Fourth-quarter operating income came to $116 million in the quarter ended Jan. 30, compared to $122 million in the year-ago period. On an adjusted basis, operating income was $131 million last year compared to $125 million in the year-ago period.
By division, Hollister’s sales were down 8 percent last quarter to $655.4 million from $710.5 million a year ago. Abercrombie’s sales were down 2 percent to $466.6 million from $474 million in the 2019 period.
“I am proud of our execution in the fourth quarter, where we exceeded initial internal expectations,” said Horowitz, in a statement. “We listened and remained close to our customer, adjusting our product and messaging to align with their new reality. We drove 34 percent digital sales growth, expanded gross profit rate by 230 basis points and reduced operating expense during the fourth quarter.
For all of last year, A&F lost $114 million, compared to a profit of $39.4 million in 2019.
Net sales last year reached $3.1 billion, down 14 percent compared to $3.6 billion in 2019. Digital sales increased 39 percent to $1.7 billion.
“For the year, we made significant progress on our key transformation initiatives,” Horowitz said. “We leaned into our infrastructure to grow digital to 54 percent of annual revenues while utilizing our lease flexibility to take approximately 1.1 million gross square feet, or 17 percent, out of our base, including eight tourist-dependent flagships. At the same time, we continued to make strategic investments to support future growth including opening smaller, more omni-enabled experiences; adding senior level talent in key areas including marketing, data and analytics and digital, and further building out regional teams in EMEA and APAC. We remain focused on controlling what we can control and ended 2020 even stronger than we started.”
Horowitz also said A&F has shifted to a digitally led business model, with digital sales last quarter accounting for 54 percent of the volume. The company has set a $100 million capital expenditure budget for 2021, about half of which will be spent on the digital operations. In digital, “the most important investment is in the experience,” Horowitz said, noting that last year, the company shored up talent in the company’s user and data analytics teams.
A&F closed eight flagship locations during fiscal 2020, leaving seven flagships remaining. In addition, the company closed 129 nonflagship locations during fiscal 2020. These actions reduced total company gross square footage by 1.1 million gross square feet, or 17 percent, as compared to fiscal 2019 year-end.