Gap posts profit as Q3 sales increase
Third quarter net sales at Gap Inc. of 4.04 billion dollars, were up 2 percent compared to last year, while comparable sales were up 1 percent year-over-year. The company's reported net income was 282 million dollars and adjusted net income was 260 million dollars.
The company anticipates that total company net sales could be down mid-single digits in the fourth quarter of fiscal 2022.
“We have sharpened our focus on execution to optimise profitability and cash flow, are bringing more rigour to our operations, and balancing our assortments in response to what our customers are telling us,” said Bob Martin, executive chairman and interim CEO, Gap Inc.
“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.” added Martin.
Gap reports Q3 trading results
The company’s online sales increased 5 percent and represented 39 percent of total net sales, while store sales increased 1 percent 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.
The company’s reported gross margin was 37.4 percent; adjusted gross margin, excluding 53 million dollars in impairment charges related to Yeezy Gap, was 38.7 percent, deleveraging 320 basis points versus last year.
Reported operating income was 186 million dollars and reported operating margin was 4.6 percent. Adjusted operating income was 156 million dollars; while adjusted operating margin was 3.9 percent.
Reported diluted earnings per share were 77 cents, while adjusted diluted earnings per share were 71 cents.
Gap Inc.’s performance across its nameplates
Old Navy net sales of 2.1 billion dollars were up 2 percent compared to last year driven by improved size and assortment balance and product acceptance offset by softness in the kids and baby category and demand from the lower-income consumer. Comparable sales were down 1 percent.
Gap net sales of 1.04 billion dollars were flat compared to last year 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 percent, while North America comparable sales were flat.
Net sales at Banana Republic of 517 million dollars were up 8 percent and comparable sales were up 10 percent.
Athleta net sales of 340 million dollars were up 6 percent compared to last year. The company said, 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. The brand’s comparable sales were flat.