended May 3, 2025 and May 4, 2024.

• Liquidity and Capital Resources .

A discussion of the Company’s financial condition, changes in financial condition and liquidity as of November 2, 2024, which includes (i) an analysis of financial condition as compared to February 3, 2024;

(ii) an analysis of changes in cash flows for the thirty-nine weeks ended November 2, 2024, as compared to the thirty-nine weeks ended October 28, 2023;

and (iii) an analysis of liquidity, including availability under the Company’s ABL Facility (as defined below), the Company’s share repurchase program, and outstanding debt and covenant compliance.

A discussion of the Company’s financial condition, changes in financial condition and liquidity as of May 3, 2025, which includes (i) an analysis of financial condition as compared to February 1, 2025;

(ii) an analysis of changes in cash flows for the thirteen weeks ended May 3, 2025, as compared to the thirteen weeks ended May 4, 2024;

and (iii) an analysis of liquidity, including availability under the Company’s ABL Facility (as defined below), the Company’s share repurchase program, and covenant compliance.

• Recent Accounting Pronouncements .

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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:

The Company manages its business on a geographic basis, consisting of 3 reportable segments:

Europe, the Middle East and Africa (“EMEA”);

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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.

The Company’s brands include Abercrombie brands and Hollister brands.

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.

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Fiscal 2024 February 1, 2025 52

Fiscal 2025 January 31, 2026 52

Fiscal 2026 January 30, 2027 52

Historically, the Company’s operations have been seasonal in nature and consist of two principal selling seasons:

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Focus areas for fiscal 2025

In June of Fiscal 2022, we announced our 2025 Always Forward Plan, which outlines our long-term strategy and goals, including growing shareholder value.

The Company introduced the Always Forward Plan in June 2022.

The Always Forward Plan is anchored on our strategic growth principles, which are to:

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• Operate with financial discipline.

The 2025 Always Forward Plan growth principles serve as a framework for the Company achieving sustainable and profitable growth and profitability in Fiscal 2024.

Below are some additional details specific to Fiscal 2024 objectives within the 2025 Always Forward Plan:

While the Company has significantly outperformed certain financial targets set forth in the Always Forward Plan, the growth principles continue to serve as a framework for the Company achieving sustainable and profitable growth and profitability.

The Company’s strategic priorities continue to evolve based on changing consumer demands and new strategic opportunities, and management reviews and prioritizes investments and strategic focus areas to address such demands and opportunities.

The Company's focus areas for Fiscal 2025 are to:

Execute focused growth plans by:

• driving sales growth across regions and brands primarily through marketing and store investment;

• using our playbooks globally to align the brands’ products, voices, and experiences with customers, both digitally and in-store;

• driving sales growth across regions and brand families primarily through marketing and store investments in our owned and operating channels, while pursuing new geographies and markets via franchise, wholesale and licensing partnerships;

• using our regionally relevant brand playbooks globally to align the brands’ products, voices, and experiences with customers, both digitally and in-store;

• using testing and chase strategies to deliver compelling assortments and product collections across genders.

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• continuing to progress on our multi-year enterprise resource planning (“ERP”) transformation and cloud migration journey;

• investing in digital and technology to improve experiences across key parts of the customer journey while delivering a consistent omnichannel experience.

Operate with financial discipline by:

• actively managing inventory levels and positioning Abercrombie brands and Hollister brands to chase inventory as appropriate throughout the year;

• funding our growth strategies while properly balancing investments, impacts of inflation and efficiency efforts.

• investing in digital and technology to improve experiences across key parts of the customer journey while delivering a

Abercrombie & Fitch Co.

2025 1Q Form 10-Q

Current macroeconomic conditions and impact of inflation

Macroeconomic conditions, that include inflation, a volatile interest rate environment, the geopolitical landscape, global political uncertainty, including as a result of the 2024 U.S.

presidential and congressional elections, uncertainty regarding significant changes in legislation, regulations, and tariffs, foreign exchange rate fluctuations, and evolving habits in consumer discretionary spending continue to impact the global economy.

In periods of perceived or actual unfavorable economic conditions, consumers may reallocate available discretionary spending or determine that they have fewer funds available for discretionary spending, which may adversely impact demand for our products.

In addition, while cotton and raw material costs stabilized since the second quarter of Fiscal 2024, freight costs have been increasing since the start of the second quarter of Fiscal 2024.

Continued inflationary pressures and pricing volatility could further impact expenses and have a long-term impact on the Company because increasing costs may impact its ability to maintain satisfactory margins.

consistent omnichannel experience.

Operate with financial discipline by:

• using our agile inventory model and pricing strategies to position the Company to support customer demand throughout the year;

• maintaining our durable balance sheet and consistent free cash flow profile, underpinned by our disciplined investment philosophy while balancing against macro environment impacts and efficiency efforts.

Current macroeconomic conditions

Macroeconomic conditions, such as a volatile interest rate environment, ongoing inflation, the geopolitical landscape, and foreign exchange rate fluctuations continue to impact the global economy.

In addition, recent changes in legislative and regulatory developments, including enacted and proposed tariffs and other trade policies, have introduced additional uncertainty in the global economy.

For example, during the first quarter of Fiscal 2025, the U.S.

announced a new universal baseline tariff of 10%, plus an additional country-specific tariff for select countries, including the countries from which we source a predominant portion of our merchandise, on all U.S.

As a result, certain countries have imposed retaliatory tariffs on U.S.

While the U.S.

announced a 90-day pause on many of these country-specific tariffs and a recent court ruling brings additional uncertainty regarding the enforceability of the announced tariffs, it is possible that further tariffs may be introduced or increased, resulting in further uncertainty regarding the future of global trade relations.

These actions have the potential to disrupt our ability to procure, and/or increase the cost of merchandise sourced from these countries.

Uncertainties regarding tariffs, together with geopolitical tensions, may further affect our business and operations or could lead to further weakened business conditions for our industry.

With continued uncertainty surrounding the geopolitical and trade environment, we continue to evaluate the impact of tariffs and other trade policies on our business and are building a playbook of mitigation strategies.

Current mitigation strategies include supply chain changes, negotiations with our supply chain vendors, and pursuing operating expense reductions.

