GlobeNewswire Inc | Nov 24, 2020 07:30AM EST

November 24, 2020

Deliversnet income per diluted share of $0.66and $0.76on a GAAP and non-GAAP basis, respectively, positive cash flows fueled by digital sales growth, gross profit rate expansion and operating expense leverage

Continues progress on store network optimization; Announces early exit of four moreflagshipsthrough lease transfers and sublease, reducing liabilities and bringing fiscal 2020 flagship closures to seven

NEW ALBANY, Ohio, Nov. 24, 2020 (GLOBE NEWSWIRE) -- Abercrombie & Fitch Co. (NYSE: ANF) today announced results for the third quarter ended October31, 2020. These compare to results for the third quarter ended November2, 2019. Descriptions of the use of non-GAAP financial measures and reconciliations of GAAP and non-GAAP financial measures accompany this release.

A summary of results for thethird quarterended October31, 2020 as compared to the third quarter ended November2, 2019:

-- Net sales of $820 million, down 5% as compared to last year, reflecting the adverse impact of COVID-19 on store sales. -- Digital net sales increased 43% to $382 million reflecting robust growth in every month of the quarter. -- Gross profit rate improved 390 basis points to 64.0% on higher average unit retail and lower average unit cost, benefiting from inventory shrink favorability of approximately 100 basis points and changes in foreign currency exchange rates of approximately 90 basis points. -- Operating expense leveraged, reflecting an ongoing focus on tightly managing costs. Operating expense as a percentage of sales decreased 160 basis points and 120 basis points on a reported and adjusted non-GAAP basis, respectively. -- Operating incomeimproved to $59 million and $65 million on a reported and adjusted non-GAAP basis, respectively, as compared to $14 million and $25 million last year, on a reported and adjusted non-GAAP basis, respectively. -- Net income per diluted share improved to $0.66 and $0.76 on a reported and adjusted non-GAAP basis, respectively, as compared to net income per diluted share last year of $0.10 and $0.23 on a reported and adjusted non-GAAP basis, respectively. -- Generated positive operating cash flows of $63 million during the third quarter ended October31, 2020, ending the quarter with $813 million of cash and equivalents and liquidity of approximately $1.2 billion.

Fran Horowitz, Chief Executive Officer, said, I am proud of our global teams and partners. Reflecting your ongoing hard work and perseverance, we delivered our best third quarter operating income in eight years. Results were fueled by 43% year-over-year digital sales growth and sequential sales improvements in our global store base. Updated product and marketing resonated with existing and new customers across brands and regions. Combined with a focused inventory management strategy, we expanded gross profit rate significantly while continuing to tightly manage expenses, leading to operating margin improvements over last year.

We are also pleased to announce the early exit of four additional flagship locations by the end of January 2021. This is in addition to the three previously announced fiscal 2020 natural lease expirations. With these seven closures, we should end the year with eight operating flagships down from fifteen at the beginning of the year. These actions align with our multi-year strategy of reducing dependence on tourist-driven locations to reposition within key markets and deliver a better omnichannel experience to our local customer.

We are encouraged by quarter-to-date results, including ongoing strong digital demand, with our customers responding favorably to new product and messaging. However, this is tempered by uncertainty regarding the potential for increased COVID-related store restrictions and our expectation for elevated shipping, handling and freight costs. As we approach the peak holiday selling period, inventories remain well-controlled and we have thoughtful plans in place to help us adapt to changing business conditions. As we have done since the start of the pandemic, we will utilize our proven playbooks to remain agile and provide the best omnichannel experience for our customers.

Details related to net income per diluted share for the third quarter are as follows:

2020 2019 GAAP $ 0.66 $ 0.10 Excluded items, net of tax effect ^(^1) (0.09 ) (0.12 )Adjusted non-GAAP $ 0.76 $ 0.23 Benefit from changes in foreign currency exchange rates ^ ? 0.15 (^2^)Adjusted non-GAAP constant currency $ 0.76 $ 0.37

(1)Excluded items consist of certain pre-tax store asset impairment charges and the tax effect of pre-tax excluded items.(2)The estimated impact from foreign currency is calculated by applying current period exchange rates to prior year results using a 26% tax rate.

