SAN
FRANCISCO, Nov. 16, 2023 /PRNewswire/ -- Gap
Inc. (NYSE: GPS), the largest specialty apparel company in the
U.S., with a portfolio of brands including Old Navy, Gap, Banana
Republic, and Athleta, today reported financial results for its
third quarter ended October 28,
2023.
"Gap Inc. delivered a solid performance in the third quarter. We
were pleased to see market share gains as well as improvements in
both gross margins and operating margins, demonstrating our ability
to drive operating and financial discipline. This rigor has put the
company on stronger financial footing and is enabling us to focus
on reinvigorating our portfolio of brands, strengthening our
operating platform, and reviving our culture for success," said Gap
Inc. President and Chief Executive Officer, Richard Dickson.
Third Quarter Fiscal 2023 – Financial Results
- Net sales of $3.8 billion, down
7% compared to last year, inclusive of an estimated 2 percentage
points of negative impact from the sale of Gap China.
- Comparable sales were down 2%.
- Store sales decreased 6% compared to last year. The company
ended the quarter with 3,533 store locations in over 40 countries,
of which 2,598 were company operated.
- Online sales decreased 8% compared to last year and represented
38% of total net sales.
- Gross margin of 41.3% increased 390 basis points versus last
year's reported gross margin and increased 260 basis points versus
last year's adjusted gross margin which excluded $53 million in impairment charges related to the
decision to discontinue the Yeezy Gap business.
- Merchandise margin increased 460 basis points versus last year
on a reported basis. Compared to last year's adjusted rate,
merchandise margin increased 340 basis points primarily due to
lower commodity costs and improved promotional activity in the
quarter.
- Rent, occupancy, and depreciation (ROD) deleveraged 70 basis
points on a reported basis. Compared to last year's adjusted rate,
ROD deleveraged 80 basis points due to lower net sales in the
quarter.
- Reported operating income was $250
million; reported operating margin of 6.6%.
- Adjusted operating income, excluding $5
million in restructuring costs, was $255 million; adjusted operating margin of
6.8%.
- The effective tax rate was 13% and included a benefit from the
impact of foreign operations.
- Reported net income of $218
million; reported diluted earnings per share of $0.58.
- Adjusted net income of $221
million, excluding restructuring costs; adjusted diluted
earnings per share of $0.59.
Third Quarter Fiscal 2023 – Balance Sheet and Cash Flow
Highlights
- Ended the quarter with cash and cash equivalents of
$1.4 billion, an increase of 99% from
the prior year.
- Year-to-date net cash from operating activities was
$832 million. Free cash flow, defined
as net cash from operating activities less purchases of property
and equipment, was $544 million.
- Ending inventory of $2.38 billion
was down 22% compared to last year.
- Year-to-date capital expenditures were $288 million.
- Paid a third quarter dividend of $0.15 per share, totaling $55 million. The company's Board of Directors
approved a fourth quarter fiscal 2023 dividend of $0.15 per share.
Additional information regarding adjusted gross margin, adjusted
operating income, adjusted operating margin, adjusted net income,
adjusted diluted earnings per share, and free cash flow, all of
which are non-GAAP financial measures, is provided at the end of
this press release along with a reconciliation of these measures
from the most directly comparable GAAP financial measures for the
applicable period.
Third Quarter Fiscal 2023 – Global Brand Results
Old Navy:
- Net sales of $2.13 billion, down
1% compared to last year. The brand saw strength in women's and
kids and baby during the quarter, as well as an acceleration in the
active category compared to the second quarter of fiscal 2023.
- Comparable sales were up 1%.
Gap:
- Net sales of $887 million, down
15% compared to last year. Excluding the estimated negative impact
from the sale of Gap China and the shutdown of Yeezy Gap, net sales
were down about 6% versus last year. The brand saw strength in
women's and baby during the quarter.
- Comparable sales were down 1%.
Banana Republic:
- Net sales of $460 million, down
11% compared to last year. Banana Republic continues to work toward
re-positioning itself as a premium lifestyle brand and acquiring
new, high-value customers.
