Gap Inc. (NYSE:GPS) today reported fourth quarter and full year results for fiscal year 2012 and provided guidance for fiscal year 2013. Improved product performance and continued global expansion helped drive an 8 percent increase in net sales for the full year. The company reported earnings per share for the 53 weeks ended February 2, 2013 increased 49 percent to $2.33 on a diluted basis, compared with $1.56 for the 52 weeks ended January 28, 2012.
“Our results in 2012 were stellar in many ways, and I’m very pleased with how well our product resonated with customers,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “We enter 2013 focused on leveraging our global brands to gain more market share and continuing to increase shareholder value.”
Fiscal Year 2012 Financial and Business Highlights
- In North America, Gap, Banana Republic, and Old Navy each delivered positive comparable sales for four consecutive quarters.
- Fiscal year 2012 gross margin increased 320 basis points to 39.4 percent; operating margin increased 250 basis points to 12.4 percent.
- Fiscal year 2012 diluted earnings per share increased 49 percent to $2.33 compared with $1.56 last year.
- The Gap Inc. Direct division delivered $1.9 billion in net sales – representing a 24 percent increase over fiscal year 2011.
- Franchise net sales grew by 17% and franchisees entered nine new countries.
- The company returned about $1.3 billion in cash to shareholders through share repurchases and dividends for the full year.
- On December 31, 2012, the company acquired Intermix, a multi-brand specialty retailer of luxury and contemporary women’s apparel and accessories, based in New York.
In addition, the company successfully executed on key real estate and expansion initiatives in fiscal year 2012:
- In North America, the company made significant progress toward optimizing its Gap and Old Navy store fleet through store closures, consolidations, and downsizing.
- The company opened 25 Athleta stores, for a total of 35, and expects to open about 30 stores in fiscal year 2013.
- Old Navy opened its first store in Japan and plans to open as many as 20 more stores in fiscal year 2013.
- The company opened net 33 Gap and outlet stores in China and expects to open an additional 35 stores in fiscal year 2013.
- Gap Inc.’s franchise partners opened net 85 Gap and Banana Republic stores, reaching a total of 312 franchise stores. The company expects its franchise partners will open as many as 75 additional franchise stores in fiscal year 2013.
The company noted that fiscal year 2012 had 53 weeks versus 52 weeks in fiscal year 2011. As a result, the company’s results for the fourth quarter of fiscal year 2012 and for the fiscal year 2012 include the additional week, while comparable sales calculations exclude the 53
Fourth Quarter Results
Net sales for the 14 weeks ended February 2, 2013 were $4.73 billion, compared with $4.28 billion for the 13 weeks ended January 28, 2012. The company’s fourth quarter comparable sales were up 5 percent compared with a 4 percent decrease in the fourth quarter last year.