Fourth Quarter Net Sales Increased with
Market Share Gains
Fourth Quarter Operating Margin Expansion
Reflects Continued Financial and Operational Rigor
Full Year Operating Cash Flow of $1.5 Billion; Ended Fiscal Year with Cash Balance
of $1.9 Billion
SAN
FRANCISCO, March 7, 2024 /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 fourth quarter and fiscal year ended February 3, 2024.
"The fourth quarter exceeded expectations on several key metrics
along with market share gains, reflecting improved trends at Old
Navy and Gap and strong continued progress on margins and cash
flow," said Gap Inc. President and Chief Executive Officer,
Richard Dickson. "The financial and
operational rigor we have worked to develop, and will continue to
pursue, is enabling us to focus on reinvigorating our brands with
the goal of generating profitable growth and value for
shareholders. While there is a lot of work to do, I am inspired by
the team's commitment and energized by the opportunities
ahead."
The company noted that fiscal year 2023 had 53 weeks versus 52
weeks in fiscal year 2022. As a result, the company's results for
the fourth quarter and the fiscal year include the additional week,
while comparable sales calculations exclude the additional
week.
Fourth Quarter Fiscal 2023 - Financial Results
- Net sales of $4.3 billion
were up 1% compared to last year, inclusive of an estimated 2
percentage points of negative impact from the sale of Gap China.
The addition of the 53rd week contributed approximately 4
percentage points of growth to the fourth quarter.
- Comparable sales were flat year-over-year.
- Store sales increased 4% compared to last year.
- Online sales decreased 2% compared to last year and
represented 40% of total net sales.
- Gross margin was 38.9%, an increase of 530 basis points
versus last year.
- Merchandise margin increased 500 basis points versus
last year primarily driven by lower commodity costs and improved
promotional activity during the quarter.
- Rent, occupancy, and depreciation (ROD) as a percent of
sales leveraged 30 basis points versus last year.
- Operating expense was $1.46
billion.
- Operating income was $214
million; operating margin of 5.0%.
- The effective tax rate of 15.1% benefited from the
release of certain tax reserves.
- Net income of $185
million; diluted earnings per share of
$0.49.
Full Year Fiscal 2023 - Financial Results
- Net sales of $14.9 billion
were down 5% compared to last year, inclusive of an estimated 2
percentage points of negative impact from the sale of Gap China.
The addition of the 53rd week contributed about 1 percentage point
of growth to the full year.
- Comparable sales down 2% year-over-year.
- Store sales decreased 3% compared to last year. The
company ended the year with 3,560 store locations in over 40
countries, of which 2,562 were company operated.
- Online sales decreased 7% compared to last year and
represented 37% of total net sales.
- Gross margin was 38.8%, expanding 450 basis points
versus last year's reported gross margin and 380 basis points
versus last year's adjusted rate.
- Merchandise margin increased by 490 basis points versus
last year's reported rate; on an adjusted basis, merchandise margin
increased 420 basis points driven by lower air freight expense and
improved promotional activity.
- Rent, occupancy, and depreciation (ROD) deleveraged 40
basis points versus last year.
- Reported operating expense was $5.22 billion; adjusted operating expense,
excluding $89 million in
restructuring costs and a $47 million
gain on sale of a building, was $5.17
billion, down 6% from last year primarily driven by savings
as a result of strategic actions.
- Reported operating income was $560 million; reported operating margin of
3.8%.
- Adjusted operating income, excluding $93 million in restructuring costs and a
$47 million gain on sale, was
$606 million; adjusted operating
margin of 4.1%.
- The reported effective tax rate was 9.7%. The
adjusted effective tax rate was 11.0%.
- Reported net income was $502
million; reported diluted earnings per share of
$1.34.
- Adjusted net income, excluding restructuring costs and
the gain on sale, was $536 million;
adjusted diluted earnings per share of $1.43 includes approximately $0.29 of discrete tax benefits and an estimated
$0.05 benefit related to the 53rd
week.
Balance Sheet and Cash Flow Highlights
- Ended the year with cash and cash equivalents of
$1.9 billion, an increase of 54% from
the prior year.
- Fiscal 2023 net cash from operating activities was
$1.5 billion. Free cash flow,
defined as net cash from operating activities less purchases of
property and equipment, was $1.1
billion.
- Ending inventory of $2
billion was down 16% compared to last year.