Net Sales

Net sales by brand and region for the third quarter are as follows:

(in thousands) 2020 2019 % ChangeNet sales by brand: Hollister $ 476,665 $ 514,772 (7 )%Abercrombie^ (1) 342,988 348,700 (2 )%Total company $ 819,653 $ 863,472 (5 )% Net sales by region: 2020 2019 % ChangeUnited States $ 557,814 $ 583,593 (4 )%EMEA 190,214 191,977 (1 )%APAC 43,618 55,910 (22 )%Other 28,007 31,992 (12 )%International $ 261,839 $ 279,879 (6 )%Total company $ 819,653 $ 863,472 (5 )%

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

Financial Position and Liquidity

As of October31, 2020 the company had:

-- Cash and equivalents of $813 million. This compares to cash and equivalents of $671 million and $411 million as of February1, 2020 and November2, 2019, respectively. -- Inventories of $546 million, down 8% as compared to November2, 2019. -- Long-term gross borrowings under the companys senior secured notes of $350 million (the Senior Secured Notes) which mature in July2025 and bear interest at a rate of 8.75% per annum. -- Borrowing available under the senior-secured asset-based revolving credit facility (the ABL Facility) of $345 million. -- Liquidity, comprised of cash and equivalents and borrowing available under the ABL Facility, of approximately $1.2 billion. This compares to liquidity of $914 million and $770 million as of February1, 2020 and November2, 2019, respectively.

Cash Flow and Capital Allocation

Details related to the companys cash flows for the year-to-date period ended October31, 2020 are as follows:

-- Net cash provided by operating activities of $159 million. -- Net cash used for investing activities of $92 million. Based on actions taken, the company expects capital expenditures for fiscal 2020 to now be approximately $110 million as compared to $203 million of capital expenditures in fiscal 2019. -- Net cash provided by financing activities of $70 million, reflecting the issuance of the Senior Secured Notes of $350 million which were used, along with existing cash on hand, to repay outstanding borrowings under the credit facilities.

The company has returned $28 million to shareholders during the year-to-date period ended October31, 2020 through share repurchases and dividends, prior to the companys decision to temporarily suspend its share repurchase and dividend programs in light of COVID-19.

Depreciation and amortization was $127 million for the year-to-date period ended October31, 2020.

Flagship Store Update

As part of its ongoing global store network optimization initiative and stated goal of repositioning from larger format, tourist-dependent flagship locations to smaller, omni-enabled stores that cater to local customers, the company is announcing the early exit of four European Abercrombie & Fitch flagship locations. The Dusseldorf flagship closed during the third quarter, and the London, Munich and Paris flagships will close by the end of January 2021, all well ahead of their natural lease expirations. Three of the leases will be transferred to a new tenant while the fourth will be subleased to a new tenant. The company no longer has lease obligations beyond fiscal 2020 for the three transfers and is scheduled to receive payments to fully offset its lease obligations on the sublease.

The company has recognized a pre-tax gain of $8 million in the current quarter related to flagship store exit activity, primarily due to a gain on lease assignment and updates to previously established accruals for asset retirement and severance obligations related to the four closures.

In addition to the four early exits, the Brussels, Madrid and Fukuoka flagships will close in early January 2021 due to natural lease expirations leaving the company with eight operating flagships at year end down from fifteen at the beginning of the year.

The seven flagship locations that will close in fiscal 2020 represent a combined 200,000 gross square feet, or about 3% of total company gross square footage and 10% of the Abercrombie & Fitch brand square footage as of fiscal year-end 2019. In fiscal 2019, these seven flagships had a combined adverse impact of approximately 20 basis points to comparable sales and approximately 10 basis points to operating margin. The combined stores contributed approximately 1% to revenues and approximately $30 million to annualized payroll and occupancy in fiscal 2019. Fiscal year-to-date, the comparable sales and operating margin drag has been meaningfully worse due to COVID-19.

