Abercrombie

Abercrombie & Fitch Co.a redefined fit

2012 Annual Report

120th AnniversaryEST. 1892

Abercrombie & Fitch RedefinedAbercrombie and Fitch Co. has been under scrutiny for sometime now, and we want to prove ourselves to the public that we are on the way to redefining ourselves. Our clothing has been known to be timeless and classic, and this year we want to redefine what A&F stands for, not only for us, but for our consumers. Each of our brands can easily be defined as other words other than abercrom-bie and Fitch. For Abercrombie and Fitch, we redefined it as Active & Fit. For Hollister, we described it as Adven-turous & Fun. As abercrombie kid we redefined it as Accessible & Family and for Gilly Hicks, we redefined it as Ambitious & Fun. Abercrombie and Fitch Co. is clothing that everyone can wear, and it never goes out of style. Ab

ercrombie & Fitch Co. (“A&F”), a company incorporat-edin Delaware in 1996, through its stores and direct-to-consumer operations offering bras, underwe-ar, personal care products, sleepwear and at-home products for women under the Gilly Hicks brand. subsid- iaries (collectively, A&F and its subsidiaries are referred to as “Abercrombie & Fitch” or the “Company”), is a specialty retailer that operates stores and direct-to-consumer operations selling casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and ac-cessories for men, women and kids under the Abercrom-bie & Fitch, abercrombie kids, and Hollister brands.

A & F

Table of Contents Letter to our shareholders 6

Our heritage 12 Abercrombie & Fitch 16

Hollister 20Abercrombie Kids 22

Gilly Hicks 24 Financial Highlights 26

Net Sales 2009-2012(In Thousands)

$1

5,0

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0

$1

5,5

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0

$1

5,2

45

,00

0

$1

6,5

80

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0

20

09

20

10

20

11

20

12

There have been three retailers called Abercrombie & Fitch and the current A&F shares only its name with the original business. Founded in 1892 in the Manhattan borough of New York City, New York, by David T. Abercrombie and Ezra H. Fitch, the original Abercrombie & Fitch was an elite outfitter of sporting and excur-sion goods, particularly noted for its expensive shotguns, fishing rods, and tents. This year in 2012, it is Aber-crombie and Fitch’s 120th anniversary, in which we are celebrating our heritage and our All-American brand.

COMPANY OVERVIEW

Abercrombie and Fitch company stock increased by 4.6% in the year 2012 alone. Over the last 47 years (that is, since present management took over), book value has grown from $19 to $99,860, a rate of 19.8% compounded annually. Charlie Munger, A&F’s Vice Chairman and my partner, and I feel good about the company’s progress during 2011. Here are the highlights:

We incorporated new lines into all of our brands. For example, in Abercrombie and Fitch we added “Elements of Ivy”, a class English Ivy School line. In Hollister, we added “So cal classic prep”, which shows west coast preppy style. They were are best selling lines this year and did very well. The only thing that brought Abercrombie and Fitch down was Gilly Hicks. Abercrombie and Fitch Co. for the past few years has been under scrutiny, and we have tried our best to turn that

letter FromOur Ceo

around. Of all of our companies, we earned $750 million dollars and as 2013 approaches, we expect nothing less. 2012 was a successful year with a few ups and downs, but this company is on the rise and I can’t wait to see what will happen in the future.

to the shareholders of abercrombie & fitch co.

Mike Jeffries

Mike Jeffries, CEOAbercrombie & Fitch CO.

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Officers & Directors

Lauren Brisky

Archie Griffin

Elizabeth Lee

John Kessler

Blake WhilenVice President

Bobby RocksinSenior Exutive Director

Katherine AveryCreative Director

Elizabeth SchmidtExcutive Director

Arnold LisenDesign Director

During the first half of the 20th century Abercrombie & Fitch Co. was the definitive store for America’s sporting elite, outfitting big-game hunters, fishermen, and other adventurers. After the chain went bankrupt in 1977, Oshman’s Sporting Goods revived the Abercrom-bie & Fitch name but shifted its focus to more contemporary sporting goods and a wider array of apparel for men and women. The Lim-ited, Inc., after acquiring the company in 1988, eliminated sporting goods entirely.