- Comparable sales were down 8%.
Athleta:
- Net sales of $279 million, down
18% compared to last year. Sales in the quarter continued to be
challenged as the brand laps last year's elevated discount levels
and the team works to re-engage its core customer through better
product and brand right marketing.
- Comparable sales were down 19%.
Fiscal 2023 Outlook
"Our third quarter results reflect ongoing progress, with gross
margin expansion and operating margin improvement, resulting in
strong free cash flow generation," said Katrina O'Connell, Executive Vice President and
Chief Financial Officer, Gap Inc. "As we look to the remainder of
the year, we are reaffirming our full year revenue outlook, which
balances the progress we are seeing with a prudent view of the
economic and consumer environment in which we are operating."
The fourth quarter and fiscal 2023 will include an additional
week estimated to positively impact net sales by $150 million. The company is estimating
fourth quarter net sales, inclusive of the 14th week, to
be flat to slightly negative compared to last year's net sales of
$4.2 billion as positive signs at Old
Navy and Gap balance the continued work underway at Athleta and
Banana Republic. As a reminder, the sale of Gap China to Baozun
Inc. closed on January 31, 2023.
Fourth quarter 2022 net sales included approximately $90 million in sales for Gap China.
The company continues to anticipate that fiscal 2023 net sales,
inclusive of the 53rd week, could be down in the
mid-single digit range compared to last year's net sales of
$15.6 billion. As a reminder, fiscal
2022 net sales included approximately $300
million in sales for Gap China.
The company continues to expect gross margin expansion for
fiscal 2023. At the estimated level of sales described above, the
company is planning adjusted operating expenses of approximately
$1.4 billion in the fourth quarter
and approximately $5.15 billion for
fiscal 2023.
The company now expects fiscal 2023 capital expenditures of
about $475 million, below its prior
range of $500 million to $525 million, due in part to fewer store
openings.
The company now expects to open a net total of 15 to 20 Old Navy
and Athleta stores in fiscal 2023. The company continues to expect
to close a net total of about 50 Gap and Banana Republic stores
this year, completing its plan to close 350 Gap and Banana Republic
stores in North America by the end
of fiscal 2023.
Webcast and Conference Call Information
Emily Gacka, Director of Investor
Relations at Gap Inc., will host a conference call to review the
company's third quarter fiscal 2023 results beginning at
approximately 2:00 p.m. Pacific Time
today. Ms. Gacka will be joined by Chief Executive Officer
Richard Dickson and Chief Financial
Officer Katrina O'Connell.
A live webcast of the conference call will be available online
at investors.gapinc.com. A replay of the webcast will be available
at the same location.
Non-GAAP Disclosure
This press release and related conference call include financial
measures that have not been calculated in accordance
with U.S. generally accepted accounting principles (GAAP)
and are therefore referred to as non-GAAP financial measures. The
non-GAAP measures described below are intended to provide investors
with additional useful information about the company's financial
performance, to enhance the overall understanding of its past
performance and future prospects and to allow for greater
transparency with respect to important metrics used by management
for financial and operating decision-making. The company presents
these non-GAAP financial measures to assist investors in seeing its
financial performance from management's view and because it
believes they provide an additional tool for investors to use in
computing the company's core financial performance over multiple
periods with other companies in its industry. Additional
information regarding the intended use of each non-GAAP measure
included in this press release and related conference call is
provided in the tables to this press release.
The non-GAAP measures included in this press release and related
conference call are adjusted gross margin, adjusted operating
expenses/adjusted SG&A, adjusted operating income, adjusted
operating margin, adjusted net income, adjusted diluted earnings
per share, and free cash flow, as well as expected adjusted
operating expenses/adjusted SG&A. These non-GAAP measures
exclude the impact of certain items that are set forth in the
tables to this press release. A reconciliation of expected adjusted
operating expenses/adjusted SG&A is not provided, in
reliance on the exception provided under Item 10(e)(1)(i)(B) of
Regulation S-K, because a comparable GAAP measure is not reasonably
accessible or reliable due to the inherent difficulty in
forecasting and quantifying measures that would be necessary for
such reconciliation. Namely, we are not able to reliably predict
the impact of many of the costs and expenses that may be incurred
in the future that could impact operating expenses/SG&A. In
addition, we believe such a reconciliation would imply a degree of
precision and certainty that could be confusing to investors. The
variability of those costs and expenses may be material and have a
significant and unpredictable impact on our future GAAP
results.
