Delaware | 1-7562 | 94-1697231 | ||
(State of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Two Folsom Street San Francisco, California | 94105 | |
(Address of principal executive offices) | (Zip Code) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
99.1 | Press Release dated May 18, 2017 announcing the Company's earnings for the first quarter ended April 29, 2017. |
THE GAP, INC. | |||
(Registrant) | |||
Date: May 18, 2017 | By: | /s/ Teri List-Stoll | |
Teri List-Stoll | |||
Executive Vice President and | |||
Chief Financial Officer |
Exhibit Number | Description |
99.1 | Press Release dated May 18, 2017 announcing the Company's earnings for the first quarter ended April 29, 2017. |
• | Reaffirmed Full-Year Earnings per Share Guidance Range of $1.95 to $2.05 |
• | Delivered Positive 2 Percent Comparable Sales Growth |
• | Distributed Approximately $190 Million to Shareholders Through Share Repurchases and Dividends |
• | Old Navy Global: positive 8 percent versus negative 6 percent last year |
• | Gap Global: negative 4 percent versus negative 3 percent last year |
• | Banana Republic Global: negative 4 percent versus negative 11 percent last year |
• | earnings per share for the first half and full fiscal year 2017; |
• | comparable sales for fiscal year 2017; |
• | net sales for fiscal year 2017; |
• | foreign exchange impact in fiscal year 2017; |
• | effective tax rate for fiscal year 2017; |
• | total inventory at the end of the first half of fiscal year 2017; |
• | capital expenditures for fiscal year 2017; |
• | costs related to rebuilding the Fishkill distribution center; |
• | store count at the end of fiscal year 2017 and new Athleta stores; |
• | insurance recovery for costs related to the fire at our Fishkill distribution center; and |
• | share repurchases in the second quarter of fiscal year 2017. |
• | the risk that additional information may arise during the company’s close process or as a result of subsequent events that would require the company to make adjustments to the unaudited financial information; |
• | the risk that the company or its franchisees will be unsuccessful in gauging apparel trends and changing consumer preferences; |
• | the highly competitive nature of the company’s business in the United States and internationally; |
• | the risk that failure to maintain, enhance and protect the company’s brand image could have an adverse effect on its results of operations; |
• | the risk that the failure to attract and retain key personnel, or effectively manage succession, could have an adverse impact on the company’s results of operations; |
• | the risk that trade matters could increase the cost or reduce the supply of apparel available to the company and adversely affect its business, financial condition, and results of operations; |
• | the risk that changes in the regulatory or administrative landscape could adversely affect the company’s financial condition, strategies, and results of operations; |
• | the risk that the company’s investments in omni-channel shopping initiatives may not deliver the results the company anticipates; |
• | the risk that if the company is unable to manage its inventory effectively, its gross margins will be adversely affected; |
• | the risk that the company is subject to data or other security breaches that may result in increased costs, violations of law, significant legal and financial exposure, and a loss of confidence in the company’s security measures, which could have an adverse effect on the company’s results of operations and reputation; |
• | the risk that foreign currency exchange rate fluctuations could adversely impact the company’s financial results; |
• | the risks to the company’s business, including its costs and supply chain, associated with global sourcing and manufacturing; |
• | the risk that changes in global economic conditions or consumer spending patterns could adversely impact the company’s results of operations; |
• | the risks to the company’s efforts to expand internationally, including its ability to operate under a global brand structure and operating in regions where it has less experience; |
• | the risks to the company’s reputation or operations associated with importing merchandise from foreign countries, including failure of the company’s vendors to adhere to its Code of Vendor Conduct; |
• | the risk that the company’s franchisees’ operation of franchise stores is not directly within the company’s control and could impair the value of its brands; |