Assuming a 30% tariff on U.S.

imports from China and a 10% baseline tariff on other global imports to the U.S., and factoring in our planned mitigation strategies, we expect to incur approximately $50 million of tariff expense, or 100 basis points as a percent of net sales, which will correspondingly negatively impact our operating profit in Fiscal 2025.

In addition, freight costs have remained heightened since the start of the second quarter of Fiscal 2024, which we expect to continue through the first half of Fiscal 2025.

Continued inflationary pressures could further impact expenses and have a long-term impact on the Company as increasing costs may impact its ability to maintain satisfactory margins.

Global events and supply chain disruptions

As a global multi-brand omnichannel specialty retailer, with operations in North America, Europe, the Middle East, and Asia, among other regions, management is mindful of macroeconomic risks, global challenges and the changing global geopolitical environment.

The global supply chain also continues to be negatively impacted by various factors, including disruptions in major maritime routes, port congestion, higher operational costs, and increased competition for supply chain availability due to uncertainty regarding potential tariffs.

The Company has taken certain mitigating actions in response to these disruptions, including increasing air freight usage where appropriate and prioritizing critical orders earlier to allow for longer lead times.

Further mitigating actions may be needed, particularly if there is prolonged port congestion or transportation delays, and could result in higher freight costs in the near-term and beyond.

The global supply chain also continues to be negatively impacted by various factors, including disruptions in major maritime routes, higher operational costs, and increased competition for supply chain availability due to uncertainty regarding tariffs and trade policy.

In the past, the Company has taken certain mitigating actions in response to these disruptions, including increasing air freight usage where appropriate and prioritizing critical orders earlier to allow for longer lead times.

Further mitigating actions may be needed and could result in higher freight costs in the near-term and beyond.

Management continues to monitor global events and assess the potential impacts that these and similar events may have on the business in future periods.

Although management also develops and updates contingency plans to assist in mitigating potential impacts, it is possible that the Company’s preparations for such events are not adequate to mitigate their impact, and that these events could further adversely affect its business and results of operations.

Global store network optimization

Global store network modernization and growth

The Company has a goal of finding the right size, right location and right economics for omni-enabled stores that cater to local customers.

The Company continues to use data to inform its focus on aligning store square footage with digital penetration, and has delivered new store experiences across brands during Fiscal 2025.

Through the end of the third fiscal quarter, the Company opened 39 new stores, remodeled 30 stores and right-sized eight stores while closing 31 stores.

Through the end of the first fiscal quarter, the Company opened seven new stores, remodeled nine stores and right-sized one store, while closing three stores.

As part of this focus, the Company’s store investment plan includes delivering approximately 40 net store openings during Fiscal 2025 consisting of opening approximately 60 new stores, while closing approximately 20 stores, pending negotiations with our landlord partners.

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The Company may also elect to exit or modify other leases, and could incur charges related to these actions.

Abercrombie & Fitch Co.

2025 1Q Form 10-Q

Pillar Two Model Rules

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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.

withdrew from the OECD’s 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 implementation of the Pillar Two Rules in each jurisdiction in which it operates did not have a material impact on the Company’s effective tax rate.

The Company will continue to evaluate the impact as additional jurisdictions implement legislation and provide further guidance.

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

The Company will continue to evaluate the impact as additional jurisdictions enact legislation and provide further guidance.

For a discussion of material risks that have the potential to cause our actual results to differ materially from our expectations, refer to Part I, “Item 1A.

Risk Factors” on the Fiscal 2024 Form 10-K.

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

Summary of results

The following provides a summary of results for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023:

The following provides a summary of results for the thirteen weeks ended May 3, 2025 and May 4, 2024:

GAAP Non-GAAP (1)

Thirteen Weeks Ended November 2, 2024

October 28, 2023

November 2, 2024

October 28, 2023

Thirteen Weeks Ended May 3, 2025

Net sales (in thousands)

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Comparable sales (2)

Gross profit rate 65.1 % 64.9 %

Operating income (in thousands)

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Operating income margin

14.8 % 13.1 %

Net income attributable to A&F (in thousands)

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Net income per share attributable to A&F $ 1.59 $ 2.14

Thirty-Nine Weeks Ended

Net sales $ 3,363,670 $ 2,827,770

Change in net sales 19.0 % 13.2 %

Comparable sales (2)

Gross profit rate 65.4 % 62.9 %

Operating income $ 484,756 $ 261,870 $ 266,306

Operating income margin

14.4 % 9.3 % 9.4 %

Net income attributable to A&F $ 378,997 $ 169,676 $ 172,905

Net income per share attributable to A&F 7.13 3.25 3.32

(1) Discussion as to why the Company believes that these non-GAAP financial measures are useful to investors and a reconciliation of the non-GAAP measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are provided below under “ NON-GAAP FINANCIAL MEASURES .”

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Refer to the discussion below in “ NON-GAAP FINANCIAL MEASURES ,” for further details on the comparable sales calculation.

Certain components of the Company’s Condensed Consolidated Balance Sheets as of November 2, 2024 and February 3, 2024 were as follows:

(in thousands) November 2, 2024 February 3, 2024

Certain components of the Company’s Condensed Consolidated Balance Sheets as of May 3, 2025 and February 1, 2025 were as follows:

(in thousands) May 3, 2025 February 1, 2025

Cash and equivalents $ 510,563 $ 772,727

Marketable securities 97,006 116,221

Inventories 542,059 575,005

Gross long-term borrowings outstanding, carrying amount — 223,214

Certain components of the Company’s Condensed Consolidated Statements of Cash Flows for the thirty-nine week periods ended November 2, 2024 and October 28, 2023 were as follows:

(in thousands) November 2, 2024 October 28, 2023

Net cash provided by operating activities $ 402,756 $ 350,142

Certain components of the Company’s Condensed Consolidated Statements of Cash Flows for the thirteen-week periods ended May 3, 2025 and May 4, 2024 were as follows:

(in thousands) May 3, 2025 May 4, 2024

Net cash (used for) provided by operating activities $ (4,000) $ 95,010

Net cash used for investing activities (30,764) (38,886)

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The estimated basis point (“BPS”) change disclosed throughout this Results of Operations section has been rounded based on the change in the percentage of net sales.

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

The Company’s net sales by reportable segment for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023 were as follows:

Net sales by segment are presented by attributing revenues to a physical store location or geographical region that fulfills the order.

