Welcome to the Abercrombie & Fitch Fourth Quarter Earnings Results Conference Call. Just to remind you today's conference is being recorded. If you have a question at any time during today's conference you may signal us by pressing "*" "1" on your touchtone phone. We will open the call to take your questions at the end of the presentation. Now I would like to turn the call over to your host Mr. Tom Lennox. Please go ahead, sir.

Good afternoon and welcome to our fourth quarter conference call. After the market closed, we publicly released the quarterly sales and earnings release, balance sheet, income statement and an updated financial history. If you haven't seen these materials, they are available on our Web site. This call is being taped and can be replayed by dialing 888-203-1112. You will need to reference the conference ID number 3097441. You may also access the replay through the Internet at abercrombie.com. With me today are Mike Jeffries, Chairman and Chief Executive Officer, Mike Kramer, Chief Financial Officer, and Brian Logan, the Company's Controller. Today's earnings call will be limited to one hour. After our prepared comments, we will be available to take your questions for as long as time permits. Please limit yourself to one question so that we can speak with as many callers as possible. Before we begin, I remind you that any forward-looking statements we may make today are subject to the Safe Harbor Statement found in our SEC filings. Now to Mike Kramer

Good afternoon. Net sales for the fourth quarter were $961.4 million, increasing 40% over last year's fourth quarter sales of $687.3 million. With comparable store sales up 28%. For the quarter cost by brand were as follows in the adult business, Abercrombie & Fitch, comparable store sales increased 18%, men's comps increased by mid-teens, women's increased by high-teens. In the kids business, Abercrombie comps increased 59% with boys comps increasing by mid 30s and girls increasing by high 60s. Hollister, same-store sales increased 34% compared to last year with Dudes comp increasing by low 30 and (indiscernible) is increasing by mid 30s. On a regional basis, the business was consistent with each region generating comparable store sales, increases greater than 25%. Fiscal 2005 net sales were $2.785 billion versus $2.021 billion last year, an increase of 38%. Comparable store sales increased 26% in fiscal 2005. The fourth quarter gross profit rate was 66.5%, 20 basis points higher than last year's rate as 66.3%. The increase reflects an improved shrink rate and initial markup with little changed in the markdown rate versus last year For fiscal 2005, the gross profit rate was 66.5% versus 66.4%, an increase of 10 basis points versus last year. The gross profit rate increased reflects higher initial markup and a reduction in shrink, partially offset by a slightly higher markdown rate. We ended the fourth quarter with inventories up 59% per gross square foot at a cost versus last year. This is less than the guidance we provided on our third quarter conference call. When we estimated the year-end inventory per square foot would reflect slightly less than the 87% increase reported at the end of the third quarter of fiscal 2005. Going forward, we expect increases in inventory levels to continue to moderate, ending the…

Good afternoon. Fiscal 2005 was a very successful year. Each of our brands exhibited strong growth, which allowed the business to generate record sales and earnings. Our success during this period is of the result of our ongoing commitment to protecting and enhancing the long-term strengths of our brands. To do so, requires a delicate balance between reporting near-term profit growth and investing in new organization, never as this spin more evident than in fiscal 2005. We made essential investments throughout the year, initially focusing on the stores organization, where we drastically improve the shopping experience for our customers and later in the year at the home office by broadening the merchandising and design organization. Despite these major investments, we still reported a 43% increase in operating income and a 48% increase in net income per share for fiscal 2005 excluding one time charges in both years. By businesses, each of our brands performed very well throughout fiscal 2005. For the year, the adult business Abercrombie & Fitch achieved the comparable store sales increase of 18%, demonstrating excellent growth for matured business. The business was consistently strong throughout the year, with both the men’s and women’s businesses performing very well. With limited opportunity to see here additional domestic model locations, expanding the ANF business would be driven by opening select flagship locations combined with international expansion. As many of you know, we opened the first Abercrombie & Fitch flagship store in Fifth Avenue during the fourth quarter. The store performed extremely well throughout the fourth quarter exceeding our initial sales productivity expectations. We also opened our first Abercrombie & Fitch stores in Canada during the quarter. Stores are off to an amazing start with productivity above that of our average US Abercrombie & Fitch stores. In addition, we are planning…

Hi guys, congratulation everyone on a fantastic year.