With the planned closures of these seven underperforming locations, the company removed approximately $85 million of lease liabilities from the balance sheet, reflecting the early exit from certain leases and the corresponding elimination of lease payments previously scheduled for fiscal 2021 through 2031.

See the company's third quarter investor presentation for additional information regarding the companys flagship store fleet.

Conference Call

Today at 8:30 AM, ET, the company will conduct a conference call. To listen to the conference call, dial (800) 458-4121 or go to corporate.abercrombie.com. The international call-in number is (323) 794-2093. This call will be recorded and made available by dialing the replay number (888) 203-1112 or the international number (719) 457-0820 followed by the conference ID number 7344326 or through corporate.abercrombie.com. A presentation of third quarter results will be available in the Investors section at corporate.abercrombie.com at approximately 7:30 AM, ET, today.

Safe Harbor Statement Under the Private SecuritiesLitigation Reform Act of1995

A&F cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Press Release or made by management or spokespeople of A&F involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the companys control. Words such as estimate, project, plan, believe, expect, anticipate, intend, and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements. The following factors, in addition to those disclosed in ITEM 1A. RISK FACTORS of A&Fs Annual Report on Form10-Kfor the fiscal year endedFebruary1, 2020, and in A&Fs subsequently filed quarterly reports on Form 10-Q, in some cases have affected, and in the future could affect, A&Fs financial performance and could cause actual results for fiscal 2020and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this Press Release or otherwise made by management: the current outbreak of the novel coronavirus, orCOVID-19,has materially adversely impacted and disrupted, andmaycontinue to materially adversely impact and cause disruption to, our business, financial performance and condition, operating results, liquidity and cash flows; the spread of theCOVID-19outbreak has caused significant disruptions in the United States and global economy, the extent of the impact and duration of which is not yet known and any future outbreak of any other highly infectious or contagious disease could have a similar impact;changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits could have a material adverse impact on our business; failure to engage our customers, anticipate customer demand and changing fashion trends, and manage our inventory commensurately could have a material adverse impact on our business; our failure to operate in a highly competitive and constantly evolving industry could have a material adverse impact on our business; fluctuations in foreign currency exchange rates could have a material adverse impact on our business; 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; the impact of war, acts of terrorism, mass casualty events or civil unrest could have a material adverse impact on our business; the impact of extreme weather, infectious disease outbreaks, including COVID-19, and other unexpected events could result in an interruption to our business, as well as to the operations of our third-party partners, and have a material adverse impact on our business; failure to successfully develop an omnichannel shopping experience, a significant component of our growth strategy, or failure to successfully invest in customer, digital and omnichannel initiatives could have a material adverse impact on our business; our failure to optimize our global store network could have a material adverse impact on our business; our failure to execute our international growth strategy successfully and inability to conduct business in international markets as a result of legal, tax, regulatory, political and economic risks could have a material adverse impact on our business; failure to protect our reputation could have a material adverse impact on our business; if our information technology systems are disrupted or cease to operate effectively it could have a material adverse impact on our business; we may be exposed to risks and costs associated with cyber-attacks, data protection, credit card fraud and identity theft that could have a material adverse impact on our business; our reliance on our distribution centers makes us susceptible to disruptions or adverse conditions affecting our supply chain; changes in the cost, availability and quality of raw materials, labor, transportation, and trade relations could have a material adverse impact on our business; 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 rely on the experience and skills of our executive officers and associates, and the failure to attract or retain this talent, or effectively manage succession could have a material adverse impact on our business; 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; our litigation exposure, or any securities litigation and shareholder activism, could have a material adverse impact on our business; failure to adequately protect our trademarks could have a negative impact on our brand image and limit our ability to penetrate new markets which could have a material adverse impact on our business; changes in the regulatory or compliance landscape could have a material adverse impact on our business; and the agreements related to our senior secured asset-based revolving credit facility and our senior secured notes include restrictive covenants that limit our flexibility in operating our business and our inability to obtain credit on reasonable terms in the future could have an adverse impact on our business.