- Fiscal year 2023 capital expenditures were $420 million.
- Paid a fourth quarter dividend of $0.15 per share, totaling $56 million. Paid dividends totaling $222 million in fiscal year 2023. The Company's
Board of Directors approved a first quarter fiscal 2024 dividend of
$0.15 per share.
Additional information regarding adjusted gross margin, adjusted
operating expense/adjusted SG&A, adjusted operating income,
adjusted operating margin, adjusted effective tax rate, 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.
Fourth Quarter and Full Year Fiscal 2023 - Global Brand
Results
Comparable
Sales
|
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Old Navy
|
2 %
|
|
(7) %
|
|
(1) %
|
|
(12) %
|
Gap
|
4 %
|
|
(4) %
|
|
1 %
|
|
(4) %
|
Banana
Republic
|
(4) %
|
|
(3) %
|
|
(7) %
|
|
9 %
|
Athleta
|
(10) %
|
|
(5) %
|
|
(12) %
|
|
(5) %
|
Gap Inc.
|
0 %
|
|
(5) %
|
|
(2) %
|
|
(7) %
|
Old Navy:
- Fourth quarter net sales of $2.29
billion were up 6% compared to last year. Comparable sales
were up 2%. This represents the second consecutive quarter of
positive comparable sales at the brand, demonstrating improved
consistency in performance and execution.
- Full year net sales of $8.2
billion were flat versus last year. Comparable sales were
down 1%.
Gap:
- Fourth quarter net sales of $1.01
billion were down 5% compared to last year. Excluding the
estimated negative impact to sales of 8 percentage points related
to the sale of Gap China, sales would have been up 3% versus last
year. Comparable sales were up 4%. Performance was driven by
continued strength in Women's, which gained market share for the
fifth quarter in a row.
- Full year net sales of $3.3
billion were down 11% versus last year. Excluding the
estimated negative impact to sales of 7 percentage points related
to the sale of Gap China, sales would have been down 4% versus last
year. Comparable sales were up 1%.
Banana Republic:
- Fourth quarter net sales of $567
million were down 2% compared to last year. Comparable sales
were down 4%. While the brand has been making progress elevating
its aesthetic, re-establishing Banana Republic will take time and
there is work to be done to better execute many of the
fundamentals.
- Full year net sales of $1.9
billion were down 8% versus last year. Comparable sales were
down 7%.
Athleta:
- Fourth quarter net sales of $419
million were down 4% compared to last year. Comparable sales
were down 10%. Athleta's performance improved sequentially versus
the prior quarter, but sales continue to be challenged due to
tougher comparisons as the brand laps a period of elevated
discounting last year.
- Full year net sales of $1.4
billion were down 8% versus last year. Comparable sales were
down 12%.
Fiscal 2024 Outlook
The company's outlook takes into consideration the continued
uncertain consumer and macro environment. The company's projected
full year fiscal 2024 operating income growth below is provided in
comparison to its full year fiscal 2023 adjusted operating income.
In addition, the company's expected first quarter fiscal 2024 gross
margin expansion below is provided in comparison to its first
quarter fiscal 2023 adjusted gross margin.
Full Year Fiscal
2024
|
|
|
|
|
|
Full Year Fiscal
2024 Outlook
|
|
Full Year Fiscal
2023 Results
|
Net sales
|
Roughly flat on a
52-week basis
|
|
$14.9
billion
|
Gross margin
|
At least 50 bps
expansion
|
|
38.8 %
|
Operating
expense
|
Approximately $5.1
billion
|
|
$5.17 billion
(adjusted)
|
Operating
income
|
Low-to-mid teens
growth
|
|
$606 million
(adjusted)
|
Effective tax
rate
|
Approximately
28%
|
|
9.7 %
|
Capital
expenditures
|
Approximately $500
million
|
|
$420 million
|
|
|
First Quarter Fiscal
2024
|
|
|
|
|
|
First Quarter Fiscal
2024 Outlook
|
|
First Quarter Fiscal
2023 Results
|
Net sales
|
Roughly flat
|
|
$3.3 billion
|
Gross margin
|
At least 100 bps
expansion
|
|
37.2%
(adjusted)
|
Operating
expense
|
Approximately $1.2
billion
|
|
$1.20 billion
(adjusted)
|
Webcast and Conference Call Information
Emily Gacka, Director of Investor Relations at
Gap Inc., will host a conference call to review the company's
fourth quarter and fiscal year 2023 results beginning at
approximately 2:00 p.m. Pacific Time
today. Ms. Gacka will be joined by President and Chief Executive
Officer, Richard Dickson and Chief
Financial Officer, Katrina
O'Connell.