Thanks Jeff

My question is this, I guess in terms of the sales gains, and the productivity gains that you achieved this years may be Mike and Mike will commenting on it, coming out of the year for the year-end total, can you gives us stands for how a split between the comp being driven by number of transactions and AUR increases and then how we ended the year and what you see I guess this is your biggest opportunity going forward, will it be driving the transaction in this store, do you still have opportunities for your AUR next.

Let's take a look Mike you want a comment.

Yes I’ll comments and then I will have Mike talk little more qualitatively, but we actually didn’t see an increase in our transaction in our stores as well as our AUR, I would say that is roughly 50-50 split, in terms is there, -- we believe strongly that the future growth is going to come from transaction growth, having said that I think that we will take some opportunities, pricing changes as we see to that but we don’t see that as of right now, do you have anything to add Mike.

No

Well stated

Thank you.

Okay thank you.

Thanks Jeff.

We will next go to John Morris of Harris Nesbitt Gerard

Hi thanks, first I would say congratulations to everybody, its really terrific quarter. One follow up and one quick one, the follow up was just Mike you just said that taking optimistic pricing increase as you today, going forward, can you just elaborate and what that being or kind of clarify that.

Let me speak for Mike, that would be in the Abercrombie & Fitch brand as we have seen putting a lot more quality in to a specific product we have taken some prices up as we saw yet there instance the basic follow and going Abercrombie & Fitch the price was raised from $39 to $49 last fall because we just felt so much in to the product and saw that we could sustained as kinds of increase those kind of things will happen within the Abercrombie & Fitch brand, I don’t expect many of them to happened because I am very happy with the price levels there and we clearly and harvester in kids will stay exactly where we are in terms of price, thank you John.

And we next now to you Kimberly Greenberger of Smith Barney

Great, thank I had a question on your CapEx numbers for 2006, you were a little fair that we are looking for and if you could just gives us some detail around that and why you are seeing such an acceleration in the CapEx that would be very helpful.

That Kimberly this is Mike Kramer, I would be glad to answer that. As we've seen tremendous growth in all of our brands and we have to continue to build infrastructure for continued growth as we indicated $260 million is going to be targeted towards store build to remodels, on top of that there is $80 million that were going to be spend building another distribution center here on our campus in New Albany, Ohio. We’re also going to be investing significantly in our IT infrastructure as we continue to grow and see,-- that we need to enhance our business, more importantly we able to drive more efficiency in our business we go forward.

I’ll comment beyond that we are initiating and investment program in the Abercrombie & Fitch flee, that I am very excited about as you know we have a fleet of stores that really started 1994 and we continue to update them rather than, to a go for total remodels. We are padding some really exciting elements to those stores over the next 6 months, we were spending approximately $30 million on the Abercrombie & Fitch fleet too updated to really enhance the store experience. We are spending $10 million in Hollister, which is essentially an expansion of the video wall system that is currently in that chain. So, between the 2 chains, $40 million to enhance the customer experience.

We are next announcing Brian Tunick of JP Morgan.

Yes, thanks, question on the merchandized margin side. How they come in versus your plans for Q4 and do you think we should expect flattish merchandized margins going forward? Thanks very much.

Brian, our answer to the second part of your question, you have been listening to me for about 14 years, and every quarter I have said do not build into your model of higher merchandized margin than we have achieved in the past and I will continue to say that. We hope we can do better. The first part of the question was against plans. We actually performed just little bit higher than our plan, but right on the mark. Thanks Brain.

We are next announcing Jeff Black of Lehman Brothers.

Yeah, thanks a lot. Can you talk little bit Mike about where you see opportunities for some further expense to leverage and we got some in this quarter, that was impressive but what’s is the track going out and will that potentially lead to some operating margin improvement in ‘06 versus ‘05 given that were still below peak margin, thanks.

