ABERCROMBIE & FITCH COANFEarnings & Financial Report

ITEM 1. BUSINESS - STRATEGY AND KEY BUSINESS PRIORITIES ,” included in this Annual Report on Form 10-K.

Abercrombie & Fitch Co. 31 2021 Form 10-K Table of Contents Summary of results A summary of results for Fiscal 2021 and Fiscal 2020 follows: GAAP Non-GAAP (1) (in thousands, except change in net sales, gross profit rate, operating margin and per share amounts) Fiscal 2021 Fiscal 2020 Fiscal 2021 Fiscal 2020 Net sales $ 3,712,768 $ 3,125,384 Change in net sales from the prior fiscal year 19 % (14) % Gross profit rate (2) 62.3 60.5 Operating income (loss) $ 343,084 $ (20,469) $ 355,184 $ 52,468 Operating income (loss) margin 9.2 % (0.7) % 9.6 % 1.7 % Net income (loss) attributable to A&F (3) $ 263,010 $ (114,021) $ 272,689 $ (45,383) Net income (loss) per diluted share attributable to A&F (3) 4.20 (1.82) 4.35 (0.73) (1) Refer to “ RESULTS OF OPERATIONS ” for details on excluded items.

A reconciliation from each non-GAAP financial measure presented in this Annual Report on Form 10-K to the most directly comparable financial measure calculated in accordance with GAAP, as well as a discussion as to why the Company believes that these non-GAAP financial measures are useful to investors is provided below under “ NON-GAAP FINANCIAL MEASURES .” (2) Gross profit is derived from cost of sales, exclusive of depreciation and amortization.

(3) Fiscal 2021 results includes $42.5 million of tax benefits due to the release of valuation allowances as a result of the improvement seen in business conditions.

Fiscal 2020 results included $101 million of adverse tax impacts related to valuation allowances on deferred tax assets and other tax charges as a result of the COVID-19 pandemic, which adversely impacted net loss per diluted share by or $1.61 per share.

Refer to Note 12, “ INCOME TAXES .” Certain components of the Company’s Consolidated Balance Sheets as of January 29, 2022 and January 30, 2021 and Consolidated Statements of Cash Flows for Fiscal 2021 and Fiscal 2020 were as follows: (in thousands) Balance Sheets data January 29, 2022 January 30, 2021 Cash and equivalents $ 823,139 $ 1,104,862 Gross borrowings outstanding, carrying amount 307,730 350,000 Inventories 525,864 404,053 Statement of Cash Flows data Fiscal 2021 Fiscal 2020 Net cash provided by operating activities $ 277,782 $ 404,918 Net cash used for investing activities (96,979) (51,910) Net cash (used for) provided by financing activities (446,898) 69,717 Abercrombie & Fitch Co. 32 2021 Form 10-K Table of Contents RESULTS OF OPERATIONS The estimated basis point (“BPS”) change disclosed throughout this Results of Operations has been rounded based on the change in the percentage of net sales.

Net sales (in thousands) Fiscal 2021 Fiscal 2020 $ Change % Change Hollister $ 2,147,979 $ 1,834,349 $ 313,630 17% Abercrombie 1,564,789 1,291,035 273,754 21% Total Company $ 3,712,768 $ 3,125,384 $ 587,384 19% Net sales by geographic area are presented by attributing revenues on the basis of the country in which the merchandise was sold for in-store purchases and the shipping location provided by customers for digital orders.

The Company’s net sales by geographic area for Fiscal 2021 and Fiscal 2020 were as follows: (in thousands) Fiscal 2021 Fiscal 2020 $ Change % Change United States $ 2,652,158 $ 2,127,403 $ 524,755 25% EMEA 755,072 709,451 45,621 6% APAC 171,701 176,636 (4,935) (3)% Other 133,837 111,894 21,943 20% International $ 1,060,610 $ 997,981 $ 62,629 6% Total Company $ 3,712,768 $ 3,125,384 $ 587,384 19% For Fiscal 2021, net sales increased 19% as compared to Fiscal 2020, primarily due to an increase in units sold as a result of increased store traffic relative to last year, which was impacted by widespread temporary store closures due to COVID-19, and 4% digital sales growth.