The Company’s net sales by reportable segment for the thirteen weeks ended May 3, 2025 and May 4, 2024 were as follows:

Thirteen Weeks Ended

(in thousands, except ratios) November 2, 2024 October 28, 2023 $ Change % Change Comparable

Americas $ 986,449 $ 867,566 $ 118,883 14 % 16 %

EMEA 181,592 157,976 23,616 15 13

APAC 40,925 30,889 10,036 32 16

Total $ 1,208,966 $ 1,056,431 $ 152,535 14 16

Thirty-Nine Weeks Ended

(in thousands, except ratios) November 2, 2024 October 28, 2023 $ Change % Change Comparable

(in thousands, except ratios) May 3, 2025 May 4, 2024 $ Change % Change Comparable

Americas $ 874,804 $ 820,121 $ 54,683 7 % 4 %

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Refer to “ NON-GAAP FINANCIAL MEASURES , ” for further details on the comparable sales calculation.

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

For the third quarter of Fiscal 2024, net sales increased 14% as compared to the third quarter of Fiscal 2023.

The increase was primarily attributable to a high-single digit growth in unit volume from traffic growth in comparable company owned and operated stores and digital channels.

Mid-single digit increase in average unit retail (“AUR”) from lower promotional activity and category mix into higher ticket items also contributed to the increase in net sales.

The increase was partially offset by approximately $10 million due to the timing of sales volume based on the impact of the calendar shift in fiscal 2024 due to the 53rd selling week in fiscal 2023.

The year-over-year increase in net sales reflects positive comparable sales of 16%, as compared to the third quarter of Fiscal 2023.

For the first quarter of Fiscal 2025, net sales increased 8% as compared to the first quarter of Fiscal 2024.

The increase was primarily attributable to high-single digit growth in unit volume from traffic growth in comparable company owned and operated stores and digital channels and net new stores.

The year-over-year increase in net sales reflects positive comparable sales of 4%, as compared to the first quarter of Fiscal 2024.

• Net sales growth in the Americas region of 7%.

The increase was attributable to both higher AUR from lower promotional activity and category mix into higher ticket items and direct channel unit volume growth from increased traffic and transactions in company owned and operated stores and digital channels.

The increase was attributable to unit volume growth from increased traffic and transactions in company owned and operated stores and digital channels.

The comparable sales growth percentage is lower than net sales growth percentage, as comparable sales excludes the net impact of new store openings during the period which had a benefit on net sales growth.

• Net sales growth in the EMEA region of 12%.

The increase was attributable to both higher AUR from lower promotional activity and category mix into higher ticket items and unit volume growth from increased traffic and transactions in company owned and operated stores and digital channels.

• In the APAC region net sales grew 32% and 16% on a comparable sales basis.

In the third quarter, APAC net sales growth had an outsized benefit relative to total company from the calendar shift of the 53rd selling week.

This third quarter benefit will be offset in the fourth quarter.

Comparable sales growth led by high unit sales across company owned and operated stores and digital channels.

For the year-to-date period of Fiscal 2024, net sales increased 19%, as compared to the year-to-date period of Fiscal 2023.

The increase was primarily attributable to a double-digit increase in AUR from lower promotional activity and category mix into higher ticket items.

Mid-single digit growth in unit volume also contributed to the increase in net sales, following increases in traffic and transactions in company owned and operated channels.

Additionally, there was a benefit of approximately $30 million due to the timing of sales volume based on the impact of the calendar shift in Fiscal 2024 due to the 53rd selling week in Fiscal 2023.

The year-over-year increase in net sales reflects positive comparable sales of 18%, as compared to the year-to-date period of Fiscal 2023.

• Net sales growth in the Americas region of 20% and 18% on a comparable basis.

The increase was attributable to a higher AUR from lower promotional activity and category mix into higher ticket items.

Growth in unit volume as a result of increased traffic and transactions in company owned and operated stores and digital channels also contributed to the increase in net sales.

• Net sales growth in the EMEA region of 17% on both a reported and comparable sales basis.

The increase was attributable to a higher AUR from lower promotional activity and category mix into higher ticket items.

Growth in unit volume as a result of increased traffic and transactions in company owned and operated stores and digital channels contributed to the increase in net sales.

The increase was attributable to both higher average unit retail (“AUR”) from lower promotional activity and unit volume growth from increased traffic and transactions in company owned and operated stores and digital channels.

The comparable sales growth percentage is lower than net sales growth percentage, as comparable sales exclude the net impact of new store openings during the period and the effects of foreign currency, both of which had a benefit on net sales growth.

• In the APAC region, net sales grew 5% and 2% on a comparable sales basis.

Comparable sales growth percentage is higher than net sales growth percentage, as comparable sales excludes the impact of store closures during the period and the effects of foreign currency, both of which had negative impacts on net sales growth.

The Company’s net sales by brand for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023 were as follows:

The increase was attributable to net sales growth led by high unit sales across company owned and operated stores and digital channels.

The Company’s net sales by brand for the thirteen weeks ended May 3, 2025 and May 4, 2024 were as follows:

Thirteen Weeks Ended

(in thousands, except ratios) November 2, 2024 October 28, 2023 $ Change % Change Comparable

Abercrombie (2)

$ 629,835 $ 547,728 $ 82,107 15 % 11 %

Hollister (3)

579,131 508,703 70,428 14 21

Total $ 1,208,966 $ 1,056,431 $ 152,535 14 16

Thirty-Nine Weeks Ended

(in thousands, except ratios) November 2, 2024 October 28, 2023 $ Change % Change Comparable

Abercrombie (2)

(in thousands, except ratios) May 3, 2025 May 4, 2024 $ Change % Change Comparable

$ 547,947 $ 571,513 $ (23,566) (4) % (10) %

Hollister (3)

549,364 449,217 100,147 22 23

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Refer to “ NON-GAAP FINANCIAL MEASURES , ” for further details on the comparable sales calculation.

(2) Includes Abercrombie & Fitch and abercrombie kids.

(3) Includes Hollister and Gilly Hicks.