A live webcast of the conference call and accompanying materials
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
non-GAAP measures 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 are
adjusted gross margin, adjusted operating expense/adjusted
SG&A, adjusted operating income, adjusted operating margin,
adjusted effective tax rate, adjusted net income, adjusted diluted
earnings per share, and free cash flow. These non-GAAP measures
exclude the impact of certain items that are set forth in the
tables to this press release. In addition, the company's outlook
includes projected full year fiscal 2024 operating income growth
compared to its full year fiscal 2023 adjusted operating income as
well as expected first quarter fiscal 2024 gross margin expansion
compared to its first quarter fiscal 2023 adjusted gross
margin.
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 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: our strategic priorities, including maintaining and
delivering financial and operational rigor, reinvigorating our
brands, strengthening our platform, and energizing our culture; our
executive leadership team and their roles and contributions; our
financial position heading into fiscal 2024; continuing to elevate
our performance, improve execution consistency, and set the
foundation for brand reinvigoration; each brand having trend-right
product assortments and a clear point of view; our brand
reinvigoration playbook; Old Navy accelerating growth in the Active
market; building consistency and delivering against priorities at
Old Navy; reigniting Gap brand with big ideas and delivering
results; reestablishing Banana Republic to thrive in the premium
lifestyle space; Banana Republic getting back to product and
execution basics in fiscal 2024; the timeline for reestablishing
Banana Republic and unlocking the brand's potential; the impact in
fiscal 2024 of lapping periods of elevated discounting at Athleta;
resetting Athleta for success; Athleta's efforts driving underlying
benefits; building and sharpening our operational capabilities to
improve effectiveness and efficiency and drive cost leverage and
demand generation; elevating our technology tools and capabilities;
cultivating a digital-first organization and mindset; using our
platform to unlock additional value creation; energizing our
culture to fuel creativity and connectivity; our Chief People
Officer's role in building a winning culture; strengthening the
fundamentals in 2024; remaining focused on discipline around margin
recovery, expense actions, inventory management, and maintaining a
strong balance sheet; our dividend policy and expected first
quarter fiscal 2024 dividend; expected fiscal 2024 net sales;
expected fiscal 2024 operating income growth; the impact of the
loss of an additional week in fiscal 2024 and timing shifts
associated with the additional week in fiscal 2023; impacts related
to geopolitical issues in the Red Sea in fiscal 2024; consumer
dynamics and macroeconomic pressures in fiscal 2024; the impact of
a CFBP ruling on late fees for credit card holders in fiscal 2024;
expected gross margin expansion in fiscal 2024; expected commodity
cost tailwinds in fiscal 2024; expected ROD deleverage in fiscal
2024; expected fiscal 2024 SG&A; identifying and pursuing
efficiencies as we drive our strategic plan; expected fiscal 2024
net interest expense; expected fiscal 2024 effective tax rate;
expected fiscal 2024 capital expenditures; expected first quarter
fiscal 2024 net sales; expected first quarter fiscal 2024 gross
margin expansion; expected first quarter fiscal 2024 SG&A; and
generating sustainable, profitable growth and delivering value for
shareholders over the long-term.