Well, we are going to continue to see some operating margin improvement at the store level, which we’ve indicated in the past. We are continually focusing on the same areas that I have discussed in the past, primarily store payroll and we are continuing to do that. Now, in terms of MG&A, there we probably will not be leveraging MG&A and tell probably latter part of this year, as Mike and I both indicated we are going to continue to invest in the business, we are not going to invest in the business at the rate that we did in the previous spring, but we will be continuing to invest in the business. Now, one of the areas that we are going to be investing in the business is IT and those investments are in churn, going to churn around, it will be able to drive some efficiencies throughout the organization in terms of headcount. So, again in short, we are focused on the same areas that we talk about in the past in terms of driving efficiency and then we are also going to try to CAP technology help us in that capacity.

And we go next announcing Joe Teklits with Wachovia Securities

Hello, everybody thanks.

Hello.

Hello Joe. How are you?

I think the biggest controversy of amongst the three it is your inventory levels Mike in anyway. So, I was wondering, if you could just give us some more detail on the subject maybe how clean it is, but even more importantly some details on how you pioneer going forward other than what you have given us, maybe when the turns are going to start increasing, again some thing like that?

Let me take that on Joe. Our Spring inventories on an average to our Fall inventories on average sports store basis to last year, which for what percent,

Down

So, down so down to last year slightly down to last year

They were clean last year.

And they clean last year on an increased volume levels, we think they are extraordinarily fine. So, in terms of seasonal, fashion merchandize, extraordinarily clean, I think the whole inventory is very clean and let me take this opportunity again to discuss, how we look at our inventories. We planned them in different segments. We planned basic Denim as one category, where we've said that our markdown risk is appreciably less then impassion merchandize. Those inventories are extraordinarily well balanced at this point, you will see those inventories will be more efficient with those inventories as we move from this season in December and in this fall. The fashion basic component of our business is those back up to Denim that Denim inventories as you know we’ve invested in heavily, we’ve very happy with those inventories and their levels will in fact moderate as we go through the year. The second category is fashion basics, which includes polo shirts, applique logo, T-shirts those inventories are up to last year or own plan and its extraordinary clean. Third classification is personal care up to last year business performing very well, extraordinary we clean inventories we’ve cleaned our any non go forward fragments. The fourth category is fashion, this is the category that we control very, very tightly, because there is markdown risk in fashion. Fashion, consist of anything that has to markdown within a season, we would consider that to be to -- it include some Denim items. As we said in the past we take markdowns on fashion Denim as we saw we took markdowns on embellished Denim, we took markdowns on some fashion back parked denims and in the future we will continue to take markdowns on fashion Denim that would include our as we’re fix line which is a premium denim line but that is included in the fashion in acquisition of our business. We plan that inventory would downside in terms of the sales to protect their margin. So I am very, very pleased with our inventories how clean they are, and how we projecting go forward.

This is Mike Kram, I want to add to that well I know the controversy out there exist, I don’t understand that given the large success that we’ve actually seen over the last three quarters. Again to state our past in terms of the strategy, you did see a significant amount of increase year-over-year two to three quarters ago. We believe that the increase presentation on our store also added to the sales volume, and the experience within the store. Again as you continue to see on a quarter-by-quarter basis, we indicated on this particular quarter an increase of 59% on a cost basis on a unit basis is in the low 40s when you saw 33% comp coming out of the quarter and as we’ve also stated we will continue to see moderation in that particular percentage.

I will take our next question now from Paul Ledgeway with Credit Suisse.

Thanks guys, Mike Jeffries as you reflect back on the past year. How do you spend your time on prior year, can you may be just talked about some of the differences from ’05 versus ’04 and also how are you thinking about it, going forward if there any changes in demand on your time, thanks.

I spend my time, as most of you know, on primarily on merchandising and design in the business and have done so. We will continue to do so, I have spent expect more time this year on, I would say managing the total business as we run the business with a leadership group, very focused disciplined kind of way but the majority of my time is still spend on merchandising, design, marketing the business where I think I can make the biggest difference. We have an extraordinarily talented leadership team, functional leadership hugely strong in this business and the fact that we have very hands on control where I do at this point I think it has been hugely beneficial to this business. We as a team are marching in the same direction, and I guess make a lot of confidence in the future.