The non-GAAP measures used by the company should not be
considered as a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP and may not
be the same as similarly titled measures used by other companies
due to possible differences in method and in items or events being
adjusted. The company urges investors to review the
reconciliation of these non-GAAP financial measures to the most
directly comparable GAAP financial measures included in the tables
to this press release below, and not to rely on any single
financial measure to evaluate its business. The non-GAAP financial
measures used by the company have limitations in their usefulness
to investors because they have no standardized meaning prescribed
by GAAP and are not prepared under any comprehensive set of
accounting rules or principles.
Forward-Looking Statements
This press release and related conference call contain
forward-looking statements within the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. All
statements other than those that are purely historical are
forward-looking statements. Words such as "expect," "anticipate,"
"believe," "estimate," "intend," "plan," "project," and similar
expressions also identify forward-looking statements.
Forward-looking statements include statements regarding the
following: maintaining and delivering operational and financial
rigor; reinvigorating our brands; the strength and continued
evolution of our platform; reviving our culture; expected
annualized cost savings; increasing the consistency of our
performance; breaking through this season with campaigns and
touchpoints that matter; strengthening our portfolio of brands with
crisp identities and purpose; creating trend-right product
assortments, with a clear point of view, to deliver on needs and
wants; consistently delivering merchandising presentations and
product storytelling that excites our customers; creating a better,
more engaging omnichannel experience with a clear and compelling
pricing strategy; communicating through innovative marketing to
regain a powerful, ongoing voice in the cultural conversation;
consistently executing with excellence at every touchpoint and
interaction; Old Navy competing during the holiday season; Banana
Republic's evolution and thriving in the quiet luxury space;
Athleta's growth potential and long-term success; Athleta's winning
platform; headwinds in the fourth quarter at Athleta from heavy
discounting in fiscal 2022; resetting Athleta; building on and
leveraging operational capabilities to increase efficiency and
support our brands; reinvigorating our portfolio while reviving a
creative culture that attracts, retains and develops the best
talent in the industry; discipline around margin recovery, expense
actions, inventory management and maintaining a strong balance
sheet; signs of progress and building momentum at Gap brand; higher
earned interest on cash deposits in the fourth quarter; maintaining
inventory discipline and utilizing our responsive levers to chase
trends; expected fiscal 2023 ending inventories; the anticipated
recovery timeline for Athleta and Banana Republic; expected Athleta
net sales in the fourth quarter; the expected impact of an
additional week in fiscal 2023 on fiscal 2023 net sales; November
month-to-date sales trends; expected fourth quarter and fiscal 2023
net sales; expected fourth quarter and fiscal 2023 gross margin;
expected merchandise margin in the fourth quarter and fiscal 2023;
expected commodity and inflationary costs in the fourth quarter and
fiscal 2023; expected air utilization in the fourth quarter and
fiscal 2023; expected promotional activity in the fourth quarter
and fiscal 2023; expected inventory levels and quality of
assortments in the fourth quarter and fiscal 2023; expected ROD in
the fourth quarter and fiscal 2023; expected adjusted operating
expenses/SG&A in the fourth quarter and fiscal 2023; expected
capital expenditures in fiscal 2023; expected store openings in
fiscal 2023; generating sustainable, profitable growth, and
delivering value for our shareholders over the long-term; expected
Old Navy and Athleta store openings in fiscal 2023; and expected
Gap brand and Banana Republic store closures in fiscal 2023.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause our
actual results to differ materially from those in the
forward-looking statements. These factors include, without
limitation, the following risks, any of which could have an adverse
effect on our financial condition, results of operations, and
reputation; the overall global economic and geopolitical
environment and the impact on consumer spending patterns; the risk
that we fail to maintain, enhance, and protect our brand image and
reputation; the highly competitive nature of our business in
the United States and
internationally; the risk that we may be unable to manage or