About Abercrombie & Fitch Co.

Abercrombie & Fitch Co. (NYSE: ANF) is a leading, global specialty retailer of apparel and accessories for men, women and kids through three renowned brands. Abercrombie & Fitch believes that every day should feel as exceptional as the start of the long weekend.Since 1892, the brand has been a specialty retailer of quality apparel, outerwear and fragrance - designed to inspire our global customers to feel confident, be comfortable and face their Fierce. The quintessential retail brand of the global teen consumer,Hollister Co.believes in liberating the spirit of an endless summer inside everyone. At Hollister, summer isnt just a season, its a state of mind. Hollister creates carefree style designed to make all teens feel celebrated and comfortable in their own skin, so they can live in a summer mindset all year long, whatever the season. A global specialty retailer of quality, comfortable, made-to-play favorites, abercrombie kids sees the world through kids eyes, where play is life and every day is an opportunity to be anything and better everything.

The brands share a commitment to offering products of enduring quality and exceptional comfort that allow consumers around the world to express their own individuality and style.The company operates approximately 850 stores under these brands across North America, Europe, Asia and the Middle East, as well as the e-commerce sites www.abercrombie.com and www.hollisterco.com.

Investor Contact: Media Contact: Pamela Quintiliano Mackenzie GusweilerAbercrombie & Fitch Co. Abercrombie & Fitch Co.(614) 283-6751 (614) 283-6192Investor_Relations@anfcorp.com Public_Relations@anfcorp.com

Abercrombie & Fitch Co.Condensed Consolidated Statements of Operations(in thousands, except per share data)(Unaudited) Thirteen Weeks Ended Thirteen Weeks Ended October 31, % of November 2, % of 2020 Net 2019 Net Sales SalesNet sales $ 819,653 100.0 % $ 863,472 100.0 %Cost of sales, exclusiveof depreciation and 295,220 36.0 % 344,541 39.9 %amortizationGross profit 524,433 64.0 % 518,931 60.1 %Stores and distribution 346,263 42.2 % 377,697 43.7 %expenseMarketing, general and 121,000 14.8 % 114,075 13.2 %administrative expenseFlagship store exit (8,063 ) (1.0 ) 285 0.0 %(benefits) charges %Asset impairment,exclusive of flagship 6,329 0.8 % 12,610 1.5 %store exit chargesOther operating loss 288 0.0 % (215 ) 0.0 %(income), netOperating income 58,616 7.2 % 14,479 1.7 %Interest expense, net 8,808 1.1 % 2,922 0.3 %Income before income taxes 49,808 6.1 % 11,557 1.3 %Income tax expense 5,779 0.7 % 3,987 0.5 %Net income 44,029 5.4 % 7,570 0.9 %Less: Net incomeattributable to 1,758 0.2 % 1,047 0.1 %noncontrolling interestsNet income attributable to $ 42,271 5.2 % $ 6,523 0.8 %Abercrombie & Fitch Co. Net income per shareattributable to Abercrombie & Fitch Co.:Basic $ 0.68 $ 0.10 Diluted $ 0.66 $ 0.10 Weighted-average shares outstanding:Basic 62,558 63,099 Diluted 63,877 63,911