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

Cost of sales, exclusive of depreciation and amortization

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Cost of sales, exclusive of depreciation and amortization $ 422,034 34.9 % $ 370,762 35.1 % (20)

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Cost of sales, exclusive of depreciation and amortization $ 417,133 38.0 % $ 343,273 33.6 % 440

For the third quarter of Fiscal 2024, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales decreased by approximately 20 basis points, as compared to the third quarter of Fiscal 2023.

The percentage decline was primarily attributable to cost of sales leverage from a higher AUR on reduced promotions, partially offset by higher freight costs compared to the third quarter of Fiscal 2023.

For the year-to-date period of Fiscal 2024, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales decreased by approximately 250 basis points as compared to the year-to-date period of Fiscal 2023.

The percentage decline was primarily attributable to cost of sales leverage from a higher AUR on reduced promotions, as well as a benefit in product costs, as certain raw material prices have declined.

These benefits were partially offset by higher freight costs compared to the year-to-date period of Fiscal 2023.

Gross profit, exclusive of depreciation and amortization

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Gross profit, exclusive of depreciation and amortization $ 786,932 65.1 % $ 685,669 64.9 % 20

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net Sales % of Net Sales BPS Change

Gross profit, exclusive of depreciation and amortization $ 2,200,651 65.4 % $ 1,779,843 62.9 % 250

For the first quarter of Fiscal 2025, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales increased by approximately 440 basis points, as compared to the first quarter of Fiscal 2024.

The percentage increase was primarily attributable to cost of sales deleverage from approximately 230 basis points in higher freight costs compared to the first quarter of Fiscal 2024.

Abercrombie & Fitch Co.

2025 1Q Form 10-Q

Stores and distribution expense

Selling expense

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Stores and distribution expense $ 419,235 34.7 % $ 383,883 36.3 % (160)

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Stores and distribution expense $ 1,181,154 35.1 % $ 1,072,662 37.9 % (280)

For the third quarter of Fiscal 2024, stores and distribution expense increased by $35 million compared to the third quarter of 2023.

Stores and distribution expense as a percentage of net sales decreased 160 basis points, as compared to the third quarter of Fiscal 2023.

The decrease in rate was primarily driven by expense leverage from higher net sales, including approximately 110 basis points in stores expense, primarily relating to store occupancy and store payroll, and approximately 60 basis points in distribution center and order fulfillment costs as compared to the third quarter of Fiscal 2023.

For the year-to-date period of Fiscal 2024, stores and distribution expense increased by $108 million and decreased 280 basis points, as a percentage of net sales, as compared to the year-to-date period of Fiscal 2023.

The decrease as a percent of net sales was primarily driven by expense leverage from higher net sales, including approximately 250 basis points in stores expense, primarily relating to store occupancy and store payroll, and 30 basis points in distribution center and order fulfillment costs compared to the year-to-date period of Fiscal 2023.

Marketing, general and administrative expense

Selling expense $ 399,937 36.4 % $ 360,018 35.3 % 110

For the first quarter of Fiscal 2025, selling expense increased by $40 million compared to the first quarter of 2024.

Selling expense as a percentage of net sales increased 110 basis points, as compared to the first quarter of Fiscal 2024.

The increase in rate was primarily driven by expense deleverage, including approximately 50 basis points in marketing costs, approximately 40 basis points in stores expense, primarily relating to store occupancy and store employee compensation costs, and approximately 30 basis points in distribution center and order fulfillment costs as compared to the first quarter of Fiscal 2024.

General and administrative expense

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Marketing, general and administrative expense $ 190,001 15.7 % $ 162,510 15.4 % 30

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Marketing, general and administrative expense $ 538,352 16.0 % $ 449,643 15.9 % 10

For the third quarter of Fiscal 2024, marketing, general and administrative expense increased by $27 million compared to the third quarter of Fiscal 2023.

Marketing, general and administrative expense as a percentage of net sales increased 30 basis points, as compared to the third quarter of Fiscal 2023.

The increase in expense rate was primarily driven by an 80 basis point increase in marketing expense, primarily due to media campaigns and content, partially offset by 50 basis points of other general and administrative costs primarily relating to payroll expense leverage from higher net sales.

For the year-to-date period of Fiscal 2024, marketing, general and administration expense increased by $89 million and increased 10 basis points as a percentage of net sales, as compared to the year-to-date period of Fiscal 2023, with a 50 basis point increase in marketing expense, primarily due to media campaigns and content, partially offset by a 40 basis point decrease in other general and administrative costs primarily relating to payroll expense leverage from higher net sales.

Other operating (income) loss, net

General and administrative expense

$ 174,925 15.9 % $ 189,548 18.6 % (270)

For the first quarter of Fiscal 2025, general and administrative expense decreased by $15 million compared to the first quarter of Fiscal 2024.

General and administrative expense as a percentage of net sales decreased 270 basis points, as compared to the first quarter of Fiscal 2024.

The decrease in expense rate was primarily driven by a 210 basis point decrease in employee compensation costs and approximately 60 basis points in outside services and other administrative expenses.

Other operating loss (income), net

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Other operating (income) loss, net $ (1,586) (0.1) % $ 1,256 0.1 % (20)

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Other operating income, net $ (3,611) (0.1) % $ (4,332) (0.2) % 10

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

Other operating loss (income), net $ 3,783 0.3 % $ (1,958) (0.2) % 50

Operating income

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net sales (1)

% of Net sales (1)

Americas $ 304,542 30.9 % $ 257,440 29.7 % 120

EMEA 21,708 12.0 20,795 13.2 (120)

APAC (4,181) (10.2) (3,261) (10.6) 40

Operating loss not attributed to segments (142,787) (136,954)

Operating income $ 179,282 14.8 $ 138,020 13.1 170

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands, except ratios) % of Net sales (1)

5 unchanged sentences

Operating income $ 101,533 9.3 $ 129,849 12.7 (340)

Excluded items:

Asset impairment charges (2)

— — 4,436 0.2 (20)

Adjusted non-GAAP operating income $ 484,756 14.4 $ 266,306 9.4 500

(1) Segment operating income as a percentage of net sales is calculated by attributing the segment’s operating income with the respective net sales in the segment.

(2) Refer to “ NON-GAAP FINANCIAL MEASURES ” for further details.

For the third quarter of Fiscal 2024, operating income increased by $41 million, or 170 basis points, as a percentage of net sales, as compared to the third quarter of Fiscal 2023.

