Second Quarter Net Income of $77.8 Million or $0.87 Per Diluted Share

Board of Directors Declares Quarterly Dividend Of $0.175

Company Provides Outlook for Second Half of the Year

NEW ALBANY, Ohio, Aug. 15 /PRNewswire-FirstCall/ -- Abercrombie & Fitch Co. (NYSE: ANF) today reported unaudited results which reflected second quarter net income of $77.8 million and net income per diluted share of $0.87 for the thirteen weeks ended August 2, 2008, compared to net income of $81.3 million or net income per diluted share of $0.88 for the thirteen weeks ended August 4, 2007.

Second quarter 2008 net income per diluted share of $0.87 includes $0.01 related to charges associated with the departure of a senior executive.

Second Quarter Highlights

-- Total Company net sales increased 5% to $845.8 million; comparable store sales decreased 4%

-- Total direct-to-consumer net sales increased 23% to $55.9 million

-- Abercrombie & Fitch net sales increased 5% to $383.6 million; Abercrombie & Fitch comparable store sales increased 3%

-- abercrombie net sales were $94.8 million, flat compared to last year; abercrombie comparable store sales decreased 11%

-- Hollister Co. net sales increased 5% to $350.8 million; Hollister comparable store sales decreased 9%

-- RUEHL net sales increased 7% to $12.5 million; RUEHL comparable store sales decreased 22%

-- Net income for the second quarter decreased 4% to $77.8 million

-- Net income per diluted share in the second quarter decreased 1% to $0.87

Mike Jeffries, Chief Executive Officer and Chairman of the Board of Abercrombie & Fitch Co., said:

'Our second quarter financial results reflect difficult macroeconomic conditions and a significant slowdown in consumer spending. However, we see these challenging times as a great opportunity to place more distance between us and the rest of specialty retail. We remain firmly committed to the aspirational positioning of our brands and to building the foundation that supports us as a truly multinational business. We will continue to focus on what we do best ... providing the best casual lifestyle brands for our customers by continuously elevating the quality of our product and the emotional store experience. We believe this gives us a competitive advantage and is critical to our long-term success.'

Second Quarter Financial Results

Net sales for the thirteen weeks ended August 2, 2008 increased 5% to $845.8 million from $804.5 million for the thirteen weeks ended August 4, 2007. Total Company direct-to-consumer net sales increased 23% to $55.9 million for the thirteen week period ended August 2, 2008, compared to the thirteen week period ended August 4, 2007. Total Company comparable store sales decreased 4% for the thirteen weeks ended August 2, 2008.

The gross profit rate for the quarter was 70.1%, up 130 basis points compared to last year. The improvement in gross profit rate was primarily due to a higher initial markup rate. The markdown rate was flat compared to last year.

Stores and distribution expense, as a percentage of sales, increased 100 basis points to 42.6% from 41.6% and marketing, general and administrative expense, as a percentage of sales, increased 70 basis points to 12.9% from 12.2%. The Company continued to operate a disciplined cost structure. Reductions in store payroll hours more than offset the minimum wage increase and resulted in a decrease in store payroll expense, as a percent of sales, compared to last year. The increase in operating expense rate, compared to last year, primarily resulted from the inability to leverage fixed expenses due to the comparable store sales decline and additional expense needed to execute the Company's international expansion plans. The rate increase also reflects additional expense incurred related to charges associated with the departure of a senior executive.

Operating income for the second quarter was $124.0 million compared to $124.1 million last year.

Interest income for the second quarter decreased to $1.8 million compared to $4.1 million last year. The decrease was attributed to a lower average rate of return on investments, compared to last year, primarily due to a restructuring of the investment portfolio.

The effective tax rate for the second quarter was 38.1% compared to 36.6% last year. The rate unfavorability was primarily attributed to lower tax exempt investment income. The effective tax rate for the second quarter of fiscal 2007 reflected the favorable impact from the settlement of tax audits.

Net income for the second quarter decreased 4% to $77.8 million compared to $81.3 million last year.

Net income per diluted share for the second quarter decreased 1% to $0.87, including $0.01 related to charges associated with the departure of a senior executive, compared to $0.88 last year.

2008 Outlook

The Company expects net income per diluted share for the second half of fiscal 2008 to be in the range of $3.40 to $3.45. Based upon this guidance, the Company now expects full year fiscal 2008 net income per diluted share to be in the range of $4.95 to $5.00.