Abercrombie & Fitch Co.Condensed Consolidated Statements of Operations(in thousands, except per share data)(Unaudited) Thirty-nine Weeks Ended Thirty-nine Weeks Ended October 31, % of November 2, % of 2020 Net Sales 2019 Net SalesNet sales $ 2,003,340 100.0 % $ 2,438,522 100.0 %Cost of sales,exclusive of 791,154 39.5 % 976,868 40.1 %depreciation andamortizationGross profit 1,212,186 60.5 % 1,461,654 59.9 %Stores and 978,757 48.9 % 1,110,656 45.5 %distribution expenseMarketing, generaland administrative 326,509 16.3 % 341,716 14.0 %expenseFlagship store exit (12,490 ) (0.6 )% 47,023 1.9 %(benefits) chargesAsset impairment,exclusive of 57,340 2.9 % 14,987 0.6 %flagship store exitchargesOther operating (1,562 ) (0.1 )% (465 ) 0.0 %income, netOperating loss (136,368 ) (6.8 )% (52,263 ) (2.1 )%Interest expense, 19,277 1.0 % 4,908 0.2 %netLoss before income (155,645 ) (7.8 )% (57,171 ) (2.3 )%taxesIncome tax expense 38,565 1.9 % (16,931 ) (0.7 )%(benefit)Net loss (194,210 ) (9.7 )% (40,240 ) (1.7 )%Less: Net incomeattributable to 2,203 0.1 % 3,534 0.1 %noncontrollinginterestsNet lossattributable to $ (196,413 ) (9.8 )% $ (43,774 ) (1.8 )%Abercrombie & FitchCo. Net loss per shareattributable to Abercrombie & FitchCo.:Basic $ (3.14 ) $ (0.67 ) Diluted $ (3.14 ) $ (0.67 ) Weighted-average shares outstanding:Basic 62,541 64,932 Diluted 62,541 64,932

Reporting and Use of GAAP and Non-GAAP Measures

The company believes that each of the non-GAAP financial measures presented are useful to investors as they provide a measure of the companys operating performance excluding the effect of certain items which the company believes do not reflect its future operating outlook, such as certain asset impairment charges related to the companys flagship stores and significant impairments primarily attributable to the COVID-19 pandemic, therefore supplementing investors understanding of comparability of operations across periods. Management used these non-GAAP financial measures during the periods presented to assess the companys performance and to develop expectations for future operating performance. Non-GAAP financial measures should be used supplemental to, and not as an alternative to, the companys GAAP financial results, and may not be calculated in the same manner as similar measures presented by other companies.

In addition, at times the company provides comparable sales, defined as the percentage year-over-year change in the aggregate of: (1) sales for stores that have been open as the same brand at least one year and whose square footage has not been expanded or reduced by more than 20% within the past year, with prior years net sales converted at the current years foreign currency exchange rate to remove the impact of foreign currency rate fluctuation, and (2) direct-to-consumer sales with prior years net sales converted at the current years foreign currency exchange rate to remove the impact of foreign currency rate fluctuation.

The company also provides certain financial information on a constant currency basis to enhance investors understanding of underlying business trends and operating performance, by removing the impact of foreign currency exchange rate fluctuations. The effect from foreign currency, calculated on a constant currency basis, is determined by applying current year average exchange rates to prior year results and is net of the year-over-year impact from hedging. The per diluted share effect from foreign currency is calculated using a 26% tax rate.

At times, the company may also refer to certain non-GAAP store-level metrics, including 4-wall operating margins. Store-level 4-wall operating margins exclude certain components of the companys results of operations, including but not limited to, amounts related to marketing, depreciation and amortization related to home-office and IT assets, distribution center expense, direct-to-consumer expense, and other corporate overhead expenses that are considered normal operating costs as well as all asset impairment and flagship store exit charges. This measure also excludes certain product costs related to direct-to-consumer, wholesale, licensing and franchise operations as well as variances from estimated freight and import costs, and provisions for inventory shrink and lower of cost or net realizable value. In addition, this metric excludes revenue other than store sales and does not include gift card breakage. As such, store-level 4-wall operating margins is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of these exclusions. The company provides store-level 4-wall operating margins on occasion because it believes that it provides a meaningful supplement to the companys operating results.