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 consumer spending patterns; the highly competitive
nature of our business in the United
States and internationally; 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 we fail to maintain, enhance and protect our
brand image and reputation; the risk that we may be unable to
manage our inventory effectively and the resulting impact on our
gross margins and sales; the risk of loss or theft of assets,
including inventory shortage; the risk that we fail to manage key
executive succession and retention and to continue to attract
qualified personnel; the risks to our business, including our costs
and global 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; 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;
engaging in or seeking to engage in strategic transactions that are
subject to various risks and uncertainties; the risk that changes
in our business strategy or restructuring our operations may not
generate the intended benefits or projected cost savings; the risk
that our efforts to expand internationally may not be successful;
the risk that our franchisees and licensees could impair the value
of our brands; the risk that our investments in customer, digital,
and omni-channel shopping initiatives may not deliver the results
we anticipate; 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;
reductions in income and cash flow from our credit card arrangement
related to our private label and co-branded credit cards; the risk
of foreign currency exchange rate fluctuations; the risk that our
comparable sales and margins may experience fluctuations or that we
may fail to meet financial market expectations; 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 changes in our credit profile or deterioration in market
conditions may limit our access to the capital markets; evolving
regulations and expectations with respect to ESG matters; natural
disasters, public health crises (such as pandemics and epidemics),
political crises (such as the ongoing Russia-Ukraine and Israel-Hamas conflicts), negative
global climate patterns, or other catastrophic events; our failure
to comply with applicable laws and regulations and changes in the
regulatory or administrative landscape; the risk that we will not
be successful in defending various proceedings, lawsuits, disputes,
and claims; the risk that our estimates regarding consumer demand
are inaccurate, or that global economic conditions worsen beyond
what we currently estimate; 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
March 7, 2024. 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 house of iconic brands, is
the largest specialty apparel company in America. Its
Old Navy, Gap, Banana Republic, and Athleta brands offer
clothing, accessories, and lifestyle products for men, women and
children. Since 1969, Gap Inc. has created products and experiences
that shape culture, while doing right by employees, communities and
the planet. Gap Inc. products are available worldwide through
company-operated stores, franchise stores, and e-commerce sites.
Fiscal year 2023 net sales were $14.9
billion. For more information, please visit
www.gapinc.com.
Investor Relations Contact:
Nina Bari
Investor_relations@gap.com
Media Relations Contact:
Megan Foote
Press@gap.com
The Gap,
Inc.
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
February 3,
2024
|
|
January 28,
2023
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
1,873
|
|
$
1,215
|
Merchandise
inventory
|
1,995
|
|
2,389
|
Other current
assets
|
527
|
|
1,013
|
Total current
assets
|
4,395
|
|
4,617
|
Property and equipment,
net of accumulated
depreciation
|
2,566
|
|
2,688
|
Operating lease
assets
|
3,115
|
|
3,173
|
Other long-term
assets
|
968
|
|
908
|
Total assets
|
$
11,044
|
|
$
11,386
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
1,349
|
|
$
1,320
|
Accrued expenses and
other current liabilities
|
1,108
|
|
1,219
|
Current portion of
operating lease liabilities
|
600
|
|
667
|
Income taxes
payable
|
39
|
|
50
|
Total current
liabilities
|
3,096
|
|
3,256
|
Long-term
liabilities:
|
|
|
|
Revolving credit
facility
|
—
|
|
350
|
Long-term
debt
|
1,488
|
|
1,486
|
Long-term operating
lease liabilities
|
3,353
|
|
3,517
|
Other long-term
liabilities
|
512
|
|
544
|
Total long-term
liabilities
|
5,353
|
|
5,897
|
Total stockholders'
equity
|
2,595
|
|
2,233
|
Total liabilities and
stockholders' equity
|
$
11,044
|
|
$
11,386
|
The Gap,
Inc.
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 Weeks Ended
(1)
|
|
13 Weeks
Ended
|
|
53 Weeks Ended
(1)
|
|
52 Weeks
Ended
|
($ and shares in
millions except per share amounts)
|
February 3,
2024
|
|
January 28,
2023
|
|
February 3,
2024
|
|
January 28,
2023
|
Net sales
|
$
4,298
|
|
$
4,243
|
|
$
14,889
|
|
$
15,616
|
Cost of goods sold and
occupancy expenses
|
2,626
|
|
2,819
|
|
9,114
|
|
10,257
|
Gross profit
|
1,672
|
|
1,424
|
|
5,775
|
|
5,359
|
Operating
expenses
|
1,458
|
|
1,454
|
|
5,215
|
|
5,428
|
Operating income
(loss)
|
214
|
|
(30)
|
|
560
|
|
(69)
|
Interest,
net
|
(4)
|
|
13
|
|
4
|
|
70
|
Income (loss) before
income taxes
|
218
|
|
(43)
|
|
556
|
|
(139)
|
Income tax
expense
|
33
|
|
230
|
|
54
|
|
63
|
Net income
(loss)
|
$
185
|
|
$
(273)
|
|
$
502
|
|
$
(202)
|
|
|
|
|
|
|
|
|
Weighted-average number
of shares - basic
|
372
|
|
366
|
|
370
|
|
367
|
Weighted-average number
of shares - diluted
|
381
|
|
366
|
|
376
|
|
367
|
|
|
|
|
|
|
|
|
Net earnings (loss) per
share - basic
|
$
0.50
|
|
$
(0.75)
|
|
$
1.36
|
|
$
(0.55)
|
Net earnings (loss) per
share - diluted
|
$
0.49
|
|
$
(0.75)
|
|
$
1.34
|
|
$
(0.55)
|
|
|
|
|
|
|
|
|
|
(1) Fiscal 2023
includes incremental sales attributable to the 53rd
week.
|
The Gap,
Inc.
