Gap Inc. (NYSE: GPS), a portfolio of purpose-led, billion-dollar
lifestyle brands including Old Navy, Gap, Banana Republic, and
Athleta, and the largest specialty apparel company in the U.S.,
today reported financial results for its third quarter ended
October 29, 2022.
“I have deep conviction that we have a portfolio of iconic
brands that our customers love, increased confidence in our
platform to drive leverage and economies of scale, and belief in
the team’s ability to deliver. We have sharpened our focus on
execution to optimize profitability and cash flow, are bringing
more rigor to our operations, and balancing our assortments in
response to what our customers are telling us. While our efforts
show early signs of improvement, we are clear that there is work to
be done to deliver what our customers, employees and shareholders
expect from Gap Inc.” said Bob Martin, Executive Chairman and
Interim CEO, Gap Inc.
Third Quarter Fiscal 2022 - Financial
Results
- Net sales of $4.04 billion, up 2% compared to last year.
Comparable sales were up 1% year-over-year.
- Online sales increased 5% compared to last year and represented
39% of total net sales.
- Store sales increased 1% compared to last year. The company
ended the quarter with 3,380 store locations in over 40 countries,
of which 2,743 were company operated.
- Reported gross margin was 37.4%; adjusted gross margin,
excluding $53 million in impairment charges related to Yeezy Gap,
was 38.7%, deleveraging 320 basis points versus last year.
- On a reported basis, merchandise margin declined 480 basis
points versus last year; adjusted for the impairment charge,
merchandise margin declined 370 basis points. Merchandise margins
were negatively impacted by higher discounting and inflationary
commodity price increases and partially offset by lapping last
year’s higher air freight expense.
- Rent, occupancy, and depreciation (ROD) leveraged 10 basis
points versus last year primarily due to higher sales volume during
the quarter; excluding a Yeezy Gap impairment charge, ROD leveraged
50 basis points versus last year.
- Reported operating income was $186 million; reported operating
margin of 4.6%. Reported operating income and margin include a $83
million gain related to the sale of the company’s UK distribution
center and $53 million in impairment charges related to Yeezy
Gap.
- Adjusted operating income was $156 million; adjusted operating
margin of 3.9%. Adjusted operating income and margin exclude the
gain on sale and impairment charges.
- Reported net income of $282 million. Reported net income
includes an income tax benefit of $114 million related to the
cumulative impact of a change in estimated annual tax rate as a
result of quarterly earnings variability.
- Adjusted net income of $260 million, excluding the gain on sale
and impairment charges. Adjusted net income includes an adjusted
income tax benefit of $122 million.
- Reported diluted earnings per share of $0.77. Reported diluted
earnings per share includes an income tax benefit of approximately
$0.31.
- Adjusted diluted earnings per share of $0.71, which excludes
the gain on sale and the impairment charges. Adjusted diluted
earnings per share includes an adjusted income tax benefit of
approximately $0.33.
Third Quarter Fiscal 2022 – Balance
Sheet and Cash Flow Highlights
- Ended the quarter with cash and cash equivalents of $679
million.
- Year-to-date net cash from operating activities was an outflow
of $112 million. Year-to-date free cash flow, defined as net cash
from operating activities less purchases of property and equipment,
was an outflow of $689 million.
- Ending inventory of $3.04 billion was up 12% year-over-year
which includes a 13-percentage point benefit related to lapping
last year’s higher in-transit inventory. This was offset by 9
percentage points of growth related to pack and hold inventory and
about two-thirds of the remaining increase attributable to elevated
levels of slow-turning basics and remainder seasonal.
- Year-to-date capital expenditures were $577 million.
- Paid third quarter dividend of $0.15 per share, totaling $55
million. Board of Directors approved fourth quarter fiscal 2022
dividend of $0.15 per share.
- Repurchased 1.2 million shares for $12 million early in the
third quarter.
Additional information regarding adjusted gross margin, adjusted
operating income, adjusted operating margin, adjusted net income,
adjusted income taxes, 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 2022 – Global
Brand Results
Old Navy:
- Net sales of $2.1 billion were up 2% compared to last year.
Sales growth was driven by improved size and assortment balance and
product acceptance offset by softness in kids and baby category and
demand from the lower-income consumer.
- Comparable sales were down 1%.
Gap:
- Net sales of $1.04 billion were flat compared to last year.