Average unit retail increased year-over-year, driven by less promotions and lower clearance levels, with benefits from changes in foreign currency exchange rates of approximately $26 million.

Cost of sales, exclusive of depreciation and amortization Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Cost of sales, exclusive of depreciation and amortization $ 1,400,773 37.7% $ 1,234,179 39.5% (180) For Fiscal 2021, cost of sales, exclusive of depreciation and amortization, as a percentage of net sales decreased approximately 180 basis points as compared to Fiscal 2020.

The year-over-year decrease was primarily attributable to approximately 550 basis points of increased average unit retail as a result of lower promotions and markdowns, partially offset by higher average unit cost related to approximately 414 basis points of increased freight costs as well as other costs incurred to offset supply chain issues.

Gross profit, exclusive of depreciation and amortization Fiscal 2021 Fiscal 2020 % of Net Sales % of Net Sales BPS Change Gross profit, exclusive of depreciation and amortization $ 2,311,995 62.3% $ 1,891,205 60.5% 180 Abercrombie & Fitch Co. 33 2021 Form 10-K Table of Contents Stores and distribution expense Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Stores and distribution expense $ 1,429,476 38.5% $ 1,391,584 44.5% (600) For Fiscal 2021, stores and distribution expense increased 3% as compared to Fiscal 2020, primarily driven by a a $42 million increase in digital sales marketing expense, $36 million increase in payroll expense, reflecting the return of certain expenses not incurred in Fiscal 2020 due to COVID-19 temporary store closures, a $15 million increase in digital shipping and handling expense reflecting 4% year-over-year digital sales growth and a $11 million increase in digital direct expense.

These increases in expense were partially offset by a $68 million reduction in store occupancy expense, due to a decrease in store count and favorable rent negotiations and include approximately $17.9 million in benefits related to rent abatements and a favorable resolution of a flagship store closure.

Marketing, general and administrative expense Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Marketing, general and administrative expense $ 536,815 14.5% $ 463,843 14.8% (30) For Fiscal 2021, marketing, general and administrative expense increased 16% as compared to Fiscal 2020, primarily driven by increased digital media spend, performance-based compensation, legal, consulting and information technology expense.

These increases were partially offset by a decrease in depreciation expense.

Flagship store exit (benefits) charges Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Flagship store exit (benefits) charges $ (1,153) 0.0% $ (11,636) (0.4)% 40 For Fiscal 2021, flagship store exit benefits primarily related to the closure of two international Abercrombie & Fitch flagship stores.

Refer to Note 19, “ FLAGSHIP STORE EXIT (BENEFITS) CHARGES . ” Asset impairment, exclusive of flagship store exit charges Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Asset impairment, exclusive of flagship store exit charges $ 12,100 0.3% $ 72,937 2.3% (200) Excluded items: Asset impairment charges (1) (12,100) (0.3)% (72,937) (2.3)% 200 Adjusted non-GAAP asset impairment, exclusive of flagship store exit charges $ — 0.0% $ — 0.0% — (1) Refer to “ NON-GAAP FINANCIAL MEASURES ,” for further details.

Refer to Note 9, “ ASSET IMPAIRMENT ,” for further discussion.

Abercrombie & Fitch Co. 34 2021 Form 10-K Table of Contents Other operating income, net Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Other operating income, net $ 8,327 0.2% $ 5,054 0.2% — For Fiscal 2021, other operating income, net, increased as compared to Fiscal 2020, primarily due to sublease rental income recognized in Fiscal 2021.

Operating income (loss) Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Operating (loss) income $ 343,084 9.2% $ (20,469) (0.7)% 990 Excluded items: Asset impairment charges (1) 12,100 0.3% 72,937 2.3% (200) Adjusted non-GAAP operating income $ 355,184 9.6% $ 52,468 1.7% 790 (1) Refer to “ NON-GAAP FINANCIAL MEASURES ,” for further details.