protect our inventory effectively and the resulting impact on our
gross margins, sales and results of operations; the risk that
we fail to manage key executive succession and retention and to
continue to attract and retain qualified personnel; the risk that
we or our franchisees may be unsuccessful in gauging apparel trends
and changing consumer preferences or responding with sufficient
lead time; the risk that restructuring our business may not
generate the intended benefits and projected cost savings to the
extent or on the timeline as expected; the risk that inflationary
pressures continue to negatively impact gross margins or that we
are unable to pass along price increases; the risks to our
business, including our costs and supply chain, associated with
global sourcing and manufacturing; the risks to our reputation or
operations associated with importing merchandise from foreign
countries, including failure of our vendors to adhere to our Code
of Vendor Conduct; the risk that trade matters could increase the
cost or reduce the supply of apparel available to us; reductions in
income and cash flow from our credit card arrangement related to
our private label and co-branded credit cards; the risk of data or
other security breaches or vulnerabilities that may result in
increased costs, violations of law, significant legal and financial
exposure, and a loss of confidence in our security measures; the
risk that failures of, or updates or changes to, our IT systems may
disrupt our operations; the risk that our franchisees and licensees
could impair the value of our brands or fail to make payments for
which we are liable; natural disasters, public health crises,
political crises, negative global climate patterns, or other
catastrophic events; acts of terrorism or war, including the
conflict between Russia and
Ukraine and the conflict in
Israel, and the impact on global
market stability; the risk that our investments in customer,
digital, and omni-channel shopping initiatives may not deliver the
results we anticipate; engaging in or seeking to engage in
strategic transactions that are subject to various risks and
uncertainties; the risk that our efforts to expand internationally
may not be successful; the risk of foreign currency exchange rate
fluctuations; the risk that our comparable sales and margins may
experience fluctuations, that the seasonality of our business may
experience changes, or that we may fail to meet financial market
expectations; the risk that we or our franchisees may be
unsuccessful in identifying, negotiating, and securing new store
locations and renewing, modifying, or terminating leases for
existing store locations effectively; the adverse effects of
climate change on our operations and those of our franchisees,
vendors and other business partners; the risk that we will not be
successful in defending various proceedings, lawsuits, disputes,
and claims; our failure to comply with applicable laws and
regulations and changes in the regulatory or administrative
landscape; our failure to satisfy regulations and market
expectations related to our ESG initiatives; the risk that changes
in our credit profile or deterioration in market conditions may
limit our access to the capital markets; the risk that our level of
indebtedness may impact our ability to operate and expand our
business; the risk that we and our subsidiaries may be unable to
meet our obligations under our indebtedness agreements; the risk
that worsening global economic and geopolitical conditions could
result in changes to the assumptions and estimates used when
preparing our financial statements; the risk that changes in our
business structure, our performance or our industry could result in
reductions in our pre-tax income or utilization of existing tax
carryforwards in future periods, and require additional deferred
tax valuation allowances; the risk that changes in the geographic
mix and level of income or losses, the expected or actual outcome
of audits, changes in deferred tax valuation allowances, and new
legislation could impact our effective tax rate; the risk that the
adoption of new accounting pronouncements will impact future
results; and the risk that additional information may arise during
our close process or as a result of subsequent events that would
require us to make adjustments to our financial information.
Additional information regarding factors that could cause
results to differ can be found in our Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 14, 2023, as well as our subsequent filings
with the Securities and Exchange Commission.
These forward-looking statements are based on information as of
November 16, 2023. We assume no
obligation to publicly update or revise our forward-looking
statements even if experience or future changes make it clear that
any projected results expressed or implied therein will not be
realized.
About Gap Inc.