We will go next to Stacy Pak with Prudential

Hi.

Hi Stacy

Couple of quickies, one is will you comment on your comfort with Q1 consensus, which you think is $0.59 or $0.60 and what’s the realistic growth rate for the store and distribution expense in Q1, and then last one would be, in what quarter should inventory growth be inline with sales growth, in dollars?

Hi Stacy, I'd like to just start comment, we'd rather not comment on key census, we provided our own range and we'd like to stick with that. Part 2, in terms of the store and distribution in terms of Q1, in terms of growth rate, we're actually going to see again as I said earlier on the call, we're actually going to see leverage, but in terms of growth rate, we're going to probably see the consistent cost with regards to the distributions center, but in terms of other store level basis, I would, build into your model as certain amount at the variable in a per store basis, I don’t want to really comment other than that. We've indicated in that particular line item, we believe that there will be on leverage, I just don’t want to give any more guidance just compare to that. Again, there is liability with regards to the payroll as long as you have models, they really good mix between our fixed and variable, you should be able to know that number providing the sales.

And we go next announcing Dana Telsey of Telsey Advisory Group

Hi Dana. Dana your line is open for you.

Hi can you hear me?

Yes, hi Dana.

Hi congratulations on a terrific year.

Thanks.

Can you talk a little bit about the product process, you've mentioned before the facility that you building on your headquarters, in order to speed up the lead times and perhaps, give you better sense of product, how is that, is that impact 2006 and how do you see that in impacting in each of the businesses, thank you?

Hi Dana, I think we'll start to see that impact on this year, I can't tell you how great an impact it will be because we are just getting on her feet with that, as you know it’s a really advanced center enables us to be technically superior in the product categories if we go after, and we would hope would, speed up time to market for each of the categories. We haven’t build anything into our model, that would cause for the result of that, but we should see some result, I can't tell you when. I'm very excited about it, Dana this is my time, I just want to congratulate you on your move, yes.

Good luck.

We get our next question now from Robin Murchison of SunTrust.

Thank you Mike

Hi Robin.

Hello. Can you just remind us about gross of the Canadian market for the various brands?

The size of the market, you mean what, store count we've committed in Canada?

Exactly.

Let's look at himself.

I don’t know that we've said anything publicly what we've committed, or every, no we really haven’t quantify.

No, we haven’t quantified.

Now what we haven’t quantified, I mean, what I can tell you is in terms of 2006, we're targeting another 6 stores. And what I will tell you is, excuse me, another one store, only one more store in terms of 2006. This is something that we were going to be, go in a very moderate phase. Depending on the success of the stores that we have in a ground today which we've indicated, we were very pleased with, and will continue to look at real estate as it presents itself, as you know, there are very few cities, with the population density that we would like, but we'll take a look at our strategy in Canada on a evolving basis.

And I think directionally it’s probably a greater opportunity for the Hollister concept versus the Abercrombie & Fitch concept.

And next with Merrill lynch we go to you Tuomisto Tero

Hey guys, congratulations on a great year.

Thank you, Tero.

Could you give a little bit of an update on the internet business and specifically how is it relates to the international side of it and, if you can talk about that across the brands, Kid Hollister and of course the core Abercrombie brands.

Well, in terms of e-commerce, we actually have recently in terms of the quarter we’ve actually seen the pretty sizable increase and, our sales year-over-year, not just expensive we’ve seen in our four wall stores, but we are recently pleased with the recent results and as we'd indicated on some of the past calls we’ve initiated some brand protection industries, that have impacted our International sales. In terms of International we’ve actually seen a slight decline because of that, but we will start anniversaring those initiatives that we put in place in terms in Q2, so, we anticipate a little turn around from that perspective. But again were very pleased with the result that we saw in Q4 and our direct in consumer business on a buy brand basis, I would say that the year-over-year growth was probably consistent with regards to our stores.