• Operating income for the Americas region increased $47 million or 120 basis points as a percentage of region net sales, as compared to the third quarter of Fiscal 2023.

The increase as a percent of sales primarily relates to positive comparable sales of 16%, relating to higher unit volume, increased AUR on reduced promotions, and expense leverage relating to payroll and occupancy expenses.

• Operating income for the EMEA region increased $1 million and decreased 120 basis points as a percentage of region net sales, as compared to the third quarter of Fiscal 2023.

The decrease as a percent of net sales is primarily attributed to higher freight costs and increased marketing expense, partially offset by expense leverage from comparable sales growth of 13%.

• Operating (loss) for the APAC region increased by $(1) million or 40 basis points as a percentage of region net sales, as compared to the third quarter of Fiscal 2023.

The loss was impacted by store impairments taken during the quarter, which more than offset the expense leverage from comparable sales growth of 16%.

For the year-to-date period of Fiscal 2024, operating income increased by $223 million, or 510 basis points, as a percentage of net sales as compared to the year-to-date period of Fiscal 2023.

• Operating income for the Americas increased $241 million or 460 basis points as a percentage of region net sales as compared to the year-to-date period of Fiscal 2023.

The increase as a percent of sales primarily relates to positive comparable sales of 18%, relating to higher unit volume, increased AUR on reduced promotions, and expense leverage relating to payroll and occupancy expenses.

• Operating income for EMEA increased $35 million or 490 basis points as a percentage of region net sales as compared to the year-to-date period of Fiscal 2023.

The increase as a percent of sales primarily relates to positive comparable sales of 17%, relating to higher unit volume, increased AUR on reduced promotions, and expense leverage relating to payroll and occupancy expenses.

• Operating (loss) for APAC increased $(1) million or 50 basis points as a percentage of region net sales as compared to the year-to-date period of Fiscal 2023.

The loss was impacted by store impairments and marketing investments, which more than offset the expense leverage from comparable sales growth of 20%.

For the first quarter of Fiscal 2025, operating income decreased by $28 million, or 340 basis points, as a percentage of net sales, as compared to the first quarter of Fiscal 2024.

• Operating income for the Americas region decreased $25 million or 490 basis points as a percentage of region net sales, as compared to the first quarter of Fiscal 2024.

The decrease as a percent of net sales was primarily attributed to higher freight costs and deleverage on store occupancy and distribution center related fulfillment expenses.

• Operating income for the EMEA region decreased $8 million or 620 basis points as a percentage of region net sales, as compared to the first quarter of Fiscal 2024.

The decrease as a percent of net sales was primarily attributed to higher freight costs, marketing costs and deleverage on distribution center related fulfillment expenses.

• Operating (loss) for the APAC region increased by $4 million or 1,090 basis points as a percentage of region net sales, as compared to the first quarter of Fiscal 2024.

The decrease as a percent of net sales was primarily attributed to deleverage on higher selling expenses.

Abercrombie & Fitch Co.

2025 1Q Form 10-Q

Interest (income) expense, net

Interest income, net

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Interest expense $ 569 — % $ 8,568 0.8 % (80)

Interest income (9,302) (0.7) (7,897) (0.7) —

Interest (income) expense, net $ (8,733) (0.7) $ 671 0.1 (80)

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

1 unchanged sentence

Interest income (7,444) (0.7) (10,803) (1.1) 40

Interest (income) expense, net $ (18,959) (0.6) $ 5,211 0.2 (80)

For the third quarter of Fiscal 2024, interest (income) expense, net increased $9.4 million, as compared to the third quarter of Fiscal 2023.

The increase in interest income was due to the increased balance on time deposits and money market accounts compared to the third quarter of Fiscal 2023.

Additionally, interest expense decreased compared to the third quarter of Fiscal 2023 as result of the repurchases in late Fiscal 2023 and Fiscal 2024 and redemption of the remaining outstanding Senior Secured Notes on July 15, 2024.

For the year-to-date period of Fiscal 2024, interest (income) expense, net increased $24.2 million, as compared to the year-to-date period of Fiscal 2023.

The increase was a result of higher interest income due to the increased balance on time deposits and money market accounts.

Additionally, interest expense decreased compared to the year-to-date period Fiscal 2023 as result of the repurchases in late Fiscal 2023 and Fiscal 2024 and redemption of the remaining outstanding Senior Secured Notes on July 15, 2024.

Interest income, net $ (6,783) (0.6) $ (5,023) (0.5) (10)

For the first quarter of Fiscal 2025, interest income, net increased $1.8 million, as compared to the first quarter of Fiscal 2024.

The net increase in interest income was a result of lower interest expense in Fiscal 2025 compared to Fiscal 2024 as a result of the redemption of the remaining outstanding balance of the 8.75% Senior Secured Notes on July 15, 2024.

This was partially offset by a reduction in interest income due to the decrease in balance on time deposits and money market accounts compared to the first quarter of Fiscal 2024.

Income tax expense

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) Effective Tax Rate Effective Tax Rate

Income tax expense $ 54,151 28.8 % $ 39,617 28.8 %

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands, except ratios) Effective Tax Rate Effective Tax Rate

Income tax expense $ 26,577 24.5 % $ 19,794 14.7 %

Excluded items:

Tax effect of pre-tax excluded items (1)

Adjusted non-GAAP income tax expense $ 119,394 23.7 $ 83,556 32.0

(1) The tax effect of pre-tax excluded items is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis.

Refer to “ Operating income ” and “ NON-GAAP FINANCIAL MEASURES ” for details of pre-tax excluded items.

Compared with the year-to-date period of 2023, the change in the effective tax rates during Fiscal 2024 is due to jurisdictional mix and higher levels of pre-tax income offset by a larger tax benefit on share-based compensation.

Compared with the year-to-date period of Fiscal 2024, the change in the effective tax rate during Fiscal 2025 is due to jurisdictional mix and lower levels of pre-tax income offset by a lower tax benefit on share-based compensation compared with the prior year.

Refer to Note 9, “ INCOME TAXES .”