Interest expense, net Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Interest expense $ 37,958 1.0% $ 31,726 1.0% — Interest income (3,848) (0.1)% (3,452) (0.1)% — Interest expense, net $ 34,110 0.9% $ 28,274 0.9% — For Fiscal 2021, interest expense, net, increased 21% primarily driven by the loss on the extinguishment of debt related to the purchase of Senior Secured Notes and higher interest expense in the current year, reflecting higher average borrowings outstanding than before the completion of the Senior Secured Notes private offering.

Income tax expense Fiscal 2021 Fiscal 2020 (in thousands, except ratios) Effective Tax Rate Effective Tax Rate Income tax expense $ 38,908 12.6% $ 60,211 (123.5)% Excluded items: Tax effect of pre-tax excluded items (1) 2,421 4,299 Adjusted non-GAAP income tax expense $ 41,329 12.9% $ 64,510 266.6% (1) Refer to “ Operating income (loss) ” for details of pre-tax excluded items.

The tax effect of pre-tax excluded items is the difference between the tax provision calculation on a GAAP basis and an adjusted non-GAAP basis.

The Company’s effective tax rate for Fiscal 2021 was impacted by $42.5 million of tax benefits due to the release of valuation allowances, primarily in the U.S. and Germany, and a discrete tax benefit of $3.9 million due to a rate change in the U.K.

The Company did not recognize income tax benefits on $25.3 million of pre-tax losses generated in Fiscal 2021 primarily in Switzerland, resulting in adverse tax impacts of $4.6 million. Refer to Note 12, “ INCOME TAXES ,” for further discussion on factors that impacted the effective tax rate in Fiscal 2021 and Fiscal 2020.

Abercrombie & Fitch Co. 35 2021 Form 10-K Table of Contents Net income (loss) attributable to A&F Fiscal 2021 Fiscal 2020 (in thousands) % of Net Sales % of Net Sales BPS Change Net income (loss) attributable to A&F $ 263,010 7.1% $ (114,021) (3.6)% 1,070 Excluded items, net of tax (1) 9,679 0.3% 68,638 2.2% (190) Adjusted non-GAAP net income (loss) attributable to A&F (2) $ 272,689 7.3% $ (45,383) (1.5)% 880 (1) Excludes items presented above under “ Operating income (loss) , ” and “ Income tax expense . ” Net income (loss) per diluted share attributable to A&F Fiscal 2021 Fiscal 2020 $ Change Net income (loss) per diluted share attributable to A&F $ 4.20 $ (1.82) $6.02 Excluded items, net of tax (1) 0.15 1.10 (0.95) Adjusted non-GAAP net income (loss) per diluted share attributable to A&F $ 4.35 $ (0.73) $5.08 Impact from changes in foreign currency exchange rates — 0.01 (0.01) Adjusted non-GAAP net income (loss) per diluted share attributable to A&F on a constant currency basis (2) $ 4.35 $ (0.74) $5.09 (1) Excludes items presented above under “ Operating income (loss) , ” and “ Income tax expense . ” (2) Refer to “ NON-GAAP FINANCIAL MEASURES ,” for further details.

Abercrombie & Fitch Co. 36 2021 Form 10-K Table of Contents LIQUIDITY AND CAPITAL RESOURCES Overview The Company’s capital allocation strategy, priorities and investments are reviewed by A&F’s Board of Directors considering both liquidity and valuation factors. Regarding returns to shareholders, although the dividend program remains suspended, during Fiscal 2021, the Company resumed share repurchases.

The timing and amount of any future share repurchases will depend on various factors, such as market and business conditions, including the Company’s ability to accelerate investments in the business. The Company believes that it will have adequate liquidity to fund operating activities over the next 12 months.

The Company monitors financing market conditions and may in the future determine whether and when to amend, modify, or restructure its Credit Facilities and/or Senior Secured Notes. Primary sources and uses of cash The Company’s business has two principal selling seasons: Spring and Fall. The Company experiences its greatest sales activity during Fall, due to back-to-school and holiday sales periods.

The Company relies on excess operating cash flows, which are largely generated in Fall, to fund operations throughout the year and to reinvest in the business to support future growth. The Company also has the ABL Facility available as a source of additional funding, which is described further below under “ Credit facilities and Senior Secured Notes ”.