What we are doing from a brand protections standpoints such as the point of reference plans we're reducing the content of sale items on the Internet, I think what we've seen is some of the international customers in buying a fairly large quantities we would also limited the quantities that they can order, just to protect the brand from being exposed to secondary market. I think this is a just a really good time to state again what we've gone public with, the amount of money that an effort we’re putting into protecting these brands, not only for the domestic growth of the brands but for International growth, it's a very serious enterprise as far as this point.

Moving next now to Dana Cohen of Banc of America Securities

Hi guys, Mike, to see the MG&A line, was actually sequentially down in the fourth quarter, is there anything to note there, and you've talked about continue each to invest in the first half in level out so, should we be thinking that based this the fourth quarter number, and then the second question is, a year-ago you were talking about closing those kids business, now you are starting to open, is it too early at this point to talk about how many stores you think you can have?

Let me, comment first, we’ve never talked about closing the kids business, or we can tell

I said closing some stores; you are going to convert then the year ago and

Okay, can I have Mike can go on.

Yes, well let me address the latter part of your question first is, we are very excited about our kids business extremely excited, and we actually think that the result that we’ve seen have really open this up to probably another 100 plus potential locations that we can expand the Abercrombie kids brand, we’re extremely excite about. Let's talk about MG&A expense in terms of the decrease rate. However, this was driven by the fact that there was significant amount of one time adjustments in Q3, let me remind you some of those. The severance package related to Bob Stinger which was roughly $13.5 million and then, we also had a success there ride of about $2 million, let me take those out of the equation is roughly flat and in terms of on a go forward basis, you are going to start, you are going to see a slight increase, as we continue to add an investment in our business, I indicated that we're going to invest some in IT, and we are going to continue to invest in Mike’s design in merchandise business. You just are not going to see any more near the rate that you've seen in the spring of that last year.

I would move next now to Christine Chen with Pacific Growth Equities.

Congratulations on a great year.

Thanks.

I'm just have a follow up question about IT, can you talk a little bit of, what types of initiatives you might be looking at and then as far as options exempts clients to that $0.08 is equally spread out between the two quarters and is that kind of the run rate for Q3 and Q4. Thank you.

It's actually the spread of that’s 123 is actually a 55, 45 split. You will see the run rate drop a little bit after that due to some investing, some of the stock options that were outstanding. So types of initiatives with regards, there is going to be a significant amount of the initiatives with regards to IT is, as we growing our business, prior to last year, we didn’t invest significantly in our IT infrastructure, with the significant growth that we saw and actually exceeded our expectations we’ve seen some cracks that we're actually going to invest and really take advantage of the significant growth in our business and profitability, reinvest in the business so that we can move the business forward. And in terms of specifics I don’t really want to get into that but rest of the share we are going to remodeling doesn't investments ensuring that were getting a pay back.

Coming next now to you Janet Kloppenberg, with JJK Research

Janet

Hi Janet

Hi guys, hi guys congratulations, nice job

Thank you

Great job, great job on the inventories, every thing looks great. Just a couple of questions Mike, when I think about how is your comps in '05, I guess it was a combination of great fashion, higher average unit retails and I think to some extent the investment in the higher payroll, how do you look at driving comps in '06, do you see its much grow some average in retails or will you at the marketing expense for you also the in store service, or experience levels and how do you feel about the level of fashion units in the business going forward versus how you quantify it last year and then I have a question for Mike Krammers well thanks.

Okay, you are, we are, I am very satisfied Janet with where we are in terms of the retails buy brand.

Okay

I said that there might be slight increase within Abercrombie & Fitch brand, but I am not anticipating anything major, so the answer is we are going to grow the business with transactions.

