Gap Inc. Reports October And Third Quarter Sales Results

The FINANCIAL — SAN FRANCISCO — Gap Inc. reported that net sales for the four-week period ended November 1, 2014 were $1.26 billion compared with net sales of $1.29 billion for the four-week period ended November 2, 2013. For the third quarter of fiscal year 2014, Gap Inc.’s net sales were $3.97 billion compared with $3.98 billion for the third quarter last year, according to Gap Inc.

“While we were disappointed in our October sales results, particularly at Gap, we look forward to presenting our improved product collections for the holiday season across all our brands,” said Glenn Murphy, chairman and chief executive officer, Gap Inc.

October Comparable Sales Results

Gap Inc.’s comparable sales for October 2014 were down 3 percent versus a 4 percent increase last year. Comparable sales by global brand for October 2014 were as follows:

Gap Global: negative 7 percent versus positive 5 percent last year
Banana Republic Global: negative 2 percent versus positive 1 percent last year
Old Navy Global: flat versus positive 2 percent last year

Third Quarter Comparable Sales Results

Gap Inc.’s comparable sales for the third quarter of fiscal year 2014 were down 2 percent versus a 1 percent increase last year. Comparable sales by global brand for the third quarter of fiscal year 2014 were as follows:

Gap Global: negative 5 percent versus positive 1 percent last year
Banana Republic Global: flat versus negative 1 percent last year
Old Navy Global: positive 1 percent versus flat last year

Third Quarter Guidance

For the third quarter of fiscal year 2014, the company expects diluted earnings per share to be in the range of $0.78 to $0.79 compared to diluted earnings per share of $0.72 for the third quarter of fiscal year 2013, according to Gap Inc.

The company noted that for the third quarter fiscal year 2014 it expects both gross margin rate and operating expenses to be better compared to guidance given with the company’s September 2014 sales announcement. In addition, the company’s expected diluted earnings per share range for the third quarter of fiscal year 2014 includes a non-recurring benefit of about $0.06 from a lower effective tax rate versus the third quarter of fiscal year 2013, primarily due to the recognition of certain foreign tax credits.