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

Net income attributable to A&F

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands) % of Net sales % of Net sales BPS Change

Net income attributable to A&F $ 131,979 10.9 % $ 96,211 9.1 % 180

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands) % of Net sales % of Net sales BPS Change

Net income attributable to A&F $ 80,413 7.3 % $ 113,850 11.2 % (390)

Excluded items, net of tax (1)

— — 3,229 0.1 (10)

Adjusted non-GAAP net income attributable to A&F (2)

$ 378,997 11.3 $ 172,905 6.1 520

(1) Excluded items presented above under “ Operating income ,” and “ Income tax expense ”

(2) Refer to “ NON-GAAP FINANCIAL MEASURES ” for further details.

Net income per share attributable to A&F

Thirteen Weeks Ended

November 2, 2024 October 28, 2023 $ Change

Net income per diluted share attributable to A&F

$ 2.50 $ 1.83 $ 0.67

Impact from changes in foreign currency exchange rates — 0.07 (0.07)

Adjusted non-GAAP net income per diluted share attributable to A&F on a constant currency basis (2)

$ 2.50 $ 1.90 $ 0.60

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023 $ Change

May 3, 2025 May 4, 2024 $ Change

Net income per diluted share attributable to A&F

$ 1.59 $ 2.14 $ (0.55)

Excluded items, net of tax (1)

— 0.06 (0.06)

Adjusted non-GAAP net income per diluted share attributable to A&F (2)

$ 7.13 $ 3.32 $ 3.81

Impact from changes in foreign currency exchange rates — (0.08) 0.08

1 unchanged sentence

$ 1.59 $ 2.06 $ (0.47)

(1) Excluded items presented above under “ Operating income ,” and “ Income tax expense.

(1) Refer to “ NON-GAAP FINANCIAL MEASURES ” for further details.

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

EBITDA and adjusted EBITDA

Thirteen Weeks Ended

November 2, 2024 October 28, 2023

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

Net income $ 133,864 11.1 % $ 97,732 9.3 % 180

Income tax expense 54,151 4.5 39,617 3.8 70

Interest (income) expense, net (8,733) (0.7) 671 0.1 (80)

Depreciation and amortization 39,566 3.2 33,136 3.0 20

$ 218,848 18.1 $ 171,156 16.2 190

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

May 3, 2025 May 4, 2024

(in thousands, except ratios) % of Net sales % of Net sales BPS Change

4 unchanged sentences

$ 140,109 12.8 $ 167,538 16.4 (360)

Excluded items:

Asset impairment charges (1)

— — 4,436 0.2 (20)

Adjusted EBITDA (1)

$ 601,366 17.9 $ 371,853 13.2 470

(1) EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with GAAP.

(1) EBITDA is a supplemental financial measure that is not defined or prepared in accordance with GAAP.

EBITDA is defined as net income before interest, income taxes and depreciation and amortization.

Adjusted EBITDA is EBITDA adjusted for asset impairment.

Refer to “ NON-GAAP FINANCIAL MEASURES ” for further details.

5 unchanged sentences

The Company monitors market conditions and may in the future determine whether and when to repurchase shares of its Common Stock.

For a discussion of the Company’s share repurchase activity, please see below under “ Share repurchases and dividends .”

For a discussion of the Company’s share repurchase activity, please see below under “ Share repurchases .”

Primary sources and uses of cash

10 unchanged sentences

Historically, the Company has utilized free cash flow generated from operations to fund any discretionary capital expenditures, which have been prioritized towards new store experiences, as well as digital and omnichannel investments, and information technology.

For the year-to-date period ended November 2, 2024, the Company invested $132.0 million towards capital expenditures.

For the year-to-date period ended May 3, 2025, the Company invested $50.8 million towards capital expenditures.

Total capital expenditures for Fiscal 2025 are expected to be approximately $200 million.

The Company measures liquidity using total cash and cash equivalents and incremental borrowing available under the ABL Facility.

As of November 2, 2024, the Company had cash and cash equivalents of $683.1 million and total liquidity of approximately $1.1 billion, compared with cash and cash equivalents of $900.9 million and total liquidity of approximately $1.2 billion at the beginning of Fiscal 2024.

Share repurchases and dividends

In November 2021, the Board of Directors approved a $500 million share repurchase authorization, replacing the prior 2021 share repurchase authorization of 10.0 million shares, which had approximately 3.9 million shares remaining available.

During the year-to-date period ended November 2, 2024, the Company repurchased approximately 0.9 million shares of its Common Stock pursuant to this share repurchase authorization for approximately $129.8 million.

As of November 2, 2024 t he Company had $102 million in share repurchases remaining under the authorization approved in November 2021.

Historically, the Company has repurchased shares of its Common Stock from time to time, which repurchases are dependent on excess liquidity, market conditions and business conditions, with the objectives of returning excess cash to shareholders and offsetting dilution from issuances of Common Stock associated with the exercise of employee stock appreciation rights and the vesting of restricted stock units.

Shares may be repurchased in the open market, including pursuant to trading plans established in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), through privately negotiated transactions or other transactions or by a combination of such methods.

In May 2020, the Company suspended its dividend program.

The Company may in the future review its dividend program to determine, in light of facts and circumstances at that time, whether and when to reinstate.

Any dividends are declared at the discretion of the Company’s Board of Directors.

The Board of Directors reviews and establishes a dividend amount, if at all, based on the Company’s financial condition, results of operations, capital requirements, current and projected cash flows, business prospects and other factors, including any restrictions under the Company’s agreements related to the ABL Facility.

There can be no assurance that the Company will declare and pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.

As of May 3, 2025, the Company had cash and cash equivalents of $510.6 million and total liquidity of approximately $0.9 billion, compared with cash and cash equivalents of $772.7 million and total liquidity of approximately $1.2 billion at the beginning of Fiscal 2025.

Share repurchases

In March 2025, the Company announced that the Board of Directors approved a $1.3 billion share repurchase program (the “2025 Authorization”), which replaced the prior share repurchase program of $500 million authorized by the Board of Directors in 2021.

The 2025 Authorization does not have an expiration date.

During the year-to-date period ended May 3, 2025, the Company repurchased approximately 2.6 million shares of its Common Stock pursuant to this share repurchase authorization for approximately $200 million.

As of May 3, 2025, t he Company had $1.1 billion in share repurchases remaining under the 2025 Authorization.

