SAN FRANCISCO - March 2, 2013 - (BUSINESS WIRE) - 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 addition, the company successfully executed on key real estate and expansion initiatives in fiscal year 2012:
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 53rd week.
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.
Net income for the 14 weeks ended February 2, 2013 was $351 million, or $0.73 per share on a diluted basis. This compares with net income of $218 million, or $0.44 per share on a diluted basis, for the 13 weeks ended January 28, 2012.
Comparable sales for the fourth quarter of fiscal year 2012 were as follows:
Net sales for the 53 weeks ended February 2, 2013, were $15.7 billion compared with net sales of $14.5 billion for the 52 weeks ended January 28, 2012. The company’s fiscal year 2012 comparable sales were up 5 percent compared with a 4 percent decrease last year.
For the 53 weeks ended February 2, 2013, the company reported net income of $1.1 billion, or $2.33 per share on a diluted basis, compared with net income of $833 million, or $1.56 per share on a diluted basis, for the 52 weeks ended January 28, 2012.
Comparable sales for fiscal year 2012 were as follows:
The following tables detail the company’s fourth quarter and fiscal year net sales:
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The company expects diluted earnings per share to be in the range of $2.52 to $2.60 for fiscal year 2013, or an 8 to 12 percent increase from the prior year.
The guidance contemplates some of the impact from the weakening Japanese Yen. The average rate in fiscal year 2012 for the Japanese Yen was about 80. Current spot rate of the Japanese Yen has weakened by about 15 percent, which means the company’s Japanese Yen-based net sales and earnings translate to fewer U.S. dollars.
Further, the company noted that the 53rd week in fiscal year 2012 creates a timing shift in the calendar for fiscal year 2013. For example, the first quarter of fiscal year 2013 begins on February 3, 2013 and ends on May 4, 2013. In fiscal year 2012, the first quarter began a week earlier on January 29, 2012, and ended on April 28, 2012. Therefore, the first quarter of fiscal year 2013 excludes January 29 through February 2 and now includes April 29 through May 4, a week that was part of the second quarter last year.
Fiscal year 2012 depreciation and amortization expense, net of amortization of lease incentives, was $483 million.
For fiscal year 2013, the company expects depreciation and amortization expense, net of amortization of lease incentives, to be about $475 million.
Fourth quarter operating expenses were $1.2 billion, up $141 million compared with last year. Full year operating expenses were $4.2 billion, up $393 million from the prior year.
Marketing expenses for the full year were $653 million, up $105 million compared with last year.
The company’s operating margin in fiscal year 2012 was 12.4 percent.
The company expects that operating margin for fiscal year 2013 will be about 13 percent.
The effective tax rate was 39.9 percent for the fourth quarter of fiscal year 2012. The effective tax rate for fiscal year 2012 was 39.0 percent.
For fiscal year 2013, the company expects the effective tax rate to be about 39 percent.
On a year-over-year basis, inventory dollars per store were up 5 percent at the end of the fourth quarter of fiscal year 2012, which is in line with comparable sales.
For fiscal year 2013, the company expects inventory dollars per store at the end of the first quarter to be up in the mid-single digits on a year-over-year basis over last year’s negative 7 percent.
The company ended the year with $1.5 billion in cash, cash equivalents, and short-term investments. For fiscal year 2012, free cash flow, defined as net cash provided by operating activities less purchases of property and equipment, was $1.3 billion compared with $815 million in fiscal year 2011. Please see the reconciliation of free cash flow, a non-GAAP financial measure, from the GAAP financial measure in the tables at the end of this press release.
During the fourth quarter of fiscal year 2012, the company repurchased about 18 million shares for $563 million. For fiscal year 2012, the company repurchased about 34 million shares for a total of $1 billion.
As announced in January, the company completed its previous $1 billion authorization and announced a new $1 billion share repurchase authorization, underscoring its continued commitment to returning excess cash to shareholders.
The company paid a dividend of $0.125 per share during the fourth quarter of fiscal year 2012, which was an increase of 11 percent compared with the fourth quarter last year.
In a separate press release today, the company announced that its Board of Directors approved a plan to increase the company’s annual dividend per share by 20 percent to $0.60 per share for fiscal year 2013. This is the fourth consecutive year Gap Inc. has increased its dividend.
Fiscal year 2012 capital expenditures were $659 million.
For fiscal year 2013, the company expects capital spending to be approximately $675 million in support of its outlined strategies.
The company ended fiscal year 2012 with 3,407 store locations in 47 countries, 3,095 of which are company-operated. Square footage of company-operated stores decreased 1 percent from the end of fiscal year 2011.
In fiscal year 2013, the company expects to open about 160 company-operated stores, focused on Athleta, Gap China, Old Navy Japan, and global outlet stores. The company expects that it will close about 80 company-operated stores. The closures are weighted towards Gap North America, consistent with the company’s previously stated strategy. Given its focus on growing through new channels and geographies, the company expects square footage to increase about 1 percent in fiscal year 2013.
Store count, openings, closings, and square footage for our stores are as follows:
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Katrina O’Connell, vice president of Corporate Finance and Investor Relations at Gap Inc., will host a summary of the company’s fourth quarter fiscal year 2012 results during a live conference call and webcast at approximately 2:00 p.m. Pacific Time today. Ms. O’Connell will be joined by Glenn Murphy, Gap Inc. chairman and chief executive officer, and Sabrina Simmons, Gap Inc. chief financial officer.
The conference call can be accessed by calling 1-855-5000-GPS or 1-855-500-0477 (participant passcode: 2364809). International callers may dial 913-643-0954. The webcast can be accessed at www.gapinc.com.
As previously announced, the company will begin reporting monthly sales results after market close. As such, February sales will be released via press release on March 7, 2013 at 1:00 p.m. Pacific Time. Beginning with February 2013 sales, additional insight into Gap Inc.’s sales performance can be obtained by calling 1-800-GAP-NEWS (1-800-427-6397). International callers may call 706-902-4949. The recording will be available at approximately 1:00 p.m. Pacific Time on March 7, 2013 and available for replay until 1:00 p.m. Pacific Time on March 15, 2013.
Given Gap Inc.’s new global brands structure and as outlined in the January sales press release, the company will shift from its current reporting format of Gap Inc., Gap North America, Banana Republic North America, Old Navy North America, and International comparable sales results to the following format: Gap Inc., Gap Global, Banana Republic Global, and Old Navy Global. Each global brand’s comparable sales results will now include the respective International results, in addition to the associated comparable online and outlet sales. The fiscal year 2012 and fiscal year 2011 historical comparable sales results in this new global structure can be accessed at www.gapinc.com.
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:
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause the company’s actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the following:
Additional information regarding factors that could cause results to differ can be found in the company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2012, as well as the company’s subsequent filings with the Securities and Exchange Commission.
These forward-looking statements are based on information as of February 28, 2013. The company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
Gap Inc. is a leading global specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Piperlime, Athleta, and Intermix brands. Fiscal year 2012 net sales were $15.7 billion. Gap Inc. products are available for purchase in more than 90 countries worldwide through about 3,000 company-operated stores, over 300 franchise stores, and e-commerce sites. For more information, please visit www.gapinc.com.
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Katrina O'Connell
415-427-2832
(Investor Relations)
Investor_relations@gap.com
Stacy Rollo
415-427-3543
(Media Relations)
press@gap.com
Gap Inc. is a leading global retailer offering clothing, accessories, and personal care products for men, women, and children under the Gap, Banana Republic, Old Navy, Athleta, and Intermix brands.