Stores and Distribution expense, as a percentage of sales, increased 50 basis points from 41.1% to 41.6%. The increase in rate versus last year is primarily attributed to increases in direct-to-consumer and store-related payroll and other controllable expenses.
Marketing, General and Administrative expense, as a percentage of sales, decreased 80 basis points from 13.0% to 12.2%. The reduction in rate versus last year resulted primarily from a reduction in legal, travel, and marketing expenses, partially offset by increased home office payroll
Operating income for the second quarter increased 21% to $124.1 million, compared to $102.4 million last year. Net income for the quarter increased 24% to $81.3 million, compared to $65.7 million last year. Net income per diluted share increased 22% to $0.88, compared to $0.72 for the second quarter of fiscal 2006.
The Company expects net income per diluted share for the second half of fiscal 2007 to be in the range of $3.63 to $3.67. Based upon this guidance, the Company now expects full year fiscal 2007 net income per diluted share to be in the range of $5.16 to $5.20.
The low-end of the guidance reflects a flat comparable store sales scenario for the second half of fiscal 2007. Fourth Quarter fiscal 2006 results included incremental net income per diluted share of $0.06 resulting from an extra selling week in the fiscal 2006 retail calendar and $0.07 resulting from favorable settlements of tax audits.
The Company plans total capital expenditures for fiscal 2007 to be between $395 million and $405 million with approximately $220 million of this amount allocated to new store construction and store remodels.
Approximately $60 million is allocated to "refresh" improvements and other brand enhancing investments planned for existing stores with the balance related to home office, information technology, and direct-to-consumer infrastructure investments.
For fiscal 2007, the Company expects to increase gross square-footage by approximately 10%, primarily through the addition of six new Abercrombie & Fitch stores, 25 new abercrombie stores, 56 new Hollister Co stores, seven new RUEHL stores, and four stores of the Company's new concept.
marketing@alchempro.com