Shares may be repurchased from time to time in open market or private transactions in such manner as may be deemed advisable from time to time (including, without limitation, pursuant to accelerated share repurchase programs, one or more 10b5-1 trading plans, or any other method deemed advisable) and may be discontinued at any time.

The timing and amount of any such repurchases will be determined based on an evaluation of market conditions, the Company’s share price, legal requirements, and other factors.

Abercrombie & Fitch Co.

2025 1Q Form 10-Q

Senior Secured Notes

On July 15, 2024 (the “Redemption Date”), Abercrombie & Fitch Management Co (“A&F Management”) redeemed all of its outstanding 8.75% Senior Secured Notes due 2025, which had an aggregate principal amount of $214 million, pursuant to the terms of the indenture governing the Senior Secured Notes, at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to, but excluding, the Redemption Date.

As of the Redemption Date, the Senior Secured Notes were no longer deemed outstanding and interest on the Senior Secured Notes ceased to accrue.

Credit 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, together with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent for the lenders.

The Second Amendment amends the existing 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;

• 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);

• from 1.50% to 1.75% when average availability is less than 50% of the Loan Cap.

As of November 2, 2024, the Company did not have any borrowings outstanding under the ABL Facility.

Details regarding the remaining borrowing capacity under the ABL Facility as of November 2, 2024 are as follows:

(in thousands) November 2, 2024

On August 2, 2024, A&F, as parent and a guarantor, A&F Management Co., 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 (as amended, the “ABL Credit Agreement”).

The ABL Credit Agreement provides for the ABL Facility, which is a senior secured asset-based revolving credit facility of up to $500 million.

As of May 3, 2025, the Company did not have any borrowings outstanding under the ABL Facility.

Details regarding the remaining borrowing capacity under the ABL Facility as of May 3, 2025 are as follows:

(in thousands) May 3, 2025

Loan cap $ 477,358

9 unchanged sentences

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

As of November 2, 2024, $262.8 million of the Company’s $683.1 million of cash and equivalents were held by foreign affiliates.

As of May 3, 2025, $188.5 million of the Company’s $510.6 million of cash and equivalents were held by foreign affiliates.

Refer to Note 9, “ INCOME TAXES .”

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

Analysis of cash flows

The table below provides certain components of the Company’s Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended November 2, 2024 and October 28, 2023:

Thirty-Nine Weeks Ended

November 2, 2024 October 28, 2023

The table below provides certain components of the Company’s Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended May 3, 2025 and May 4, 2024:

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

(in thousands)

Cash and equivalents, and restricted cash and equivalents, beginning of period $ 780,395 $ 909,685

Net cash provided by operating activities 402,756 350,142

Net cash (used for) provided by operating activities (4,000) 95,010

Net cash used for investing activities (30,764) (38,886)

1 unchanged sentence

Effect of foreign currency exchange rates on cash 7,407 (857)

Net (decrease) increase in cash and equivalents, and restricted cash and equivalents (218,688) 130,559

Net decrease in cash and equivalents, and restricted cash and equivalents (261,870) (37,684)

Cash and equivalents, and restricted cash and equivalents, end of period $ 518,525 $ 872,001

Operating activities - During the year-to-date period ended November 2, 2024, net cash provided by operating activities included increased cash receipts as a result of the 19% year-over-year increase in net sales.

During the year-to-date period ended October 28, 2023, net cash used for operating activities included increased cash receipts as a result of the 13% year-over-year increase in net sales, as well as increased payments to vendors in the fourth quarter of Fiscal 2022, which resulted in lower cash payments in the first quarter of Fiscal 2023.

Investing activities - During the year-to-date period ended November 2, 2024, net cash used for investing activities was primarily used for capital expenditures of $132 million, as well as the purchase of $55 million of marketable securities.

Net cash used for investing activities for the year-to-date period ended October 28, 2023 was primarily used for capital expenditures of $128.6 million.

Financing activities - During the year-to-date period ended November 2, 2024, net cash used for financing activities included the repurchase of $9.3 million in the open market and the complete redemption of $214 million of outstanding Senior Secured Notes, $70 million related to shares of Common Stock withheld (repurchased) to cover tax withholdings upon vesting of share-based compensation awards, and the purchase of approximately 0.9 million shares of Common Stock with a market value of approximately $129.8 million.

During the year-to-date period ended October 28, 2023, net cash used for financing activities included amounts related to shares of Common Stock withheld (repurchased) to cover tax withholdings upon vesting of share-based compensation awards, the repurchase of Senior Secured Notes in the open market.

Operating activities - During the fiscal year-to-date period ended May 3, 2025, net cash used for operating activities included an increase in cash outflows related to the timing of merchandise and advertising payables, partially offset by increased cash receipts as a result of the 8% year-over-year increase in net sales.

During the fiscal year-to-date period ended May 4, 2024, net cash provided by operating activities included increased cash receipts as a result of the 22% year-over-year increase in net sales.

Investing activities - During the fiscal year-to-date period ended May 3, 2025, net cash used for investing activities was primarily used for capital expenditures of $51 million, partially offset by the maturity of $20 million of marketable securities.

Net cash used for investing activities for the fiscal year-to-date period ended May 4, 2024 was primarily used for capital expenditures of $38.9 million.

Financing activities - During the fiscal year-to-date period ended May 3, 2025, net cash used for financing activities included the purchase of approximately 2.6 million shares of Common Stock with a market value of approximately $200 million and $34 million related to shares of Common Stock withheld (repurchased) to cover tax withholdings upon vesting of share-based compensation awards.

During the fiscal year-to-date period ended May 4, 2024, net cash used for financing activities included

Abercrombie & Fitch Co.

2025 1Q Form 10-Q

$65 million related to shares of Common Stock withheld (repurchased) to cover tax withholdings upon vesting of share-based compensation awards, the purchase of approximately 0.1 million shares of Common Stock with a market value of approximately $15.0 million and the purchase of $9.3 million of the outstanding 8.75% Senior Secured Notes at a premium of $0.1 million.

Contractual obligations

10 unchanged sentences

There have been no significant changes in critical accounting policies and estimates since the end of Fiscal 2024.

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

NON-GAAP FINANCIAL MEASURES

9 unchanged sentences

The most directly comparable GAAP financial measure is change in net sales.