Gap Inc., a collection of purpose-led lifestyle brands, is the
largest American specialty apparel company offering clothing,
accessories, and personal care products for men, women, and
children under the Old Navy, Gap, Banana Republic, and
Athleta brands. The company uses omni-channel
capabilities to bridge the digital world and physical stores to
further enhance its shopping experience. Gap Inc. is guided by its
purpose, Inclusive, by Design, and takes pride in creating products
and experiences its customers love while doing right by its
employees, communities, and planet. Gap Inc. products are
available for purchase worldwide through company-operated stores,
franchise stores, and e-commerce sites. Fiscal year 2022 net
sales were $15.6 billion. For
more information, please visit www.gapinc.com.
Investor Relations
Contact:
Nina Bari
Investor_relations@gap.com
Media Relations
Contact:
Megan Foote
Press@gap.com
The Gap,
Inc.
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
October 28,
2023
|
|
October 29,
2022
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
and cash equivalents
|
|
$
1,351
|
|
$
679
|
Merchandise inventory
|
|
2,377
|
|
3,043
|
Other current assets
|
|
646
|
|
1,316
|
Total
current assets
|
|
4,374
|
|
5,038
|
Property and equipment,
net
|
|
2,552
|
|
2,788
|
Operating lease
assets
|
|
3,200
|
|
3,341
|
Other long-term
assets
|
|
926
|
|
833
|
Total
assets
|
|
$
11,052
|
|
$
12,000
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable
|
|
$
1,433
|
|
$
1,388
|
Accrued expenses and other current liabilities
|
|
1,078
|
|
1,245
|
Current portion of operating lease liabilities
|
|
604
|
|
691
|
Income taxes payable
|
|
24
|
|
57
|
Total
current liabilities
|
|
3,139
|
|
3,381
|
Long-term
liabilities:
|
|
|
|
|
Revolving credit facility
|
|
-
|
|
350
|
Long-term debt
|
|
1,488
|
|
1,486
|
Long-term operating lease liabilities
|
|
3,456
|
|
3,673
|
Other long-term liabilities
|
|
509
|
|
539
|
Total
long-term liabilities
|
|
5,453
|
|
6,048
|
Total stockholders'
equity
|
|
2,460
|
|
2,571
|
Total
liabilities and stockholders' equity
|
|
$
11,052
|
|
$
12,000
|
The Gap,
Inc.
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
39 Weeks
Ended
|
($ and shares in
millions except per share amounts)
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Net sales
|
$
3,767
|
|
$
4,039
|
|
$
10,591
|
|
$
11,373
|
Cost of goods sold and
occupancy expenses
|
2,211
|
|
2,530
|
|
6,488
|
|
7,438
|
Gross profit
|
1,556
|
|
1,509
|
|
4,103
|
|
3,935
|
Operating
expenses
|
1,306
|
|
1,323
|
|
3,757
|
|
3,974
|
Operating income
(loss)
|
250
|
|
186
|
|
346
|
|
(39)
|
Interest,
net
|
-
|
|
18
|
|
8
|
|
57
|
Income (loss) before
income taxes
|
250
|
|
168
|
|
338
|
|
(96)
|
Income tax expense
(benefit)
|
32
|
|
(114)
|
|
21
|
|
(167)
|
Net income
|
$
218
|
|
$
282
|
|
$
317
|
|
$
71
|
|
|
|
|
|
|
|
|
Weighted-average number
of shares - basic
|
371
|
|
365
|
|
369
|
|
367
|
Weighted-average number
of shares - diluted
|
375
|
|
366
|
|
373
|
|
370
|
|
|
|
|
|
|
|
|
Net earnings per share
- basic
|
$
0.59
|
|
$
0.77
|
|
$
0.86
|
|
$
0.19
|
Net earnings per share
- diluted
|
$
0.58
|
|
$
0.77
|
|
$
0.85
|
|
$
0.19
|
The Gap,
Inc.
