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Gap Inc. Reports Third Quarter Results

Gap Inc. (NYSE:GPS) today reported that third quarter diluted earnings per share increased 14 percent, to $0.72, compared with $0.63 last year, as the company continues to deliver on its goal of top-line and bottom-line growth. The company reaffirmed its estimate for full year 2013 diluted earnings per share to be in the range of $2.57 to $2.65.

Net sales for the third quarter, which ended November 2, 2013, increased 3 percent to $3.98 billion compared with $3.86 billion for the third quarter last year. Net sales increased 5 percent on a constant currency basis. In calculating net sales growth on a constant currency basis, current year foreign exchange rates are applied to both current year and prior year net sales. This is done to enhance the visibility of underlying business trends, excluding the impact of foreign currency exchange rate fluctuations.

“This quarter marks our seventh consecutive quarter of positive comp sales growth,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “We are pleased to maintain our momentum of growing sales and earnings per share this quarter.”

The company’s third quarter of fiscal 2013 comparable sales increased 1 percent versus a 6 percent increase last year. Due to the 53 rd week in fiscal year 2012, comparable sales for the third quarter of fiscal year 2013 are compared with the 13-week period ended November 3, 2012.

Additional Third Quarter 2013 Financial and Business Highlights
  • Operating margin expanded 100 basis points to 14.5 percent.
  • Increased online sales by 20 percent in the third quarter compared with last year, continuing to build upon the company’s online success and omni-channel strategies.
  • The company continued to expand its Gap store base in mainland China, opening 18 additional stores in the third quarter, for a total of 73 stores.
  • In line with its strategy to expand Old Navy internationally, the company ended the quarter with 14 Old Navy stores in Japan, on pace to open 15 to 20 stores for the year. The company also announced its intention to open its first franchise-operated Old Navy store in the Philippines in 2014.
  • The company continued to grow its Franchise business during the quarter with the addition of four markets – Brazil, Costa Rica, Hungary and Peru – now totaling more than 350 stores in over 40 global markets.
  • Gap Inc. opened 15 Athleta stores in the third quarter, for a total of 61 stores open to date, and the brand is on pace to end fiscal 2013 with about 65 stores.

Third Quarter 2013 Comparable Sales Results

Comparable sales by global brand for the third quarter of fiscal year 2013 were as follows:
  • Gap Global: positive 1 percent versus positive 4 percent last year
  • Banana Republic Global: negative 1 percent versus positive 5 percent last year
  • Old Navy Global: flat versus positive 9 percent last year

Third Quarter 2013 Net Sales Results

The following table details the company’s third quarter net sales:

($ in millions) Quarter Ended November 2, 2013

Gap Global

Old Navy Global

Banana Republic Global

Other (2)


Percentage of Net Sales
U.S. (1) $ 960 $ 1,371 $ 572 $ 155 $ 3,058 77 %
Canada 111 126 60 1 298 7 %
Europe 199 21 220 6 %
Asia 282 20 37 339 8 %
Other regions   53     8     61 2 %
Total $ 1,605 $ 1,517 $ 698 $ 156 $ 3,976 100 %

($ in millions) Quarter Ended October 27, 2012

Gap Global

Old Navy Global

Banana Republic Global

Other (2)


Percentage of Net Sales
U.S. (1) $ 966 $ 1,385 $ 572 $ 89 $ 3,012 78 %
Canada 102 126 60 288 8 %
Europe 187 19 206 5 %
Asia 264 3 39 306 8 %
Other regions   46     6     52 1 %
Total $ 1,565 $ 1,514 $ 696 $ 89 $ 3,864 100 %
(1) U.S. includes the United States, Puerto Rico, and Guam.
(2) Includes Piperlime, Athleta, and fiscal year 2013 includes Intermix.

Total online sales were $589 million for the thirteen weeks ended November 2, 2013 compared with $491 million for the third quarter last year.

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