Over the next 12 months, the Company expects its primary cash requirements to be directed towards funding operating activities, including the acquisition of inventory, and obligations related to compensation, marketing, leases and any lease buyouts or modifications it may exercise, taxes and other operating activities.

The Company evaluates opportunities for investments in the business that are in line with initiatives that position the business for sustainable long-term growth that align with its strategic pillars as described within “ ITEM 1. BUSINESS - STRATEGY AND KEY BUSINESS PRIORITIES ”.

Examples of potential investment opportunities include, but are not limited to, new store experiences and options to early terminate store leases, investments in its omnichannel initiatives and investments to increase the Company’s capacity to fulfill digital orders.

Historically, the Company has utilized cash flow generated from operations to fund any discretionary capital expenditures, which have been prioritized towards new store experiences, as well as digital and omnichannel investments, information technology, and other projects. For Fiscal 2021, the Company used $97.0 million towards capital expenditures, down from $101.9 million of capital expenditures in Fiscal 2020.

Total capital expenditures for Fiscal 2022 are expected to be approximately $150 million. Share repurchases and dividends In order to preserve liquidity and maintain financial flexibility in light of COVID-19, the Company announced that it had temporarily suspended its dividend and share repurchase programs in Fiscal 2020..

The Company has since adopted a new share repurchase program and may repurchase shares in the future, but the timing and amount of any further repurchases are dependent on various factors, such as market and business conditions, including the Company’s ability to accelerate investments in the business. The Company’s dividend program remains suspended.

The Company may in the future review its dividend program to determine, in light of facts and circumstances at that time, whether and when to reinstate.

In November 2021, the A&F Board of Directors approved a new $500 million share repurchase authorization, replacing the prior February 19, 2021 share repurchase authorization of 10.0 million shares, which had approximately 3.9 million shares remaining available at termination. During Fiscal 2021, the Company repurchased 10.2 million shares and returned $377 million to shareholders through share repurchase s .

The timing and amount of any future share repurchases will depend on various factors, including market and business conditions.

The Company has repurchased shares of its Common Stock from time to time, dependent on market and business conditions, with the objectives of returning excess cash to shareholders and offsetting dilution from issuances of Common Stock associated with the exercise of employee stock appreciation rights and the vesting of restricted stock units.

Item 1A. Risk Factors FORWARD-LOOKING STATEMENTS AND RISK FACTORS.

We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Annual Report on Form 10-K or made by us, our management or our spokespeople involve risks and uncertainties and are subject to change based on various factors, many of which may be beyond our control.

Words such as “guidance,” “outlook,” “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “goal,” “should” and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we assume no obligation to publicly update or revise any forward-looking statements.

Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. In March 2020, the COVID-19 outbreak was declared to be a global pandemic by the World Health Organization.

In response to COVID-19, certain governments imposed travel restrictions and local statutory quarantines and the Company experienced widespread temporary store closures.The Company has seen a direct, material adverse impact to sales and operations as a result of COVID-19. COVID-19 poses various risks to the Company, certain of which are detailed throughout this “ITEM 1A. RISK FACTORS”.

Any one of these risks, or a combination of risks, could result in further adverse impacts on the Company’s business, results of operations, financial condition and cash flows.

In addition, the following factors, categorized by the primary nature of the associated risk, could affect our financial performance and cause actual results to differ materially from those expressed or implied in any of the forward-looking statements.

Macroeconomic and industry risks include: • COVID‐19 has and may continue to materially adversely impact and cause disruption to our business; • Changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits could have a material adverse impact on our business; • Failure to engage our customers, anticipate customer demand and changing fashion trends, and manage our inventory commensurately could have a material adverse impact on our business; • Our failure to operate effectively in a highly competitive and constantly evolving industry could have a material adverse impact on our business; • Fluctuations in foreign currency exchange rates could have a material adverse impact on our business; • Our ability to attract customers to our stores depends, in part, on the success of the shopping malls or area attractions that our stores are located in or around; • The impact of war, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience could have a material adverse impact on our business; and • The impact of extreme weather, infectious disease outbreaks, including COVID-19, and other unexpected events could result in an interruption to our business, as well as to the operations of our third-party partners, and have a material adverse impact on our business.