Abercrombie & Fitch Co. was founded in 1892 in New York City by David T. Abercrombie and Ezra H. Fitch. Abercrombie, a former prospector, miner, trapper, and railroad surveyor or engineer, owned a small shop and factory producing camping equipment in lower Manhattan. Fitch, one of his customers, was a successful lawyer in Kingston, New York, but the outdoors was his chief interest. By this

time Abercrombie & Fitch’s reputation as purveyor to the sporting elite already was well established.

It had equipped Theodore Roosevelt for an African safari and also outfitted polar expeditions led by Roald Amundsen and Admiral Richard Byrd and flights made by Charles Lindbergh and Amelia Earhart. Every president from Roosevelt to Gerald Ford eventu-ally would buy something from the store. By this time Abercrombie & Fitch was selling outdoor and sporting equipment not only for hunting, fishing, camping, and exploration, but also for skating, polo, golf, and tennis. It also carried a variety of outdoor clothing, boots, and shoes for both men and women and cameras, pocket cutlery, and indoor games. It wasn’t until 1985 that Abercrombie and Fitch started seling men and womens clothing, and eventually it became the company we know today.

As we celebrate our 120th

Anniversary, we will never

forget our special history.

It all started back in 1892 ....

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“We are striving to grow as a company and appreciate our history.”

“We are learning from our mistakes, and will make 2013 an even better year.”

“We celebrate our 120 years by embracing our unique heritage.”

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Abercrombie and Fitch has always been Abercrombie and Fitch Co.’s best selling clothing company. A & F is known to be timeless and clas-sic, and our audience really appreciates the clothing we have to offer. This year in 2012, we hired new designers and it really helped our sales. Of all A & F’s clothing and offset lines, our best sellers this year were our shorts and pants. Our jeans always do well, but our classic chino pant did great. For mens, our flannels were a best seller and for women, they tended to flock to our tank tops and flowy skirts.

One of the great attributes of Abercrombie and Fitch is that our clothing is timeless and can fit any lifestyle. In this section we rede-fined A & F to Active & Fit, not only because the clothing can be described as that but because have newly started the A & F challenge

(11th year). he A&F Challenge raises money to benefit various organi-zations and charities in central Ohio and communities in which A&F operates throughout the U.S. The Challenge is open to our associates and the general public and attracted 3,000 participants this year with 100% of entry fees donated to charity organizations.

The Challenge includes activities such as a 5K Run, 20-mile Bike tour, and the Kid’s Challenge. The event is celebrated with post-race festivities including live entertainment, food and drinks. Schools. Below, a pie chart is shown to display our sales in each of our cloth-ing categories. Our shirts were this years best sellers (t-shirts, button downs, etc) and our pants were a close second.

Abercrombie & Fitch

Units sold/revenuein thousands

Active & Fit

Shirts

Pants

SkirtsShoes

Acessories

All Products

This year’sBest sellers

Abercrombie TRetails $55.00

A&F ShortsRetails $35.00

White Button DownRetails $75.00

It seemed as though this year in 2012, whites were very in. Along with that, a lot of our athletic wear was in high demand. At the top, our t-shirts with our name on them have always been a best seller. Underneath that, our soft shorts this year were a big hit as well as our nice button down shirts from our Elements of Ivy line.

This year’sBest sellers

Lace ShortsRetails $55.00

Prep ShortsRetails $35.00

Striped ShirtRetails $75.00

It seemed as though this year in 2012, all our beach wear and athletic wear were very in. Light colors were also a big hit, most likely to go with our prep-py beach collection. As you can see from above, our women’s lace shorts were a best seller. Along with that, our collared shirts that had patterns were another best seller this year.