Performance was driven by improvement in category mix balance and
assortment balance offset by softness in the kids and baby
category.
- Global comparable sales were up 4%. North America comparable
sales were flat.
Banana Republic:
- Net sales of $517 million were up 8% compared to last year. The
brand has maintained its focus on delivering quality product
through a differentiated experience. It continued to capitalize on
the current shift in consumer trends while realizing ongoing
benefits since last year’s brand relaunch.
- Comparable sales were up 10%.
Athleta:
- Net sales of $340 million were up 6% compared to last year.
While the brand continues to make progress in driving awareness and
establishing authority in the women’s active and wellness category,
it continued to experience softness related to the shift in
consumer preference from athleisure to occasion and work-based
categories consistent with the broader athleisure market.
- Comparable sales were flat.
Fiscal Year 2022 Outlook
“While our third quarter results underscore the initial progress
we are making toward rebalancing our assortments and reducing
inventories, we continue to take a prudent approach in light of the
uncertain consumer and increasingly promotional environment as we
look to the remainder of fiscal 2022,” said Katrina O’Connell,
Executive Vice President and Chief Financial Officer, Gap Inc. “In
the near-term, we remain focused on the actions necessary to reduce
inventory, rebalance our assortments to better meet changing
consumer needs, aggressively manage and reevaluate our investments,
and fortify our balance sheet. While we have work to do, we believe
we are taking the right steps in order to position Gap Inc. for
sustainable, profitable growth and to deliver value for our
shareholders over the long term.”
The company is providing the following commentary related to its
outlook.
Sales:
- While the company is making progress balancing its assortments,
it continues to take a prudent approach in light of the uncertain
consumer and increasingly promotional environment as it relates to
its sales outlook for the remainder of fiscal 2022. The company
anticipates that total company net sales could be down mid-single
digits year-over-year in the fourth quarter of fiscal 2022.
Gross Margin and Inventory:
- As previously communicated, the company anticipates that air
freight expense will continue to normalize and as it anniversaries
approximately $245 million of incremental air freight investment in
the fourth quarter of last year, the company expects roughly 540
basis points of margin leverage in the fourth quarter of fiscal
2022 compared to the fourth quarter of fiscal 2021. The air freight
leverage is expected to be offset by approximately 200 basis points
of continued inflationary cost deleverage. ROD as a percentage of
sales is expected to be flat compared to last year.
- While the company is taking actions to balance its assortment
and right size inventory, the company has seen the most significant
variability in its discount rate. Further limiting near-term
discount rate visibility is the uncertain consumer environment and
increasingly promotional environment. Gross margin in both the
second and third quarters of fiscal 2022 was impacted by
approximately 370 basis points of deleverage stemming primarily
from higher discounting.
- The company continues to target total inventories below prior
year levels by the end of fiscal 2022 as a result of its inventory
actions, reduction of receipts, and anniversary of higher
in-transit levels last year. By Spring, the company expects to
begin to capitalize on its responsive levers, providing the
flexibility to better align inventory levels with demand
trends.
SG&A:
- During the third quarter, the company took initial action to
reduce operating expenses, resulting in approximately $250 million
in annualized savings, of which an immaterial amount will be a
benefit in the fourth quarter due to timing and severance offsets
in addition to anticipated headwinds in the fourth quarter related
to higher seasonal labor costs relative to last year.
- While the company’s operating expense reduction actions are
expected to benefit fiscal 2023, the savings are expected to be
offset by more normalized incentive compensation and continued
higher wage pressure next year.
Tax:
- The cumulative tax benefit recorded year-to-date in fiscal 2022
is not expected to have an impact on the full year, as it is
expected to be fully offset with tax expense in the fourth quarter
of fiscal 2022.
Capital Expenditures:
- The company continues to expect capital expenditures of
approximately $650 million in fiscal 2022.
Other:
- As part of its 350-store closure plan, the company has closed a
net total of 29 Gap and Banana Republic stores in North America
year-to-date and expects to close approximately 30 more in the
fourth quarter of fiscal 2022. The company is on track to open
about 30 net new Athleta stores in fiscal year 2022. The company
now expects to open approximately 10 net new Old Navy stores in
fiscal year 2022; this excludes the 24 Old Navy Mexico stores which
were transferred to a franchisee in the third quarter of this
year.
- As previously communicated, the company has completed its goal
of offsetting dilution in fiscal 2022 and does not anticipate
further share repurchases for the remainder of the year.