Strategic risks include: • Failure to successfully develop an omnichannel shopping experience, a significant component of our growth strategy, or failure to successfully invest in customer, digital and omnichannel initiatives could have a material adverse impact on our business; • Our failure to optimize our global store network could have a material adverse impact on our business; • Our failure to execute our international growth strategy successfully and our inability to conduct business in international markets as a result of legal, tax, regulatory, political and economic risks could have a material adverse impact on our business; and • Our failure to appropriately address emerging environmental, social and governance matters could have a material adverse impact on our reputation and, as a result, our business.

Operational risks include: • Failure to protect our reputation could have a material adverse impact on our business; • If our information technology systems are disrupted or cease to operate effectively, it could have a material adverse impact on our business; • We may be exposed to risks and costs associated with cyber-attacks, data protection, credit card fraud and identity theft that could have a material adverse impact on our business; • Our reliance on our distribution centers makes us susceptible to disruptions or adverse conditions affecting our supply chain; • Changes in the cost, availability and quality of raw materials, labor, transportation, and trade relations could have a material adverse impact on our business; • We depend upon independent third parties for the manufacture and delivery of all our merchandise, and a disruption of the manufacture or delivery of our merchandise could have a material adverse impact on our business; Abercrombie & Fitch Co. 12 2021 Form 10-K Table of Contents • We rely on the experience and skills of our executive officers and associates, and the failure to attract or retain this talent, effectively manage succession, and establish a diverse workforce could have a material adverse impact on our business; and • If we identify a material weakness in our internal control over financial reporting, fail to remediate a material weaknesses, or fail to establish and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.

Legal, tax, regulatory and compliance risks include: • Fluctuations in our tax obligations and effective tax rate may result in volatility in our results of operations could have a material adverse impact on our business; • Our litigation and stockholder activism, could have a material adverse impact on our business; • Failure to adequately protect our trademarks could have a negative impact on our brand image and limit our ability to penetrate new markets which could have a material adverse impact on our business; • Changes in the regulatory or compliance landscape could have a material adverse impact on our business; and • The agreements related to our senior secured asset-based revolving credit facility and our senior secured notes include restrictive covenants that limit our flexibility in operating our business and our inability to obtain credit on reasonable terms in the future could have an adverse impact on our business.

The factors listed above are not our only risks. Additional risks may arise, and current evaluations of risks may change, which could lead to material, adverse effects on our business, operating results and financial condition. The following sets forth a description of the preceding risk factors that we believe may be relevant to an understanding of our business.

These risk factors could cause actual results to differ materially from those expressed or implied in any of our forward-looking statements. MACROECONOMIC AND INDUSTRY RISKS. COVID‐19 has and may continue to materially adversely impact and cause disruption to our business .

COVID-19 has had a material adverse effect on our business, including our financial performance and condition, operating results and cash flows, and may continue to materially adversely impact and cause disruption to our business in the future.

As a result of COVID-19, numerous state and local jurisdictions have imposed, and others in the future may impose, shelter-in-place orders, quarantines, executive orders and similar government orders and restrictions for their residents to control the spread of COVID-19.

Such orders or restrictions have resulted in temporary store closures, modified store operating hours, a decrease in customer traffic, work stoppages, slowdowns and delays, travel restrictions and cancellation of events, among other effects, thereby negatively impacting our operations.

The impact of regulations imposed in the future in response to the pandemic, could, among other things, require that we close our stores or distribution centers or otherwise make it difficult or impossible to operate our business.