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
|
53 Weeks
Ended
|
|
52 Weeks
Ended
|
($ in
millions)
|
February 3,
2024 (a)
|
|
January 28,
2023 (a)
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
502
|
|
$
(202)
|
Depreciation and
amortization
|
522
|
|
540
|
Loss on divestiture
activity
|
—
|
|
35
|
Gain on sale of
building
|
(47)
|
|
(83)
|
Change in merchandise
inventory
|
383
|
|
554
|
Change in accounts
payable
|
42
|
|
(540)
|
Change in accrued
expenses and other current liabilities
|
12
|
|
(243)
|
Change in income taxes
payable, net of receivables and other tax-related items
|
75
|
|
417
|
Other, net
|
43
|
|
129
|
Net cash provided by
operating activities
|
1,532
|
|
607
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property
and equipment
|
(420)
|
|
(685)
|
Net proceeds from sale
of buildings
|
76
|
|
458
|
Proceeds from
divestiture activity
|
9
|
|
—
|
Other
|
1
|
|
—
|
Net cash used for
investing activities
|
(334)
|
|
(227)
|
|
|
|
|
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
|
27
|
|
27
|
Withholding tax
payments related to vesting of stock units
|
(20)
|
|
(20)
|
Repurchases of common
stock
|
—
|
|
(123)
|
Cash dividends
paid
|
(222)
|
|
(220)
|
Other
|
(2)
|
|
(2)
|
Net cash (used for)
provided by financing activities
|
(567)
|
|
6
|
|
|
|
|
Effect of foreign
exchange rate fluctuations on cash, cash equivalents, and
restricted cash
|
(3)
|
|
(15)
|
Net increase in cash,
cash equivalents, and restricted cash
|
628
|
|
371
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
1,273
|
|
902
|
Cash, cash equivalents,
and restricted cash at end of period
|
$
1,901
|
|
$
1,273
|
|
|
|
|
|
|
|
|
|
(a) For the fifty-three
weeks ended February 3, 2024 and the fifty-two weeks ended January
28, 2023, total cash, cash equivalents, and restricted cash
includes $28 million and $58 million, respectively, of restricted
cash recorded within other current assets and other long-term
assets on the Condensed Consolidated Balance Sheets.
|
The Gap,
Inc.
|
|
|
NON-GAAP FINANCIAL
MEASURES
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
FREE CASH
FLOW
|
|
|
|
|
|
|
|
Free cash flow is a
non-GAAP financial measure. We believe free cash flow is an
important metric because it represents a measure of how much cash a
company has available for discretionary and non-discretionary items
after the deduction of capital expenditures. We require regular
capital expenditures including technology improvements as well as
building and maintaining our stores and distribution centers. We
use this metric internally, as we believe our sustained ability to
generate free cash flow is an important driver of value creation.
However, this non-GAAP financial measure is not intended to
supersede or replace our GAAP results.
|
|
|
|
|
|
53 Weeks
Ended
|
|
52 Weeks
Ended
|
($ in
millions)
|
February 3,
2024
|
|
January 28,
2023
|
Net cash provided by
operating activities
|
$
1,532
|
|
$
607
|
Less: Purchases of
property and equipment
|
(420)
|
|
(685)
|
Free cash
flow
|
$
1,112
|
|
$
(78)
|
The Gap,
Inc.