Webcast and Conference Call Information
Cammeron McLaughlin, Head of Investor Relations at Gap Inc.,
will host a conference call to review the company’s third quarter
fiscal 2022 results beginning at approximately 2:00 p.m. Pacific
Time today. Ms. McLaughlin will be joined by Interim Chief
Executive Officer Bob Martin 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 includes 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 is provided in the tables to this press release.
The non-GAAP measures included in this press release are
adjusted gross margin, adjusted operating income, adjusted
operating margin, adjusted net income, adjusted income taxes,
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.
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 and webcast
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: estimated annualized savings resulting from cost
management actions, the timing thereof, and the impact thereof on
SG&A in the fourth quarter of 2022 and 2023; seasonal labor
cost headwinds in the fourth quarter of 2022; incentive
compensation and wage pressure headwinds in 2023; severance offsets
in the fourth quarter of 2022; taking action to enter fiscal 2023
in an improved inventory position; total inventories by the end of
fiscal 2022; variability in discount rate; the promotional
environment; taking advantage of reinstated responsive
capabilities; chasing into demand and aligning inventory with
demand trends; integrating pack and hold inventory into future
assortments; Old Navy’s market positioning; Gap and Banana Republic
store closures in 2022 and 2023; Athleta and Old Navy store
openings in 2022; total company sales in the fourth quarter of
2022; gross margin in the fourth quarter of 2022; air freight
expense in the fourth quarter of 2022; inflationary and commodity
costs in the fourth quarter of 2022; ROD in the fourth quarter of
2022; the impact of the year-to-date income tax benefit in 2022 and
tax expense in the fourth quarter of 2022; normalized cash flow in
the second half of 2022; capital expenditures in 2022; expectations
for share repurchases in the remainder of 2022; and the impacts of
freight and commodity tailwinds on our business and the timing
thereof in 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, consumer spending patterns and risks associated with
the COVID-19 pandemic; the risk that we may be unable to manage our
inventory effectively and the resulting impact on our gross margins
and sales; the risk that inflation continues to rise, which could
increase our expenses and negatively impact consumer demand; the
risk that our estimates regarding consumer demand are inaccurate,
or that global economic conditions worsen beyond what we currently
estimate; the risk that we fail to manage key executive succession
and retention and to continue to attract qualified personnel; the
risk that we may be unable to mitigate the impact of global supply
chain disruptions on our business and operations and maintain
inventory commensurate with consumer demand; the risk that global
supply chain delays will result in receiving inventory after the
applicable selling season and lead to significant impairment
charges; 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 increased public focus on our ESG initiatives or our
inability to meet our stated ESG goals could affect our brand image
and reputation; the highly competitive nature of our business in
the United States and internationally; engaging in or seeking to
engage in strategic transactions that are subject to various risks
and uncertainties; the risk that our investments in customer,
digital, and omni-channel shopping initiatives may not deliver the
results we anticipate; 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 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 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 trade matters could increase the cost or reduce the
supply of apparel available to us; 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; natural disasters, public health
crises (similar to and including the ongoing COVID-19 pandemic),
political crises (such as the ongoing conflict between Russia and
Ukraine), negative global climate patterns, or other catastrophic
events; 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 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; reductions in income
and cash flow from our credit card arrangement related to our
private label and co-branded credit cards; 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; the risk
that the adoption of new accounting pronouncements will impact
future results; the risk that we do not repurchase some or all of
the shares we anticipate purchasing pursuant to our repurchase
program; 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 15,
2022, as well as our subsequent filings with the Securities and
Exchange Commission.
These forward-looking statements are based on information as of
November 17, 2022. 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 2021 net sales were $16.7 billion. For more
information, please visit www.gapinc.com.