Abercrombie & Fitch Co.Schedule of Non-GAAP Financial MeasuresThirteen Weeks Ended October 31, 2020(in thousands, except per share data)(Unaudited) GAAP ^(1) Excluded Adjusted items non-GAAPAsset impairment, exclusive of flagship $ 6,329 $ 6,329 $ ? store exit charges ^(2)Operating income 58,616 (6,329 ) 64,945 Income before income taxes 49,808 (6,329 ) 56,137 Income tax expense ^(3) 5,779 (369 ) 6,148 Net income attributable to Abercrombie & $ 42,271 $ (5,960 ) $ 48,231 Fitch Co. Net income per diluted share $ 0.66 $ (0.09 ) $ 0.76 attributable to Abercrombie & Fitch Co.Diluted weighted-average shares 63,877 63,877 outstanding:

(1)GAAP refers to accounting principles generally accepted in the United States of America.

(2)Excluded items consist of pre-tax store asset impairment charges of $6.3 million, which are principally the result of the impact of COVID-19 on store cash flows.

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

Abercrombie & Fitch Co.Schedule of Non-GAAP Financial MeasuresThirteen Weeks Ended November 2, 2019(in thousands, except per share data)(Unaudited) GAAP ^(1) Excluded items Adjusted non-GAAPAsset impairment, exclusive of $ 12,610 10,468 $ 2,142 flagship store exit charges ^(^2^)Operating income 14,479 (10,468 ) 24,947 Income before income taxes 11,557 (10,468 ) 22,025 Income tax expense ^(^3^) 3,987 (2,485 ) 6,472 Net income attributable to $ 6,523 $ (7,983 ) $ 14,506 Abercrombie & Fitch Co. Net income per diluted shareattributable to Abercrombie & $ 0.10 $ (0.12 ) $ 0.23 Fitch Co.Diluted weighted-average shares 63,911 63,911 outstanding:

(1)GAAP refers to accounting principles generally accepted in the United States of America. (2)Excluded items consist of pre-tax store asset impairment charges of $10.5 million related to certain of the companys international Abercrombie & Fitch flagship stores.(3)The tax effect of excluded items is the difference between the tax provision calculated on a GAAP basis and an adjusted non-GAAP basis.

Abercrombie & Fitch Co.Schedule of Non-GAAP Financial MeasuresThirty-nine Weeks Ended October 31, 2020(in thousands, except per share data)(Unaudited) GAAP ^(1) Excluded Adjusted items non-GAAPAsset impairment, exclusive offlagship store exit charges ^ $ 57,340 $ 57,340 $ ? (2)Operating loss (136,368 ) (57,340 ) (79,028 ) Loss before income taxes (155,645 ) (57,340 ) (98,305 ) Income tax expense ^(3) 38,565 (3,635 ) 42,200 Net loss attributable to $ (196,413 ) $ (53,705 ) $ (142,708 ) Abercrombie & Fitch Co. Net loss per diluted shareattributable to Abercrombie & $ (3.14 ) $ (0.86 ) $ (2.28 ) Fitch Co.Diluted weighted-average shares 62,541 62,541 outstanding:

(1)GAAP refers to accounting principles generally accepted in the United States of America. (2)Excluded items consist of pre-tax store asset impairment charges of $57.3 million which are principally the result of the impact of COVID-19 on store cash flows. (3)The tax effect of excluded items is the difference between the tax provision calculated on a GAAP basis and an adjusted non-GAAP basis.