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
39 Weeks
Ended
|
($ in
millions)
|
|
October 28,
2023 (a)
|
|
October 29,
2022 (a)
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$
317
|
|
$
71
|
Depreciation and
amortization
|
|
394
|
|
402
|
Loss on divestiture
activity
|
|
-
|
|
35
|
Gain on sale of
building
|
|
(47)
|
|
(83)
|
Change in merchandise
inventory
|
|
(5)
|
|
(78)
|
Change in accounts
payable
|
|
133
|
|
(503)
|
Change in accrued
expenses and other current liabilities
|
|
(11)
|
|
(123)
|
Change in income taxes
payable, net of receivables and other tax-related items
|
|
50
|
|
216
|
Other, net
|
|
1
|
|
(49)
|
Net cash provided by
(used for) operating activities
|
|
832
|
|
(112)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of property
and equipment
|
|
(288)
|
|
(577)
|
Net proceeds from sale
of buildings
|
|
76
|
|
458
|
Proceeds from
divestiture activity
|
|
9
|
|
-
|
Net cash used for
investing activities
|
|
(203)
|
|
(119)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from revolving
credit facility
|
|
-
|
|
350
|
Repayments of revolving
credit facility
|
|
(350)
|
|
-
|
Payments for debt
issuance costs
|
|
-
|
|
(6)
|
Proceeds from issuances
under share-based compensation plans
|
18
|
|
23
|
Withholding tax
payments related to vesting of stock units
|
(16)
|
|
(17)
|
Repurchases of common
stock
|
|
-
|
|
(123)
|
Cash dividends
paid
|
|
(166)
|
|
(166)
|
Other
|
|
(2)
|
|
(1)
|
Net cash (used for)
provided by financing activities
|
|
(516)
|
|
60
|
|
|
|
|
|
Effect of foreign
exchange rate fluctuations on cash, cash equivalents, and
restricted cash
|
|
(7)
|
|
(25)
|
Net increase (decrease)
in cash, cash equivalents, and restricted cash
|
|
106
|
|
(196)
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
|
1,273
|
|
902
|
Cash, cash equivalents,
and restricted cash at end of period
|
|
$
1,379
|
|
$
706
|
|
|
|
|
|
|
|
|
|
|
(a) For the thirty-nine weeks ended October 28, 2023 and
October 29, 2022, total cash, cash equivalents, and restricted cash
includes $28 million and $27 million, respectively, of restricted
cash primarily recorded within other long-term assets on the
Condensed Consolidated Balance Sheets.
|
The Gap,
Inc.
|
NON-GAAP FINANCIAL
MEASURES
|
UNAUDITED
|
|
FREE CASH
FLOW
|
|
Free cash flow is a
non-GAAP financial measure. We believe free cash flow is an
important metric because it represents a measure of how much cash a
company has available for discretionary and non-discretionary items
after the deduction of capital expenditures. We require regular
capital expenditures including technology improvements as well as
building and maintaining our stores and distribution centers. We
use this metric internally, as we believe our sustained ability to
generate free cash flow is an important driver of value creation.
However, this non-GAAP financial measure is not intended to
supersede or replace our GAAP results.
|
|
|
|
39 Weeks
Ended
|
($ in
millions)
|
|
October 28,
2023
|
|
October 29,
2022
|
Net cash provided by
(used for) operating activities
|
|
$
832
|
|
$
(112)
|
Less: Purchases of
property and equipment
|
|
(288)
|
|
(577)
|
Free cash
flow
|
|
$
544
|
|
$
(689)
|
The Gap,
Inc.
|
|
|
NON-GAAP FINANCIAL
MEASURES
|
|
|
UNAUDITED
|
|
|
|
|
|
ADJUSTED STATEMENT
OF OPERATIONS METRICS FOR THE THIRD QUARTER OF FISCAL YEAR
2023
|
|
|
|
The following adjusted
statement of operations metrics are non-GAAP financial measures.