The Gap, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED ($ in millions) October 29,
2022 October 30, 2021 ASSETS Current assets: Cash and
cash equivalents
$
679
$
801
Short-term investments
-
275
Merchandise inventory
3,043
2,721
Other current assets
1,316
1,410
Total current assets
5,038
5,207
Property and equipment, net
2,788
2,924
Operating lease assets
3,341
3,788
Other long-term assets
833
861
Total assets
$
12,000
$
12,780
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable
$
1,388
$
1,630
Accrued expenses and other current liabilities
1,245
1,414
Current portion of operating lease liabilities
691
746
Income taxes payable
57
33
Total current liabilities
3,381
3,823
Long-term liabilities: Revolving credit facility
350
-
Long-term debt
1,486
1,484
Long-term operating lease liabilities
3,673
4,163
Other long-term liabilities
539
523
Total long-term liabilities
6,048
6,170
Total stockholders' equity
2,571
2,787
Total liabilities and stockholders' equity
$
12,000
$
12,780
The Gap, Inc. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS UNAUDITED 13 Weeks Ended 39
Weeks Ended ($ and shares in millions except per share
amounts) October 29, 2022 October 30, 2021
October 29, 2022 October 30, 2021 Net sales
$
4,039
$
3,943
$
11,373
$
12,145
Cost of goods sold and occupancy expenses
2,530
2,282
7,438
7,031
Gross profit
1,509
1,661
3,935
5,114
Operating expenses
1,323
1,508
3,974
4,312
Operating income (loss)
186
153
(39
)
802
Loss on extinguishment of debt
-
325
-
325
Interest expense
22
44
63
149
Interest income
(4
)
(1
)
(6
)
(3
)
Income (loss) before income taxes
168
(215
)
(96
)
331
Income taxes
(114
)
(63
)
(167
)
59
Net income (loss)
$
282
$
(152
)
$
71
$
272
Weighted-average number of shares - basic
365
376
367
377
Weighted-average number of shares - diluted
366
376
370
385
Earnings (loss) per share - basic
$
0.77
$
(0.40
)
$
0.19
$
0.72
Earnings (loss) per share - diluted
$
0.77
$
(0.40
)
$
0.19
$
0.71
The Gap, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS UNAUDITED 39 Weeks Ended ($ in
millions) October 29,2022 (a) October 30,2021 (a)
Cash flows from operating activities: Net income
$
71
$
272
Depreciation and amortization
402
372
Loss on extinguishment of debt
-
325
Loss on divestiture activity
35
59
Gain on sale of building
(83
)
-
Change in merchandise inventory
(78
)
(288
)
Change in accounts payable
(503
)
(119
)
Change in accrued expenses and other current liabilities
(123
)
239
Change in income taxes payable, net of receivables and other
tax-related items
216
(94
)
Other, net
(49
)
(84
)
Net cash provided by (used for) operating activities
(112
)
682
Cash flows from investing activities: Purchases of property
and equipment
(577
)
(486
)
Net proceeds from sale of buildings
458
-
Purchases of short-term investments
-
(634
)
Proceeds from sales and maturities of short-term investments
-
768
Payments for acquisition activity, net of cash acquired
-
(135
)
Net cash paid for divestiture activity
-
(21
)
Net cash used for investing activities
(119
)
(508
)
Cash flows from financing activities: Proceeds from
revolving credit facility
350
-
Proceeds from issuance of long-term debt
-
1,500
Payments to extinguish debt
-
(2,546
)
Payments for debt issuance costs
(6
)
(16
)
Proceeds from issuances under share-based compensation plans
23
48
Withholding tax payments related to vesting of stock units
(17
)
(34
)
Repurchases of common stock
(123
)
(128
)
Cash dividends paid
(166
)
(182
)
Other
(1
)
-
Net cash provided by (used for) financing activities
60
(1,358
)
Effect of foreign exchange rate fluctuations on cash, cash
equivalents, and restricted cash
(25
)
(3
)
Net decrease in cash, cash equivalents, and restricted cash
(196
)
(1,187
)
Cash, cash equivalents, and restricted cash at beginning of period
902
2,016
Cash, cash equivalents, and restricted cash at end of period
$
706
$
829
(a) For the thirty-nine weeks ended October 29, 2022 and October
30, 2021, total cash, cash equivalents, and restricted cash
includes $27 million and $28 million, respectively, of restricted
cash recorded primarily in other long-term assets on the Condensed
Consolidated Balance Sheets.
The Gap, Inc. NON-GAAP FINANCIAL MEASURES
UNAUDITED
FREE CASH FLOW
Free cash flow is a non-GAAP financial measure. We believe free
cash flow is an important metric because it represents a measure of
how much cash a company has available for discretionary and
non-discretionary items after the deduction of capital
expenditures. We require regular capital expenditures including
technology improvements to automate processes, engage with
customers, and optimize our supply chain in addition to building
and maintaining stores. We use this metric internally, as we
believe our sustained ability to generate free cash flow is an
important driver of value creation. However, this non-GAAP
financial measure is not intended to supersede or replace our GAAP
results.