And will that come from new fashion or will that come from spending more in marketing to drive more customers, how do you see building manually

Sure, it will just come from fashion

It will come, okay

And we don’t as you know drive the business with marketing, we drive that with fashion and the in stores experience and I would hope we are getting better at the in stores experience we have invested a lot more there we did last year although we should start to see some efficiencies with that expenditure and we are getting better at running the stores, I think the systems are better, we are running an operation that does a better job of getting good support from the customers I think the stores operate just a lot better this time than last year. We will continue to enhance that in stores experience just to doing what we now had a too better, I hope in terms of fashion I think we should definitely be able to drive the business from a new fashion point of view I think we're leadership position at this point. Having all said of that I don’t think we can expect the level of comps this year that we saw last year, however I am fully expecting them to be positive and good and you had another question for Mike. She is gone. Thanks Janet

Gentlemen, we take your next question now from Lauren Levitan of SG Cowen

Hi Lauren how are you?

Great thanks, good afternoon everyone. I was wondering in light of the revised CapEx guidance and some of your more opportunistic goals for growing the Abercrombie Co. International trends, if that has any implications for the cash on the balance sheet, how you are using that now in the past given as a target or cash that you would like to maintain in your certainly well ahead of that. Can you give us some sort of how we should think about use this cash and whether not that target had moved, thanks very much.

And I guess, I can answer that the target has not changed. I mean Mike is already indicated that we are going to be between $315 in terms of cash, obviously in term of the increase CapEx we feel comfortable with that is going to allow us to grow the business more and we talked about in terms of excess cash the strategy has not changed to the extent that we had excess cash, we may go back out of the market, so really the strategy hasn’t changed.

And we'll move next now to you Jennifer Davis of Stansders Morchers.

Good afternoon congratulations. Quick question on wall, I think you have been planning for about a $20 million operating loss this year, do that pretty much come inline and I think you have said, you are expecting to be profitable by the end of '07. Did you give any guidance for '06?

We did not give any guidance, we actually do have a glide past to that profitability in 2007, the $20 million did come to provision but we don’t plan on indicating few what 2006 is but we are well on that glide past in your earlier call which regards profitability in 2007

And next now to Jennifer Black of Jennifer Black & Associates

Good afternoon and let me out my congratulations.

Thank you Jennifer.

I have a bigger picture question and I wanted to know if you could comment on how you feel about the profitability of stores in Europe versus the stores in US that you are looking out with the crystal ball, what you think and do you think that once you penetrated the domestic market with Hollister, is that also be international brand, and your products been so hard, I know I am not look at lot of small questions, but I never ask questions, It’s a loyalty, if you haven’t apart of having a loyalty program I know you have to need it one you probably don’t but just anything that

I thought you are going to ask when we are finally going to get watching some square remodel then

Well that’s a huge store

It’s on the way.

I know

Its on the way, clearly there is an opportunity for Hollister International we see that with the opening in Canada, it is always been our goal that we would go there after we’ve learned our lessons with ANF, but clearly that’s, that is a huge opportunity. Loyalty program, we had a loyalty program of source that was not financial but that was kind of little bit financial within Hollister and we’ve just continued because this was not effective and driving the business there at all. To response to the European profitability, I will turn it over to Mike.

Yeah I can actually handle that I mean again we’re working through our strategy for Europe but I had to be cornered I would actually say that the profitability in Europe will be consistent with US, may be slightly higher as everybody knows the labor cost in Europe are higher as well as our rent on a gross profit basis however the offset of that is the effect that due to the iconic nature of our brands we may be able to charge higher price when we do in United States, so again the other things become, but again we, I think that the expansion into Europe is definitely going to be even or creative to our current operating margins.

We will go back now to Kimberly Greenberger of Citigroup

Thanks I just had a quick follow up on the fourth quarter comp number, if you could break the comp increase or down by transaction and average you know retailer, average sellers sale by brand that will be really helpful. Thanks

Yeah in Q4, Kimberly the transactions in adult business were up 12 and the kids business they were up 50 in the Hollister business they were up 23 and then average transaction value is what we preferred offer and average transactions in adult business were up 11 average transaction in kids business were up 9 and then Hollister up 10.

