(Filed Under Financial and General Interest News). While still only a minor part of Abercrombie and Fitch Co., sales at the company’s Gilly Hicks lingerie division grew four times faster than the company sales as a whole last year, and the firm has increased the number of Gilly Hicks retail outlets since last June
by 31%, from 16 to 21 as of February 2012. Sales at the Gilly Hicks division rose from $40.3 million in fiscal 2010 to $73 million in fiscal 2011, rising by 81% while overall company sales rose by 20% during the same period.
These statistics and more on Gilly Hicks, a brand that was launched in 2008, were contained in the recently-released Abercrombie financial statement for fiscal 2011. Overall, the company had net sales of $4.158 billion for the fifty-two weeks ended January 28, 2012, up from from $3.469 billion for the fifty-
two weeks ended January 29, 2011. Operating income for fiscal 2011 was $190.0 million, down from $231.9 million in fiscal 2010. Net income from continuing operations was $126.9 million and net income from continuing operations per diluted share was $1.42 in fiscal 2011, down from net income from continuing operations of $150.3 million and net income from continuing operations per diluted share of $1.67 in fiscal 2010. The company did not disclose whether it
will continue the rapid pace of Gilly Hicks retail store openings in 2012 and the report cited the risks of launching new brands. “Our development of a new brand concept such as Gilly Hicks could have a material adverse effect on our financial condition or results of operations,” declared the report. “The development of new brand concepts such as Gilly Hicks requires management’s focus and attention, as well as significant capital investments. Furthermore, a new brand concept is susceptible to risks, including lack of customer acceptance, competition from existing or new retailers, product differentiation, production and distribution inefficiencies and unanticipated operating issues. There is no assurance that a new brand concept, including Gilly Hicks, will achieve successful results. The failure of Gilly Hicks to be launched successfully, and to achieve profitability, could have a material adverse effect on our financial condition and results of operations. The costs of
exiting a brand are significant. In Fiscal 2009, we incurred pre-tax exit costs of $56.1 million and pre-tax impairment charges of $51.5 million associated with the closure of Ruehl. In addition, the ongoing development of new concepts may place a strain on available resources.” The company’s Ruehl brand was
launched in 2004 and closed in 2009.
In addition, Abercrombie discussed Gilly Hicks in relation to “asset impairment charges,” stating, “the store-related asset impairment charges relate to stores whose asset carrying value exceeded their fair value. For the fifty-two week period ended January 28,
2012, the charge was associated with 14 Abercrombie & Fitch, 21 abercrombie kids, 42 Hollister and two Gilly Hicks stores. For the fifty-two week period ended January 29, 2011, the charge was associated with two
Abercrombie & Fitch, two abercrombie kids,nine Hollister and 13 Gilly Hicks stores.” Abercrombie uses colorful language, at least for a financial statement, to describe its new brand: “Gilly Hicks is the cheeky cousin of Abercrombie & Fitch. Inspired by the free
spirit of Sydney, Australia, Gilly Hicks makes the hottest Push ‘Em Up bras and the cutest Down Undies for young, naturally beautiful, confident girls. Carefree and undeniably pretty, Gilly Hicks is the All-American brand with a Sydney sensibility.”
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