39 Weeks Ended ($ in millions) October 29,
2022 October 30, 2021 Net cash provided by (used for)
operating activities
$ (112)
$ 682
Less: Purchases of property and equipment
(577)
(486)
Free cash flow
$ (689)
$ 196
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 that
excluding certain items from statement of operations metrics that
are not part of the Company's core operations provides 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
OperatingExpenses OperatingExpenses as a %of Net
Sales (c) OperatingIncome OperatingMargin
(c) IncomeTaxes NetIncome Earnings perShare -
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. NON-GAAP FINANCIAL MEASURES
UNAUDITED
ADJUSTED STATEMENT OF OPERATIONS METRICS FOR THE THIRD
QUARTER OF FISCAL YEAR 2021
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 impacts of strategic changes related to our operating
model in Europe and the loss on extinguishment of debt. Management
believes that excluding certain items from statement of operations
metrics that are not part of the Company's core operations provides
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 30, 2021
GrossProfit GrossMargin OperatingExpenses
OperatingExpenses as a %of Net Sales (b)
OperatingIncome OperatingMargin Loss
onExtinguishmentof Debt IncomeTaxes
NetIncome(Loss) Earnings (Loss)per Share -Diluted (b)
GAAP metrics, as reported
$
1,661
42.1
%
$
1,508
38.2
%
$
153
3.9
%
$
325
$
(63
)
$
(152
)
$
(0.40
)
Adjustments for: Strategic actions in Europe (a)
(9
)
(0.2
)%
(26
)
(0.7
)%
17
0.4
%
-
5
12
0.03
Loss on extinguishment of debt
-
-
%
-
-
%
-
-
%
(325
)
83
242
0.63
Non-GAAP metrics
$
1,652
41.9
%
$
1,482
37.6
%
$
170
4.3
%
$
-
$
25
$
102
$
0.27
(a) Represents the net impacts from the strategic review of our
European operating model which resulted in the closure of stores in
the United Kingdom, and Ireland, as well as the sale of our stores
in France to a third party partner. These impacts primarily include
employee-related and lease-related costs. (b) 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 2022 and 2021 net sales (unaudited):
($ in millions) 13 Weeks Ended October 29, 2022
Old NavyGlobal Gap Global BananaRepublic
Global Athleta Global Other (2) Total 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
($ in millions) 13 Weeks Ended October 30,
2021 Old NavyGlobal Gap Global BananaRepublic
Global Athleta Global Other Total U.S. (1)
$ 1,899
$ 676
$ 410
$ 317
$ -
$ 3,302
Canada
185
102
47
3
-
337
Europe
1
89
2
-
-
92
Asia
-
141
14
-
-
155
Other regions
20
31
6
-
-
57
Total
$ 2,105
$ 1,039
$ 479
$ 320
$ -
$ 3,943
(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 29, 2022 39 Weeks Ended October 29, 2022
October 29, 2022 Number ofStore Locations Number
of StoresOpened Number of StoresClosed Number ofStore
Locations SquareFootage(in millions) Old Navy
North America (1)
1,252
25
6
1,247
20.0
Gap North America
520
2
18
504
5.4
Gap Asia
329
4
74
259
2.2
Gap Europe (2)
11
-
-
-
-
Banana Republic North America
446
2
15
433
3.6
Banana Republic Asia
50
2
3
49
0.2
Athleta North America
227
29
5
251
1.0
Company-operated stores total
2,835
64
121
2,743
32.4
Franchise (1) (2)
564
77
39
637
N/A
Total
3,399
141
160
3,380
32.4
(1) The 24 Old Navy Mexico stores that were transitioned to Grupo
Axo during the period are not included as store closures or
openings for Company-operated and Franchise store activity. The
ending balance for Old Navy North America excludes these stores and
the ending balance for Franchise includes these stores. (2) The 11
Gap Italy stores that were transitioned to OVS S.p.A. during the
period are not included as store closures or openings for
Company-operated and Franchise store activity. The ending balance
for Gap Europe excludes these stores and the ending balance for
Franchise includes these stores.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221116006112/en/
Investor Relations Contact: Nina Bari
Investor_relations@gap.com
Media Relations Contact: Megan Foote Press@gap.com
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