Great any one else, any other questions

I will go next now to Barbara Wyckoff, Buckingham Research Group

Thanks, I am proud of pushing "*" "1". Hi every one great year

Thank you Paul

I want to talk a little about where you’ve modified the press release assortment towards the cash, have you adjusted your thoughts regarding the accessories, handbags as a result of the shift more casual, can you talk about how the accessories are performing versus plan and you know may I guess, I have a follow up question after that.

Okay it’s a really good question Barbara, the answer for the question is yes, we are clearly adjusting the handbags, to a more casual attitude in assortment and because I have to, they have to live together, I think our handbags have been beautiful but little serious for the business that we want to run. I think we have most to learn in the handbag business we are committed to that business we are selling lot of handbags, but we have to continue to adjust yet to the handbags driven more of casual attitude, with sports wear specialist, we are not handbag specialist but we are investing in the business and we will get it.

Great.

Thanks.

The other question I have is, in the past Hollister operating margins at run had in the core ANF, this is happened in 2005 as well.

Hollister in terms of adult comparison, to adult for this several year, it remains the same. Hollister is higher and our operating margins than a adult gross margins, excuse me.

Slightly

It's very slightly, but, there are margins are very consistent brand by brand requirement.

Now we’ll go next now to Dorothy Lakner of CIBC World Markets

Well thanks good afternoon every one. I want to ask also about rule. You talked I think Mike last quarter about the difference in performance between the different location that you have opened, I think you call that sort of a peered performance some are terrific, some are good, one I think you talked about was, your expression with that also I think, but, I just wondered if you've been able to change thing there of the performance of those stores working more inline and, in terms a 8 unit you are going to open this year, are you trying any thing different or there it going to be all mall locations. If you could give us a little bit more color on what you are doing with this role this year?

Of course, we're going to be small locations because we're the mall business that's where we do business. We continue to have five terrific stores and, one I caught to admit failure it's still bad, and we have not, although it's improving, it's not improving that a faster I'm afraid, all of the real stores are increasing their penetration to be ANF stores and there existing malls, but clearly there we have one that is still poor in relations to the volume potential in the mall, and once their and in five are really good. So I can't report to you that the core has got in really good but we're working on it. And I’ll add to that in terms of the age size for terms of 2006 were very, very excited about our real estate for the real brand in 2006. And, in this stores that we have bring on operate had, had really high penetration to the ANF stores, so we are very just above rule.

And we’ll go back now to Janet Kloppenberg of JJK Research

Hi, I had two more questions first. If you could talk a little bit about the sales course grip for at the end of fiscal ’05, relative to peak and, when you take your get to peak and if you will be able to get back to take, and also Mike, if you could talk about the investment that was made in the higher still payroll, what’s the degree of success course on that, do you see continuing having the higher store payroll level or what requirements if you might make to that program, thank you?

Two very good questions Janet first I’m actually what you bought up the sales first preferred. Our peak was actually generated back in 1999 and was about $505 per square foot, where the year all of our brands on average generated $464 per square foot, well on glide past towards that peak. One thing that I do want to point out those how the Hollister brand have exceeded that peak at $528 per square foot, so we are very excited about that brand, as well as all of our brands on the way to beating and exceeding that keep back in 1999. In terms of the investments in terms of our highest stock payroll absolutely do we feel that it's within that it's paid off the impact program paid off significantly, obviously the four coverage is paid off significantly as well in terms of sales, that’s we also indicated on several comment in terms of our strip, was that we saw reduce shrink, which we think that the enhance customer service actually added to that. So we're really excited about that on a go-forward basis, do you think that the payroll will be at the same levels that we have today. The payroll will be at a level consistent with the sales that are needed to get the efficiency that we want. We are continually looking at driving the same customers experience at a lower dollar. So we are going keep doing that but I got to tell you that these are paid off, and we are very excited about the success that we have seen and we hope that. You are seeing that same customer experience that lot of people having last year, which is been extraordinary. Any other questions.

And there is no further question, back to you gentlemen

Alright, thank you very much

Thank you everyone

Ladies and Gentlemen, that will concludes today's Abercrombie & Fitch Fourth Quarter Earnings Conference Call. I'd like to thank you for joining us today. Wish you all good afternoon.