These measures are provided to enhance visibility into the
Company's underlying results for the period excluding the impact of
restructuring costs. Management believes the adjusted metrics are
useful for the assessment of ongoing operations as we believe the
adjusted items are not indicative of our ongoing operations, and
provide additional information to investors to facilitate the
comparison of results, on an annualized basis, against past and
future years. However, these non-GAAP financial measures are not
intended to supersede or replace the GAAP measures.
|
|
|
|
|
|
($ in
millions)
13 Weeks Ended October 28, 2023
|
|
Operating
Expenses
|
|
Operating
Expenses as a %
of Net Sales (b)
|
|
Operating
Income
|
|
Operating
Margin (b)
|
|
Income Tax
Expense (Benefit)
|
|
Net
Income
|
|
Earnings
per
Share - Diluted
|
GAAP metrics, as
reported
|
|
$
1,306
|
|
34.7 %
|
|
$ 250
|
|
6.6 %
|
|
$
32
|
|
$ 218
|
|
$
0.58
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs
(a)
|
|
(5)
|
|
(0.1) %
|
|
5
|
|
0.1 %
|
|
2
|
|
3
|
|
0.01
|
Non-GAAP
metrics
|
|
$
1,301
|
|
34.5 %
|
|
$ 255
|
|
6.8 %
|
|
$
34
|
|
$ 221
|
|
$
0.59
|
|
|
|
|
|
|
|
|
|
|
(a) Primarily represents consulting and other associated
costs related to our previously announced actions to further
simplify and optimize our operating model and structure.
|
(b) Metrics were computed individually for each line
item; therefore, the sum of the individual lines may not equal the
total.
|
The Gap,
Inc.
NON-GAAP FINANCIAL MEASURES
UNAUDITED
|
|
ADJUSTED STATEMENT
OF OPERATIONS METRICS FOR THE THIRD QUARTER OF FISCAL YEAR
2022
|
|
The following adjusted
statement of operations metrics are non-GAAP financial measures.
These measures are provided to enhance visibility into the
Company's underlying results for the period excluding the impact of
impairment related to the Yeezy Gap business and a gain on sale of
building. Management believes the adjusted metrics are useful for
the assessment of ongoing operations as we believe the adjusted
items are not indicative of our ongoing operations, and provide
additional information to investors to facilitate the comparison of
results against past and future years. However, these non-GAAP
financial measures are not intended to supersede or replace the
GAAP measures.
|
|
($ in
millions)
13 Weeks Ended October 29, 2022
|
|
Gross
Profit
|
|
Gross
Margin
|
|
Operating
Expenses
|
|
Operating
Expenses as a %
of Net Sales (c)
|
|
Operating
Income
|
|
Operating
Margin (c)
|
|
Income Tax
Expense (Benefit)
|
|
Net
Income
|
|
Earnings
per
Share - Diluted
|
GAAP metrics, as
reported
|
|
$
1,509
|
|
37.4 %
|
|
$
1,323
|
|
32.8 %
|
|
$ 186
|
|
4.6 %
|
|
$
(114)
|
|
$
282
|
|
$
0.77
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yeezy Gap impairment
charges (a)
|
53
|
|
1.3 %
|
|
-
|
|
- %
|
|
53
|
|
1.3 %
|
|
9
|
|
44
|
|
0.12
|
Gain on sale of
building (b)
|
|
-
|
|
- %
|
|
83
|
|
2.1 %
|
|
(83)
|
|
(2.1) %
|
|
(17)
|
|
(66)
|
|
(0.18)
|
Non-GAAP
metrics
|
|
$
1,562
|
|
38.7 %
|
|
$
1,406
|
|
34.8 %
|
|
$ 156
|
|
3.9 %
|
|
$
(122)
|
|
$
260
|
|
$
0.71
|
|
|
|
|
|
|
|
|
|
|
(a) Represents the impairment charges as a result of the
decision to discontinue the Yeezy Gap business, primarily
related to inventory.
|
(b) Represents the impact of a gain on sale of our
distribution center located in the United Kingdom.
|
(c) Metrics were computed individually for each line
item; therefore, the sum of the individual lines may not equal the
total.