Hollister has always been a popular brand since its open-ing in 2000. Steering away from Abercrombie and Ftich’s “ivy league” heritage, Hollister focuses on its classic beachy look. HCo price points are about 20% lower than its parent Abercrombie & Fitch. To maintain the SoCal theme, stores and merchandise are categorized within the divisions named “Dudes” (men) and “Bettys” (women).

Abercrombie & Fitch has designed Hollister Co. stores to simulate the appearance of vintage beach shacks in an indoor shopping mall, making Hollister stores stand out from any

other store in the mall. Hollister, we defined as “Adventurous & Fun” because this line focuses around the ocean and taking risks. The Hollister swim wear line is always a best seller. In the diagram’s below, you can see what sold the most this year in 2012. Our swim wear sold 40% this year, with all of our shirts coming at a close second at 35%.

On the very left, you can see this years best-sellers of 2012. The striped collared shirt was very popular with the Dudes and the nice white shorts were a big seller for both Dudes and Betty’s.

A&F 20

Units sold/revenuein thousands

All Products Sold 65,000$250,550 revenue+9% from 2011

Swim

Hollister

Adventurous & Fun

Shirts

Shorts

Shoes

Abercrombie kids (marketed as abercrombie) is an American lifestyle brand by Abercrombie & Fitch. Targeting consumers aged 7–14, the concept is designed as the children’s version of A&F and is marketed as “Classic Cool”. The children’s sized casual wear is inspired by that of A&F and made available in store and on the online abercrom-biekids.com. Abercrombie & Fitch introduced abercrombie in 1997 with 9 stores. The purpose was to attract a younger audience to the American Abercrombie brand. abercrombie kids’ apparel is designed to mimic Abercrombie & Fitch clothing, and the brand carries most the styles that A&F does. Most abercrombie kids clothes that have the labeled moose on them are to resemble their parent company

“Abercrombie& Fitch” but the kids signature moose is smaller to sym-bolize that they are children. Since abercrombie kids is very similar to Abercrombie & Fitch, the sellings and popularity of the clothes are pretty much the same. abercrombie kids was redefined to Accessible & Family because it’s not very expensive but still is great taste. We incorporated the word Family because abercrombie kids is the more family oriented company of all of our brands.

In this line, our outerwear and shorts sold the most this year with sky-rocketing percentage of 42% and 40%. Following behind were pants with 12% and tops with 6%.

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abercrombie kids

Accessible & Family

Units sold/revenuein thousands

All Products

Outerwear Pants

TopsShorts

Sold 50,000$250,500 revenue+7% from 2011

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This year’sBest sellers

Abercrombie TRetails $55.00

A&F TeeRetails $35.00

White Button DownRetails $75.00

Abercrombie Kids is a well-known brand extension off of Abercrombie & Fitch and this year in 2012, we were down 15 percent of 2011. Our best sellers this year consisted of blue jean shorts as well as named T’s. Another big hit was our hooded sweatshirts with feaux fur lined inside.

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This year’sBest sellers

Pink ShortsRetails $55.00

BlazerRetails $35.00

Red Skinny JeansRetails $75.00

Gilly Hicks is the smaller of our brands in Abercrombie & Fitch Co. and this year it didn’t do as well as our other companies. The three best-sellers of Gilly Hicks were our bright colors, like our pink shorts and red pants. Another big hit was our black blazer which retails for $55.00.

Gilly Hicks

Ambitious & FreeGilly Hicks is a lifestyle brand, from American company Abercrombie & Fitch, specializing in women’s “knickers from casual to sexy, relaxed PJ’s and beauty things.” Marketed for the female consumers of its parent brand, Gilly Hicks is officially labeled as “the Cheeky cousin of Abercrombie & Fitch.”