Abercrombie & Fitch Co.Schedule of Non-GAAP Financial MeasuresThirty-nine Weeks Ended November 2, 2019(in thousands, except per share data)(Unaudited) GAAP ^(1) Excluded items Adjusted non-GAAPAsset impairment,exclusive of flagship $ 14,987 10,468 $ 4,519 store exit charges ^(^2^)Operating loss (52,263 ) (10,468 ) (41,795 ) Loss before income taxes (57,171 ) (10,468 ) (46,703 ) Income tax benefit ^(^3^) (16,931 ) (2,485 ) (14,446 ) Net loss attributable to $ (43,774 ) $ (7,983 ) $ (35,791 ) Abercrombie & Fitch Co. Net loss per diluted shareattributable to $ (0.67 ) $ (0.12 ) $ (0.55 ) Abercrombie & Fitch Co.Diluted weighted-average 64,932 64,932 shares outstanding:

(1)GAAP refers to accounting principles generally accepted in the United States of America. (2)Excluded items consist of pre-tax store asset impairment charges of $10.5 million related to certain of the companys international Abercrombie & Fitch flagship stores.(3)The tax effect of excluded items is the difference between the tax provision calculated on a GAAP basis and an adjusted non-GAAP basis.

Abercrombie & Fitch Co.Reconciliation of Constant Currency Financial MeasuresThirteen Weeks Ended October 31, 2020(in thousands, except percentage and basis point changes and per share data)(Unaudited) 2020 2019 % ChangeNet sales GAAP ^(1) $ 819,653 $ 863,472 (5 )%Benefit from changes in foreign currency ? 11,896 (1 )%exchange rates ^(2)Non-GAAP constant currency basis $ 819,653 $ 875,368 (6 )% Gross profit 2020 2019 BPS Change ^(3)GAAP ^(1) $ 524,433 $ 518,931 390 Benefit from changes in foreign currency ? 14,779 (90 )exchange rates ^(2)Non-GAAP constant currency basis $ 524,433 $ 533,710 300 Operating income 2020 2019 BPS Change ^(3)GAAP ^(1) $ 58,616 $ 14,479 550 Excluded items ^(4) (6,329 ) (10,468 ) 40 Adjusted non-GAAP $ 64,945 $ 24,947 500 Benefit from changes in foreign currency ? 7,410 (80 )exchange rates ^(2)Adjusted non-GAAP constant currency $ 64,945 $ 32,357 420 basis Net income per diluted share 2020 2019 $ Changeattributable to Abercrombie & Fitch Co.GAAP ^(1) $ 0.66 $ 0.10 $0.56 Excluded items, net of tax ^(4) (0.09 ) (0.12 ) 0.03 Adjusted non-GAAP $ 0.76 $ 0.23 $0.53 Benefit from changes in foreign currency ? 0.15 (0.15 )exchange rates ^(2)Adjusted non-GAAP constant currency $ 0.76 $ 0.37 $0.39 basis

(1)GAAP refers to accounting principles generally accepted in the United States of America.

(2)The estimated impact from foreign currency is determined by applying current period exchange rates to prior year results and is net of the year-over-year impact from hedging. The per diluted share estimated impact from foreign currency is calculated using a 26% tax rate.

(3)The estimated basis point change has been rounded based on the percentage change.

(4)Excluded items this year consist of pre-tax store asset impairment charges of $6.3 million, which are principally the result of the impact of COVID-19 on store cash flows. Excluded items last year consist of pre-tax store asset impairment charges of $10.5 million related to certain of the companys international Abercrombie & Fitch flagship stores.