|
NON-GAAP FINANCIAL
MEASURES
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED STATEMENT
OF OPERATIONS METRICS FOR 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 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)
53 Weeks Ended February 3, 2024
|
|
Gross
Profit
|
|
Gross
Margin
|
|
Operating
Expenses
|
|
Operating
Expenses
as a % of
Net Sales
|
|
Operating
Income
|
|
Operating
Margin
|
|
Income
Tax
Expense
|
|
Net
Income
|
|
Earnings
per
Share -
Diluted
|
GAAP metrics, as
reported
|
|
$
5,775
|
|
38.8 %
|
|
$ 5,215
|
|
35.0 %
|
|
$
560
|
|
3.8 %
|
|
$
54
|
|
$
502
|
|
$
1.34
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs
(a)
|
|
4
|
|
— %
|
|
(89)
|
|
(0.6) %
|
|
93
|
|
0.6 %
|
|
23
|
|
70
|
|
$
0.19
|
Gain on sale of
building
|
|
—
|
|
— %
|
|
47
|
|
0.3 %
|
|
(47)
|
|
(0.3) %
|
|
(11)
|
|
(36)
|
|
$
(0.10)
|
Non-GAAP
metrics
|
|
$
5,779
|
|
38.8 %
|
|
$ 5,173
|
|
34.7 %
|
|
$
606
|
|
4.1 %
|
|
$
66
|
|
$
536
|
|
$
1.43
|
|
|
|
|
|
|
|
|
|
(a) Includes $64
million of employee-related costs and $29 million of consulting and
other associated costs related to our previously announced actions
to further simplify and optimize our operating model and
structure.
|
The Gap,
Inc.
|
NON-GAAP FINANCIAL
MEASURES
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED STATEMENT
OF OPERATIONS METRICS FOR FISCAL YEAR 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following adjusted
statement of operations metrics are non-GAAP financial measures.
These measures are provided to enhance visibility into the
Company's underlying results for the
period excluding the impact of impairment of certain inventory,
impairment related to the Yeezy Gap business, a
loss on divestiture activity, and a gain
on sale of building. Management believes the adjusted metrics are
useful for the assessment of ongoing operations as we believe the adjusted items are not indicative
of our ongoing operations, and provide additional information to
investors to facilitate the comparison of results against past and future years. However,
these non-GAAP financial measures are not intended to supersede or
replace the GAAP measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
52 Weeks Ended January 28, 2023
|
|
Gross
Profit
|
|
Gross
Margin
|
|
Operating
Expenses
|
|
Operating
Expenses
as a % of
Net Sales
|
|
Operating
Income
(Loss)
|
|
Operating
Margin
|
|
Income
Tax
Expense
|
|
Net
Income
(Loss)
|
|
Earnings
per
Share -
Diluted
|
GAAP metrics, as
reported
|
|
$
5,359
|
|
34.3 %
|
|
$ 5,428
|
|
34.8 %
|
|
$
(69)
|
|
(0.4) %
|
|
$
63
|
|
$
(202)
|
|
$
(0.55)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory impairment
charges (a)
|
|
58
|
|
0.4 %
|
|
—
|
|
— %
|
|
58
|
|
0.4 %
|
|
9
|
|
49
|
|
$
0.13
|
Yeezy Gap impairment
charges (b)
|
|
53
|
|
0.3 %
|
|
—
|
|
— %
|
|
53
|
|
0.3 %
|
|
9
|
|
44
|
|
$
0.12
|
Loss on divestiture
activity (c)
|
|
—
|
|
— %
|
|
(35)
|
|
(0.2) %
|
|
35
|
|
0.2 %
|
|
5
|
|
30
|
|
$
0.08
|
Gain on sale of
building
|
|
—
|
|
— %
|
|
83
|
|
0.5 %
|
|
(83)
|
|
(0.5) %
|
|
(17)
|
|
(66)
|
|
$
(0.18)
|
Non-GAAP
metrics
|
|
$
5,470
|
|
35.0 %
|
|
$ 5,476
|
|
35.1 %
|
|
$
(6)
|
|
— %
|
|
$
69
|
|
$
(145)
|
|
$
(0.40)
|
|
|
|
|
|
|
|
|
|
(a) Represents the
inventory impairment charges as a result of delayed seasonal
product and extended size product, primarily at Old Navy.