The brand is the fifth from A&F, and was initially known as Concept 5. The Australian theme of Gilly Hicks was originally inspired by the phrase “Down Under”. In saying, it is the only brand from Abercrom-

bie & Fitch with a non-American image. The recent brand has been named as one of Michael Jeffries’ best new ideas for Abercrombie & Fitch’s portfolio of brands. GH is primarily set to compete with large lingerie chains Victoria’s Secret and NAT, Frederick’s of Hollywood and Aerie. Along with lingerie, bathing suits is another one of the brands specialities. Similar to how Hollister Co. apparel is named af-ter SoCal beaches, GH clothing and fragrance is named after Sydney-neighboring beaches and neighborhoods. All clothing is tagged with

Units sold/revenuein thousands

All Products Sold 32,000$175,550 revenue+8% from 2011

Swim

Lingerie

Clothing

60%

25%

15%

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Abercrombie & Fitch Co.

Financial Report

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Online Sales from 2009-2012

Assets (In thousands)

Net Income Per Share ....................................... Diluted ..................................... Net Income (Loss) Per Share from DiscontinuedOperations(1) Basic ....................................... Diluted .....................................

NetSales .................................... GrossProfit .................................. OperatingIncome ............................. Net Incomefrom Continuing Operations ........... Income (Loss) ..................................... NetIncome (1) ................................. Dividends Declared Per Share ...................

2012201120102009

2012201120102009

$2,928,626$1,883,598$117,912$78,953$78,699$254$0.70

$3,468,777$2,212,181$231,932$150,283$ -$150,283$0.70

$4,158,058$2,518,870$190,030$126,862$796$127,658$0.70

$4,569,047$2,85,650$200,657$140,862$1,500$134,569$0.70

$5.72$5.45$(0.27)$(0.26)$5.45$5.20

$3.55$3.45$(0.41)$(0.40)$3.14$3.05

$0.90$0.89$(0.90)$(0.89)$0.00$0.00

$1.46$1.42$0.01$0.01$1.47$1.43

28%41% 48% 61%

Liabilties (In thousands)

Operations(1) Basic ....................................... Diluted .....................................

$(0.26)$5.45$5.20

$3.55$3.45$(0.41)

$(0.89)$0.00$0.00

$0.01$1.47$1.43

Income (In thousands) 2012201120102009

Basic ....................................... Diluted ..................................... Basic Weighted-Average Shares Outstanding . . Diluted Weighted-Average Shares Outstanding . . Total Assets (including discontinued operations) . . ReturnonAverageAssets(2) ..................... WorkingCapital(3) ............................. CurrentRatio(4) ............................... Net Cash Provided by Operating Activities(1) . .CapitalExpenditures ........................... Long-TermDebt .............................. Stockholders’ Equity ................................ Return on Average Stockholders’ Equity(5) . . ComparableStoreSales(6) .......................

$5.45$5.20$87,248$91,523$2,567,59820%$585,575$2.08$817,524$403,345$ -$1,618,31331%(1)%

$3.14$3.05$86,816$89,291$2,567,59810%$622,213$2.38$491,031$367,602$100,000$1,845,57816%(13)%

$0.00$0.00$87,874$88,609$2,821,8660%$776,311$2.73$395,487$175,472$71,213$1,827,9178%(23)%

$1.71$1.67$88,061$89,851$2,941,4155%$874,417$2.56$391,789$160,935$68,566$1,890,7847%(7)%

Income (In thousands) 2012201120102009

Net Income ................................DepreciationandAmortization ......................Non-Cash Charge for Asset Impairment....LossonDisposal/Write-offofAssets.............LessorConstructionAllowances ................AmortizationofDeferredLeaseCredit..........DeferredTaxes ........................Share-BasedCompensation .............

Excess Tax Benefit from Share-BasedAuctionRateSecuritiesLoss

$254$238,752$84,754$10,646$47,329(47,182)$7,605$36,109

$150,283$229,153$50,631$7,064$35,281(48,373)(27,823)$40,599

$127,658$232,956$68,022$41,509(48,258)(46,330)$51,093$2,973

$134,586$250,876$72,458$45,607(50,456)(43,879)$54,459$1,989

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(4,821)13,442

(6,821)12,342