SAN FRANCISCO - May 24, 2013 - (BUSINESS WIRE) - Gap Inc. (NYSE:GPS) today reported that net sales for the first quarter, which ended May 4, 2013, increased 7 percent to $3.73 billion compared with $3.49 billion for the first quarter last year. Due to the 53rd week in fiscal year 2012, comparable sales for the first quarter of fiscal year 2013 are compared with the 13-week period ended May 5, 2012. On this basis, the company’s first quarter comparable sales increased 2 percent compared with a 4 percent increase in the first quarter last year.
“We are pleased with our strong start to the year, especially first quarter sales,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “We remain focused on continuing to deliver shareholder value.”
First quarter diluted earnings per share increased to $0.71 compared with $0.47 last year. The fiscal year 2013 first quarter diluted earnings per share included a positive impact from the calendar shift created by the 53rd week in fiscal year 2012 and a benefit from the favorable resolution of tax positions in the quarter. The company reaffirmed its fiscal year 2013 diluted earnings per share guidance of $2.52 to $2.60.
First Quarter Comparable Sales Results
Comparable sales for the first quarter of fiscal year 2013 were as follows:
Net Sales Results
The following table details the company’s first quarter net sales:
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(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 $509 million and $402 million for the thirteen weeks ended May 4, 2013 and April 28, 2012, respectively.
First quarter diluted earnings per share of $0.71 increased 51 percent compared with $0.47 for the first quarter last year. The fiscal year 2013 first quarter diluted earnings per share included a positive impact from the calendar shift created by the 53rd week in fiscal year 2012 and a benefit from the favorable resolution of tax positions in the quarter.
The company reaffirmed its full year 2013 diluted earnings per share guidance of $2.52 to $2.60.
The company continues to expect depreciation and amortization expense, net of amortization of lease incentives, for fiscal year 2013 to be about $475 million.
First quarter operating expenses were $1 billion, up $34 million compared with the first quarter of last year.
Marketing expenses for the quarter were $143 million, up $4 million compared with the first quarter of last year.
The company’s operating margin was 14.2 percent in the first quarter versus 11.3 percent last year.
The company continues to expect that operating margin for fiscal year 2013 will be about 13 percent.
The effective tax rate was 37.2 percent for the first quarter of fiscal year 2013 driven by favorable tax resolutions in the quarter. The company continues to expect its full year tax rate to be about 39 percent in fiscal year 2013.
On a year-over-year basis, inventory dollars per store were up 3 percent at the end of the first quarter of fiscal year 2013.
The company expects inventory dollars per store to be up in the mid-single digits at the end of the second quarter of fiscal year 2013 compared with the second quarter last year.
The company ended the first quarter of fiscal year 2013 with $1.6 billion in cash and cash equivalents. Year-to-date free cash flow, defined as net cash provided by operating activities less purchases of property and equipment, was an inflow of $205 million compared with an inflow of $216 million last year. 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.
First quarter share repurchases were $58 million and the company ended the first quarter of fiscal year 2013 with 466 million shares outstanding.
The company paid a dividend of $0.15 per share during the first quarter of fiscal year 2013.
Including this first quarter dividend, the company expects to pay $0.60 per share in dividends in fiscal year 2013.
Fiscal year-to-date, capital expenditures were $151 million.
For fiscal year 2013, the company continues to expect capital spending to be approximately $675 million in support of its outlined strategies.
The company ended the first quarter of fiscal year 2013 with a total of 3,428 store locations, 3,105 of which were company-operated.
During the first quarter of fiscal year 2013, the company opened 43 and closed 33 company-operated stores. Square footage of company-operated stores compared with the first quarter of fiscal year 2012 was flat.
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 continues to expect 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 first quarter fiscal year 2013 results during a 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: 2947786). International callers may dial 913-643-0954. The webcast can be accessed at www.gapinc.com.
The company will report May sales on June 6, 2013.
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 February 2, 2013, as well as the company’s subsequent filings with the Securities and Exchange Commission.
These forward-looking statements are based on information as of May 23, 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 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 3,100 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
Edie Kissko
415-427-4173
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.