(b) Represents the impairment charges as a result of the decision
to discontinue the Yeezy Gap business, primarily related to
inventory.
|
(c) Represents the
impact of the loss on divestiture activity related to the
transition of the Old Navy Mexico business.
|
The Gap,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
details the Company's fourth quarters and fiscal years 2023 and
2022 net sales (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
Old Navy
Global
|
|
Gap
Global
|
|
Banana
Republic
Global
|
|
Athleta
Global
|
|
Other
(3)
|
|
Total
|
14 Weeks Ended February 3, 2024 (1)
|
|
|
|
|
|
|
U.S. (2)
|
|
$
2,107
|
|
$
768
|
|
$
494
|
|
$
407
|
|
$
17
|
|
$
3,793
|
Canada
|
|
171
|
|
99
|
|
48
|
|
12
|
|
—
|
|
330
|
Other
regions
|
|
10
|
|
140
|
|
25
|
|
—
|
|
—
|
|
175
|
Total
|
|
$
2,288
|
|
$
1,007
|
|
$
567
|
|
$
419
|
|
$
17
|
|
$
4,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
Old Navy
Global
|
|
Gap
Global
|
|
Banana
Republic
Global
|
|
Athleta
Global
|
|
Other
(3)
|
|
Total
|
13 Weeks Ended
January 28, 2023
|
|
|
|
|
|
|
U.S. (2)
|
|
$
1,982
|
|
$
709
|
|
$
505
|
|
$
423
|
|
$
2
|
|
$
3,621
|
Canada
|
|
165
|
|
91
|
|
49
|
|
10
|
|
—
|
|
315
|
Other
regions
|
|
19
|
|
261
|
|
24
|
|
3
|
|
—
|
|
307
|
Total
|
|
$
2,166
|
|
$
1,061
|
|
$
578
|
|
$
436
|
|
$
2
|
|
$
4,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
Old Navy
Global
|
|
Gap
Global
|
|
Banana
Republic
Global
|
|
Athleta
Global
|
|
Other
(3)
|
|
Total
|
53 Weeks Ended February 3, 2024 (1)
|
|
|
|
|
|
|
U.S. (2)
|
|
$
7,460
|
|
$
2,470
|
|
$
1,681
|
|
$
1,310
|
|
$
46
|
|
$
12,967
|
Canada
|
|
674
|
|
332
|
|
170
|
|
45
|
|
—
|
|
1,221
|
Other
regions
|
|
69
|
|
539
|
|
88
|
|
5
|
|
—
|
|
701
|
Total
|
|
$
8,203
|
|
$
3,341
|
|
$
1,939
|
|
$
1,360
|
|
$
46
|
|
$
14,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
Old Navy
Global
|
|
Gap
Global
|
|
Banana
Republic
Global
|
|
Athleta
Global
|
|
Other
(3)
|
|
Total
|
52 Weeks Ended
January 28, 2023
|
|
|
|
|
|
|
U.S. (2)
|
|
$
7,471
|
|
$
2,461
|
|
$
1,829
|
|
$
1,428
|
|
$
12
|
|
$
13,201
|
Canada
|
|
679
|
|
332
|
|
192
|
|
33
|
|
—
|
|
1,236
|
Other
regions
|
|
84
|
|
981
|
|
95
|
|
19
|
|
—
|
|
1,179
|
Total
|
|
$
8,234
|
|
$
3,774
|
|
$
2,116
|
|
$
1,480
|
|
$
12
|
|
$
15,616
|
|
|
|
|
|
|
|
|
|
(1) Fiscal 2023
includes incremental sales attributable to the 53rd
week.
|
(2) U.S. includes the
United States and Puerto Rico.
|
(3) 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
|
|
53 Weeks Ended
February 3, 2024
|
|
February 3,
2024
|
|
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
|
|
25
|
|
20
|
|
1,243
|
|
19.8
|
Gap North
America
|
493
|
|
1
|
|
22
|
|
472
|
|
5.0
|
Gap Asia (1)
|
232
|
|
2
|
|
11
|
|
134
|
|
1.2
|
Banana Republic North
America
|
419
|
|
2
|
|
21
|
|
400
|
|
3.3
|
Banana Republic
Asia
|
46
|
|
4
|
|
7
|
|
43
|
|
0.2
|
Athleta North
America
|
257
|
|
25
|
|
12
|
|
270
|
|
1.1
|
Company-operated stores
total
|
2,685
|
|
59
|
|
93
|
|
2,562
|
|
30.6
|
Franchise
(1)
|
667
|
|
293
|
|
96
|
|
998
|
|
N/A
|
Total
|
3,352
|
|
352
|
|
189
|
|
3,560
|
|
30.6
|
|
|
|
|
|
|
|
|
|
(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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SOURCE Gap Inc.