Abercrombie & Fitch Co.Condensed Consolidated Balance Sheets(in thousands)(Unaudited) October 31, February 1, November 2, 2020 2020 2019Assets Current assets: Cash and equivalents $ 812,881 $ 671,267 $ 410,775 Receivables 89,074 80,251 92,736 Inventories 545,548 434,326 590,883 Other current assets 73,776 78,905 86,275 Total current assets 1,521,279 1,264,749 1,180,669 Property and equipment, net 593,932 665,290 665,862 Operating lease right-of-use 955,781 1,230,954 1,223,512 assetsOther assets 205,970 388,672 415,962 Total assets $ 3,276,962 $ 3,549,665 $ 3,486,005 Liabilities and stockholders? equityCurrent liabilities: Accounts payable $ 334,775 $ 219,919 $ 269,578 Accrued expenses 356,370 302,214 269,334 Short-term portion of 255,775 282,829 284,694 operating lease liabilitiesIncome taxes payable 6,663 10,392 13,728 Total current liabilities 953,583 815,354 837,334 Long-term liabilities: Long-term portion of operating $ 1,010,051 $ 1,252,634 $ 1,234,502 lease liabilitiesLong-term borrowings, net 343,559 231,963 241,343 Other liabilities 110,965 178,536 178,460 Total long-term liabilities 1,464,575 1,663,133 1,654,305 Total Abercrombie & Fitch Co. 849,379 1,058,810 983,512 stockholders? equityNoncontrolling interests 9,425 12,368 10,854 Total stockholders? equity 858,804 1,071,178 994,366 Total liabilities and $ 3,276,962 $ 3,549,665 $ 3,486,005 stockholders? equity

Abercrombie & Fitch Co.Condensed Consolidated Statements of Cash Flows(in thousands, except per share data)(Unaudited) Thirty-nine Weeks Ended October 31, November 2, 2020 2019Operating activities Net cash provided by (used for) operating activities $ 158,894 $ (33,839 ) Investing activities Purchases of property and equipment $ (91,748 ) $ (154,373 )Net cash used for investing activities $ (91,748 ) $ (154,373 ) Financing activities Proceeds from issuance ofsenior secured notes $ 350,000 $ ? Proceeds from borrowings under the asset-based senior 210,000 ? secured credit facilityRepayment of term loan facility borrowings (233,250 ) (10,000 )Repayment of borrowings under the asset-based senior (210,000 ) ? secured credit facilityPayment of debt issuance costs and fees (7,151 ) ? Purchases of common stock (15,172 ) (63,542 )Dividends paid (12,556 ) (38,959 )Other financing activities (11,742 ) (10,407 )Net cash provided by (used for) financing activities $ 70,129 $ (122,908 ) Effect of foreign currency exchange rates on cash $ 2,269 $ (2,686 )Net increase (decrease) in cash and equivalents, and $ 139,544 $ (313,806 )restricted cash and equivalentsCash and equivalents, and restricted cash and $ 692,264 $ 745,829 equivalents, beginning of periodCash and equivalents, and restricted cash and $ 831,808 $ 432,023 equivalents, end of period

Abercrombie & Fitch Co.Store Count

Thirteen Weeks Ended October 31, 2020 Hollister ^(1) Abercrombie ^(2) Total United International United International United International States States StatesAugust 1, 386 155 253 56 639 211 2020New 1 ? 2 ? 3 ? Permanently (1 ) (1 ) ? (2 ) (1 ) (3 )closedOctober 31, 386 154 255 54 641 208 2020 Thirty-nine Weeks Ended October 31, 2020 Hollister ^(1) Abercrombie ^(2) Total United International United International United International States States StatesFebruary 1, 391 155 256 52 647 207 2020New 2 2 4 4 6 6 Permanently (7 ) (3 ) (5 ) (2 ) (12 ) (5 )closedOctober 31, 386 154 255 54 641 208 2020

(1) Locations with Gilly Hicks carveouts within Hollister stores are represented as a single store count. Excludes nine international franchise stores as of each of October31, 2020, August1, 2020 and February1, 2020, respectively. Excludes 15 Company-operated temporary stores as of each of October31, 2020 and August1, 2020, and 16 Company-operated temporary stores as of February1, 2020.

(2) Abercrombie includes the company's Abercrombie & Fitch and abercrombie kids brands. Locations with abercrombie kids carveouts within Abercrombie & Fitch stores are represented as a single store count. Excludes eight international franchise stores as of each of October31, 2020 and August1, 2020, and seven international franchise stores as of February1, 2020. Excludes five, six, and eight Company-operated temporary stores as of October31, 2020, August1, 2020, and February1, 2020 respectively.