Excluded items

The following financial measures are disclosed on a GAAP and on an adjusted non-GAAP basis excluding the following items, as applicable:

Financial measures (1)

Excluded items

Operating income Asset impairment charges

Income tax expense (2)

Tax effect of pre-tax excluded items

Net income and net income per share attributable to A&F (2)

Pre-tax excluded items and the tax effect of pre-tax excluded items

(1) Certain of these financial measures are also expressed as a percentage of net sales.

(2) The tax effect of excluded items is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis.

Abercrombie & Fitch Co.

5 unchanged sentences

The per diluted share effect from foreign currency exchange rates is calculated using a 26% effective tax rate.

Reconciliations of non-GAAP financial metrics on a constant currency basis to financial measures calculated and presented in accordance with GAAP for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023 were as follows:

(in thousands, except change in net sales, gross profit rate, operating margin and per share data) Thirteen Weeks Ended Thirty-Nine Weeks Ended

Net sales November 2, 2024 October 28, 2023 % Change November 2, 2024 October 28, 2023 % Change

GAAP $ 1,208,966 $ 1,056,431 14 % $ 3,363,670 $ 2,827,770 19 %

Impact from changes in foreign currency exchange rates — 5,289 (1) — 2,378 —

Non-GAAP on a constant currency basis $ 1,208,966 $ 1,061,720 14 % $ 3,363,670 $ 2,830,148 19 %

Gross profit, exclusive of depreciation and amortization expense November 2, 2024 October 28, 2023 BPS Change (1)

November 2, 2024 October 28, 2023 BPS Change (1)

Reconciliations of non-GAAP financial metrics on a constant currency basis to financial measures calculated and presented in accordance with GAAP for the thirteen weeks ended May 3, 2025 and May 4, 2024 were as follows:

(in thousands, except change in net sales, operating income margin and per share data)

Thirteen Weeks Ended

Net sales May 3, 2025 May 4, 2024 % Change

GAAP $ 1,097,311 $ 1,020,730 8 %

1 unchanged sentence

Non-GAAP on a constant currency basis $ 1,097,311 $ 1,020,522 8 %

Operating income November 2, 2024 October 28, 2023 BPS Change (1)

November 2, 2024 October 28, 2023 BPS Change (1)

Operating income May 3, 2025 May 4, 2024 BPS Change (1)

GAAP $ 101,533 $ 129,849 (340)

Excluded items (2)

— — — — (4,436) 10

Adjusted non-GAAP $ 179,282 $ 138,020 170 $ 484,756 $ 266,306 500

Impact from changes in foreign currency exchange rates — (5,234) 50

Adjusted non-GAAP on a constant currency basis $ 101,533 $ 124,615 (290)

Net income per share attributable to A&F November 2, 2024 October 28, 2023 $ Change November 2, 2024 October 28, 2023 $ Change

Net income per share attributable to A&F May 3, 2025 May 4, 2024 $ Change

GAAP $ 1.59 $ 2.14 $ (0.55)

Excluded items, net of tax (2)

— — — — (0.06) 0.06

Adjusted non-GAAP $ 2.50 $ 1.83 $ 0.67 $ 7.13 $ 3.32 $ 3.81

Impact from changes in foreign currency exchange rates — (0.08) 0.08

1 unchanged sentence

(1) The estimated basis point change has been rounded based on the change in the percentage of net sales.

(2) Excluded items for the thirty-nine weeks ended October 28, 2023 consisted of pre-tax store asset impairment charges and the tax effect of pre-tax excluded items.

Abercrombie & Fitch Co.

2024 3Q Form 10-Q

EBITDA and Adjusted EBITDA

The Company provides EBITDA and Adjusted EBITDA as supplemental measures used by the Company's executive management to assess the Company's performance.

We also believe these supplemental performance measures are meaningful information for investors and other interested parties to use in computing the Company's core financial performance over multiple periods and with other companies by excluding the impact of differences in tax jurisdictions, debt service levels and capital investment.

Reconciliations of non-GAAP EBITDA and adjusted EBITDA to financial measures calculated and presented in accordance with GAAP for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023 were as follows:

The Company provides EBITDA as a supplemental measure used by the Company's executive management to assess the Company's performance.

We also believe this supplemental performance measure is meaningful information for investors and other interested parties to use in computing the Company's core financial performance over multiple periods and with other companies by excluding the impact of differences in tax jurisdictions, debt service levels and capital investment.

A reconciliation of non-GAAP EBITDA to net income, a financial measure calculated and presented in accordance with GAAP, for the thirteen weeks ended May 3, 2025 and May 4, 2024 were as follows:

Thirteen Weeks Ended

(in thousands, except ratios) November 2, 2024 % of

Net Sales October 28, 2023 % of

(in thousands, except ratios) May 3, 2025 % of

Net Sales May 4, 2024 % of

Net income $ 81,739 7.4 % $ 115,078 11.3 %

Income tax expense 26,577 2.4 19,794 1.9

Interest (income) expense, net (8,733) (0.7) 671 0.1

Depreciation and amortization 39,566 3.2 33,136 3.0

Interest income, net

(6,783) (0.6) (5,023) (0.5)

Thirty-Nine Weeks Ended

(in thousands, except ratios) November 2, 2024 % of

Net Sales October 28, 2023 % of

Net income $ 384,321 11.4 % $ 174,310 6.2 %

Income tax expense 119,394 3.5 82,349 2.9

Interest (income) expense, net (18,959) (0.6) 5,211 0.2

Depreciation and amortization 38,576 3.6 37,689 3.7

$ 140,109 12.8 $ 167,538 16.4

Adjustments to EBITDA

Asset impairment (1)

— — 4,436 0.2

Adjusted EBITDA (1)

$ 601,366 17.9 $ 371,853 13.2

(1) EBITDA and Adjusted EBITDA are supplemental financial measures that are not defined or prepared in accordance with GAAP.

(1) EBITDA is a supplemental financial measure that is not defined or prepared in accordance with GAAP.

EBITDA is defined as net income before interest, income taxes and depreciation and amortization.

Adjusted EBITDA is EBITDA adjusted for asset impairment.

Abercrombie & Fitch Co.

1 unchanged sentence

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What changed 10-Q

Item 2. Management’s Discussion and Analysis