Abercrombie & Fitch vs. H&M: Financial Analysis

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1. The Abercrombie & Fitch balance sheet lists the following line items for its shareholder equity: common stock, paid-in capital, retained earnings, "accumulated other comprehensive income" and treasury stock. H&M lists the following line items under its shareholder equity: share capital, reserves, retained earnings and profit for the year. There are some distinct differences. For example, on the H&M statement, profit for the year and retained earnings (presumably from prior years) are listed separately, even though they are both forms of retained earnings. The reserves and paid-in capital on the different statements appear to be roughly analogous. Of the two companies, only Abercrombie & Fitch has treasury shares. It does not, however, disclose in the notes the reason that it reacquired these shares. 2. The Abercrombie & Fitch income statement reveals that for the fiscal year 2011 the basic earnings per share were $1.47 and the diluted earnings per share were $1.43. For H&M, the income statement only lists 9.56 SEK as the earnings per share. It is not stated whether this is basic or diluted. Of the two companies, Abercrombie and Fitch had discontinued operations and earned $796 million on those discontinued operations last year. H&M did not have any discontinued operations last year. While the income statement is not the best place to look for stock compensation plans, other parts of the annual report do provide this information. At Abercrombie and Fitch, the

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