Abercrombie & Fitch Co. (NYSE:ANF) Q3 2023 Earnings Call Transcript

Dylan Carden: Will those add to the total fleet size and those are incremental accounts like as opposed to in —

Scott Lipesky: Those would be incremental. When you think about this year, we’re talking about 35 opens and 35 closes. So we’ll be kind of net flat. And then we’re also doing 20 remodels and rightsizes. So the way I like to look at it is we have 55 new experiences coming to the customer this year, and that’s really exciting.

Dylan Carden: Got it. And Scott, I know you’re not going to talk much about this, but to the extent that we’re trying to sort of underwrite earnings power of the model, kind of come to operating margin. I mean, trying to count the question and Kinsights speak to sort of, I guess, in relation to the 8% longer-term target. How much of this kind of low double-digit margin that you’re seeing now? Can you kind of attribute perhaps to outperformance comp relative to the cost environment? And what do you feel like you’re left with sort of more growth? I mean anything to kind of help us asset think about some of the earnings power for.

Scott Lipesky: I’ll go back to ‘22, whenever we had our Investor Day, we talked about getting some growth on the top line, a little bit of leverage and then getting some of that cost back in on the gross margin line. And what we’ve seen is both of those things happen in a bigger way than we expected back in 2022 this quickly. Really solid sales growth this year, talking in that range of 12% to 14%. And we’re going to see great leverage fall through to the bottom line there. And then on the gross margin side, just seeing that freight costs come in pretty quickly and then getting to the end of the tail here in cotton. So it’s just the same formula as we go forward. You’ve seen a really strong flow-through in the business on growth this year.

So our goal is going to be the same for next year. We want to grow. We want to see some of that cost come back in – and that’s what we’re thinking about for 2024. We’re in the middle of our budget process right now, and we want to set this business up for long-term growth, sustainable growth.

Operator: Thank you. And I’m showing no further questions in the queue at this time. I would now like to turn the call back over to Fran Horowitz for any closing remarks.

Fran Horowitz : Yes, I just want to thank everyone for joining the call today, and we look forward to providing some more updates soon.

Operator: Ladies and gentlemen, that does our conference for today. Thank you for your participation. You may now disconnect.