Executive Summary

At the Jefferies 2017 Global Consumer Conference, which was held this week in Nantucket, Massachusetts, Abercrombie & Fitch CEO Fran Horowitz provided a recap of the company’s first-quarter performance, along with CFO Joanne Crevoiserat and VP of Investor Relations Brian Logan. The team also provided an outlook on the remainder of 2017 and an update on the company’s strategic initiatives. Key takeaways include:

• Abercrombie & Fitch expects comp sales to remain challenging,and to see trend improvements in the second half of the year. The company expects the gross profit rate for the year to be slightly below last year’s adjusted rate of 61%. In terms of operating expenses, the company expects to deliver $100 million in expense reductions.
• The company plans to invest nearly $100 million in 2017, including $70 million for new stores and renovations of current stores. The company plans to close 60 stores in the US by the end of this year, and to remodel 47 stores and open seven full-price stores and two outlets. Management said the company plans to spend $20 million to enhance its digital foundation, including investments in the rollout of its international omnichannel capabilities.
• The company’s strategic initiatives include strengthening its omnichannel presence, engaging with customers through loyalty programs and social media, renovating stores through an updated proto type model, and partnering with wholesalers and franchisers to reach more consumers.