|
The Gap,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
details the Company's third quarter fiscal year 2023 and 2022 net
sales (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
Old Navy
Global
|
|
Gap
Global
|
|
Banana
Republic Global
|
|
Athleta
Global
|
|
Other
(2)
|
|
Total
|
13 Weeks Ended October 28, 2023
|
|
|
|
|
|
|
U.S. (1)
|
|
$
1,917
|
|
$
664
|
|
$
398
|
|
$
267
|
|
$
15
|
|
$
3,261
|
Canada
|
|
193
|
|
96
|
|
42
|
|
10
|
|
-
|
|
341
|
Europe
|
|
-
|
|
29
|
|
1
|
|
-
|
|
-
|
|
30
|
Asia
|
|
1
|
|
71
|
|
12
|
|
-
|
|
-
|
|
84
|
Other
regions
|
|
15
|
|
27
|
|
7
|
|
2
|
|
-
|
|
51
|
Total
|
|
$
2,126
|
|
$
887
|
|
$
460
|
|
$
279
|
|
$
15
|
|
$
3,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
Old Navy
Global
|
|
Gap
Global
|
|
Banana
Republic Global
|
|
Athleta
Global
|
|
Other
(2)
|
|
Total
|
13 Weeks Ended October 29, 2022
|
|
|
|
|
|
|
U.S. (1)
|
|
$
1,936
|
|
$
690
|
|
$
448
|
|
$
326
|
|
$
4
|
|
$
3,404
|
Canada
|
|
184
|
|
95
|
|
47
|
|
7
|
|
-
|
|
333
|
Europe
|
|
1
|
|
58
|
|
1
|
|
1
|
|
-
|
|
61
|
Asia
|
|
-
|
|
143
|
|
14
|
|
-
|
|
-
|
|
157
|
Other
regions
|
|
16
|
|
55
|
|
7
|
|
6
|
|
-
|
|
84
|
Total
|
|
$
2,137
|
|
$
1,041
|
|
$
517
|
|
$
340
|
|
$
4
|
|
$
4,039
|
|
|
|
|
|
|
(1) U.S. includes the United States and Puerto
Rico.
|
(2) Primarily consists of net sales from
revenue-generating strategic initiatives.
|
The Gap,
Inc.
|
|
|
|
|
|
|
|
|
|
REAL
ESTATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Store count, openings,
closings, and square footage for our stores are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 28,
2023
|
|
39 Weeks Ended
October 28, 2023
|
|
October 28,
2023
|
|
Number of
Store Locations
|
|
Number of
Stores
Opened
|
|
Number of
Stores
Closed
|
|
Number of
Store Locations
|
|
Square
Footage
(in millions)
|
|
|
|
|
Old Navy North
America
|
1,238
|
|
24
|
|
11
|
|
1,251
|
|
19.9
|
Gap North
America
|
493
|
|
1
|
|
14
|
|
480
|
|
5.1
|
Gap Asia (1)
|
232
|
|
1
|
|
7
|
|
137
|
|
1.2
|
Banana Republic North
America
|
419
|
|
2
|
|
13
|
|
408
|
|
3.4
|
Banana Republic
Asia
|
46
|
|
4
|
|
2
|
|
48
|
|
0.2
|
Athleta North
America
|
257
|
|
24
|
|
7
|
|
274
|
|
1.1
|
Company-operated stores
total
|
2,685
|
|
56
|
|
54
|
|
2,598
|
|
30.9
|
Franchise
(1)
|
667
|
|
219
|
|
85
|
|
935
|
|
N/A
|
Total
|
3,352
|
|
275
|
|
139
|
|
3,533
|
|
30.9
|
|
|
|
|
|
|
|
|
|
|
(1) The 89 Gap China stores that were transitioned to
Baozun during the period are not included as store closures or
openings for Company-operated and Franchise store activity. The
ending balance for Gap Asia excludes Gap China stores and the
ending balance for Franchise includes Gap China locations
transitioned during the period.
|
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multimedia:https://www.prnewswire.com/news-releases/gap-inc-reports-third-quarter-fiscal-2023-results-301991222.html
SOURCE Gap Inc.