Other factors that would negatively impact our ability to successfully operate during the current COVID-19 pandemic include, but are not limited to: • Our ability to keep our stores open if there is a re-emergence or increase in infection rate; • Our ability to attract customers to our stores, given the risks, or perceived risks, of gathering in public places; • Our ability to incentivize and retain associates and to reinstate any furloughed store associates; • Our ability to obtain rent abatements or enter into rent deferral arrangements with our landlords; • Our ability to react to changes in anticipated customer demand and manage inventories, which may result in excess inventories; • Our ability to rely on our distribution centers to manage the receipt, storage, sorting, packing and distribution of our merchandise as the distribution centers are susceptible to local and regional factors, such as system failures, accidents, labor disputes, economic and weather conditions, natural disasters, demographic and population changes; • Supply chain delays due to closed factories, reduced workforces, scarcity of raw materials and scrutiny, as well as carrier constraints due to an increase in digital sales; • Fluctuations in the cost, availability and quality of raw materials, as well as costs of labor and transportation; • A more promotional retail environment or our ability to move existing inventory, may cause us to lower our prices, sell existing inventory at larger discounts than in the past, or write down the value of inventory, and increase the costs and expenses of updating and replacing inventory, negatively impacting our margins; • Delays in, or our ability to complete, planned store openings on the expected terms or timing, or at all based on shortages in labor and materials and delays in the production and delivery of materials ; • The deterioration or fluctuations in the economic conditions in the U.S. or international markets, which could have an impact on consumer confidence and discretionary consumer spending; • Our ability to attract, retain and manage our associates during periods of extended work from home arrangements; • Associates, whether our own or those of our third-party vendors, working offsite through work from home arrangements may rely on residential communication networks and internet providers and may be more susceptible to service interruptions and cyberattacks, and, this period of uncertainty could result in an increase in phishing and other scams, fraud, money laundering, theft and other criminal activity; • Abercrombie & Fitch Co. 13 2021 Form 10-K Table of Contents • Our ability to successfully execute against our international expansion plans; • Our ability to preserve liquidity to be able to take advantage of market conditions during periods of temporary store closures; and • Difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deterioration in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities.

Factors and uncertainties related to future impacts of COVID-19 on our business, include, but are not limited to: • The severity and duration of the pandemic, including additional periods of increases or spikes in the number of COVID-19 cases, future mutations or variants of the virus in areas in which we operate; • The availability and acceptance of effective vaccines or medical treatments; • The nature and size of federal economic stimulus and other governmental efforts; • The impact of the pandemic on overall customer demand and consumer behaviors as well as its impact on macroeconomic factors such as general economic uncertainty, inflation, unemployment rates, and recessionary pressures; and • Any unknown consequences on our business performance and initiatives stemming from the substantial investment of time and other resources to the pandemic response.

It is uncertain if and when we will see in-store traffic return to pre-COVID-19 levels in the future.

In addition, customers have increasingly relied on technology to shop and to interact with our brands during this unprecedented period and our inability to continue to connect with our customers in this manner going forward could affect our ability to compete and adversely affect our results of operations.

The factors described above may exacerbate other risks within this section of “ITEM 1A. RISK FACTORS”. Any future outbreak of any other highly infectious or contagious disease could also have a material adverse impact on our business.

The impact of war, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience could have a material adverse impact on our business In the past, the impact of war, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience and the associated heightened security measures in response to these events have disrupted commerce.

Further events of this nature, domestic or abroad, including international and domestic unrest, the on-going hostilities in Ukraine, and in China’s Hong Kong Special Administrative Region (“SAR”), may disrupt commerce and undermine consumer confidence and consumer spending by causing a decline in traffic, store closures and a decrease in digital demand adversely affecting our operating results.

Furthermore, the existence or threat of any other unforeseen interruption of commerce, could negatively impact our business by interfering with the availability of raw materials or our ability to obtain merchandise from foreign manufacturers.

With a substantial portion of our merchandise being imported from foreign countries, failure to obtain merchandise from our foreign manufacturers or substitute other manufacturers, at similar costs and in a timely manner, could adversely affect our operating results and financial condition.

Changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits could have a material adverse impact on our business. Our business depends on consumer demand for our merchandise.

Consumer preferences and discretionary spending habits, including purchases of our merchandise, can be adversely impacted by recessionary periods and other periods where disposable income is adversely affected.

Our performance is subject to factors that affect worldwide economic conditions including unemployment, consumer credit availability, consumer debt levels, reductions in net worth based on declines in the financial, residential real estate and mortgage markets, sales and personal income tax rates, fuel and energy prices, global food supplies, interest rates, consumer confidence in future economic and political conditions, consumer perceptions of personal well-being and security, the value of the U.S.

Dollar versus foreign currencies and other macroeconomic factors. Global uncertainty, including the on-going hostilities in Ukraine, has in the past, and could in the future, cause changes in consumer confidence and in consumers’ discretionary spending habits globally, resulting in a material adverse effect on our results of operations, liquidity and capital resources.

The economic conditions and factors described above could adversely impact our results of operations, liquidity and capital resources, and may exacerbate other risks within this section of “ITEM 1A. RISK FACTORS”.

Changes in economic conditions could also impact our ability to fund growth and/or result in our becoming reliant on external financing, the availability and cost of which may be uncertain. Failure to engage our customers, anticipate customer demand and changing fashion trends, and manage our inventory commensurately could have a material adverse impact on our business.

Our success largely depends on our ability to anticipate and gauge the fashion preferences of our customers and provide merchandise that satisfies constantly shifting demands in a timely manner.

Because we may enter into agreements for the Abercrombie & Fitch Co. 14 2021 Form 10-K Table of Contents manufacture and purchase of merchandise well in advance of the applicable selling season, we are vulnerable to changes in consumer preferences and demand, pricing shifts, and the sub-optimal selection and timing of merchandise purchases.

Moreover, there can be no assurance that we will continue to anticipate consumer demands and accurately plan inventory successfully in the future. Changing consumer preferences and fashion trends, whether we are able to anticipate, identify and respond to them or not, could adversely impact our sales.

Inventory levels for certain merchandise styles no longer considered to be “on trend” may increase, leading to higher markdowns to sell through excess inventory and, therefore, lower than planned margins.

Conversely, if we underestimate consumer demand for our merchandise, or if our manufacturers fail to supply quality products in a timely manner, we may experience inventory shortages, which may negatively impact customer relationships, diminish brand loyalty and result in lost sales.

We could also be at a competitive disadvantage if we are unable to leverage data analytics to retrieve timely, customer insights to appropriately respond to customer demands and improve customer engagement. Any of these events could significantly harm our operating results and financial condition.

In addition to our own execution, we also need to react to factors affecting inventory flow that are outside our control, such as natural disasters or other unforeseen events that may significantly impact anticipated customer demand as we have seen with COVID-19.

If we are not able to adjust appropriately to such factors, our inventory management may be affected, which could adversely impact our performance and our reputation. Our failure to operate effectively in a highly competitive and constantly evolving industry could have a material adverse impact on our business.

The sale of apparel, personal care products and accessories for men, women and kids is a highly competitive business with numerous participants, including individual and chain specialty apparel retailers, local, regional, national and international department stores, discount stores and online-exclusive businesses.

Proliferation of the digital channel within the last few years has encouraged the entry of many new competitors and an increase in competition from established companies. These increases in competition could reduce our ability to retain and grow sales, resulting in an adverse impact to our operating results and business.

We also face a variety of challenges in the highly competitive and constantly evolving retail industry, including: • anticipating and quickly responding to changing consumer shopping preferences better than our competitors; • maintaining favorable brand recognition; • marketing our products to consumers in several diverse demographic markets effectively, including through social media platforms which have become increasingly more important in order to stay connected to our customers; as our digital sales penetration has increased. • retaining customers, including our loyalty club members, and the resulting increased marketing costs to acquire new customers; • developing innovative, high-quality merchandise in styles that appeal to consumers and in ways that favorably distinguish us from our competitors; • countering the aggressive pricing and promotional activities of many of our competitors without diminishing the aspirational nature of our brands and brand equity; and • identifying and assessing disruptive innovation, by existing or new competitors, that could alter the competitive landscape by: improving the customer experience and heightening customer expectations; transforming supply chain and corporate operations through digital technologies and artificial intelligence; and enhancing management decision-making through use of data analytics to develop new, consumer insights.

In addition, in order to compete in this highly competitive and constantly evolving industry, at times, we may launch and/or acquire new brands to expand our portfolio.

Abercrombie & Fitch Co. 26 2021 Form 10-K Table of Contents There were no sales of equity securities during Fiscal 2021 that were not registered under the Securities Act.