• | the risk that the company or its franchisees will be unsuccessful in identifying, negotiating, and securing new store locations and renewing, modifying, or terminating leases for existing store locations effectively; |
• | the risk that comparable sales and margins will experience fluctuations; |
• | the risk that changes in the company’s credit profile or deterioration in market conditions may limit the company’s access to the capital markets and adversely impact its financial results or business initiatives; |
• | the risk that updates or changes to the company’s information technology systems may disrupt its operations; |
• | the risk that natural disasters, public health crises, political crises, or other catastrophic events could adversely affect the company’s operations and financial results, or those of its franchisees or vendors; |
• | the risk that reductions in income and cash flow from our marketing and servicing arrangement related to our private label and co-branded credit cards could adversely affect our operating results and cash flows; |
• | the risk that the adoption of new accounting pronouncements will impact future results; |
• | the risk that the company does not repurchase some or all of the shares it anticipates purchasing pursuant to its repurchase program; and |
• | the risk that the company will not be successful in defending various proceedings, lawsuits, disputes, claims, and audits. |
($ in millions) | April 29, 2017 | April 30, 2016 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,583 | $ | 1,313 | |||
Merchandise inventory | 1,961 | 1,958 | |||||
Other current assets | 575 | 674 | |||||
Total current assets | 4,119 | 3,945 | |||||
Property and equipment, net | 2,605 | 2,864 | |||||
Other long-term assets | 687 | 698 | |||||
Total assets | $ | 7,411 | $ | 7,507 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current maturities of debt | $ | 67 | $ | 424 | |||
Accounts payable | 1,119 | 1,108 | |||||
Accrued expenses and other current liabilities | 1,088 | 974 | |||||
Income taxes payable | 28 | 49 | |||||
Total current liabilities | 2,302 | 2,555 | |||||
Long-term liabilities: | |||||||
Long-term debt | 1,248 | 1,318 | |||||
Lease incentives and other long-term liabilities | 999 | 1,112 | |||||
Total long-term liabilities | 2,247 | 2,430 | |||||
Total stockholders' equity | 2,862 | 2,522 | |||||
Total liabilities and stockholders' equity | $ | 7,411 | $ | 7,507 |
13 Weeks Ended | |||||||
($ and shares in millions except per share amounts) | April 29, 2017 | April 30, 2016 | |||||
Net sales | $ | 3,440 | $ | 3,438 | |||
Cost of goods sold and occupancy expenses | 2,137 | 2,229 | |||||
Gross profit | 1,303 | 1,209 | |||||
Operating expenses | 1,049 | 987 | |||||
Operating income | 254 | 222 | |||||
Interest, net | 16 | 18 | |||||
Income before income taxes | 238 | 204 | |||||
Income taxes | 95 | 77 | |||||
Net income | $ | 143 | $ | 127 | |||
Weighted-average number of shares - basic | 399 | 398 | |||||
Weighted-average number of shares - diluted | 400 | 399 | |||||
Earnings per share - basic | $ | 0.36 | $ | 0.32 | |||
Earnings per share - diluted | $ | 0.36 | $ | 0.32 |
13 Weeks Ended | |||||||
($ in millions) | April 29, 2017 | April 30, 2016 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 143 | $ | 127 | |||
Depreciation and amortization (a) | 123 | 132 | |||||
Change in merchandise inventory | (133 | ) | (53 | ) | |||
Other, net | (42 | ) | (38 | ) | |||
Net cash provided by operating activities | 91 | 168 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (110 | ) | (139 | ) | |||
Insurance proceeds related to loss on property and equipment | 14 | — | |||||
Other | (3 | ) | (1 | ) | |||
Net cash used for investing activities | (99 | ) | (140 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuances under share-based compensation plans | 8 | 10 | |||||
Withholding tax payments related to vesting of stock units | (13 | ) | (17 | ) | |||
Repurchases of common stock | (96 | ) | — | ||||
Excess tax benefit from exercise of stock options and vesting of stock units | — | 1 | |||||
Cash dividends paid | (92 | ) | (91 | ) | |||
Net cash used for financing activities | (193 | ) | (97 | ) | |||
Effect of foreign exchange rate fluctuations on cash and cash equivalents | 1 | 12 | |||||
Net decrease in cash and cash equivalents | (200 | ) | (57 | ) | |||
Cash and cash equivalents at beginning of period | 1,783 | 1,370 | |||||
Cash and cash equivalents at end of period | $ | 1,583 | $ | 1,313 |
13 Weeks Ended | |||||||
($ in millions) | April 29, 2017 | April 30, 2016 | |||||
Net cash provided by operating activities | $ | 91 | $ | 168 | |||
Less: Purchases of property and equipment | (110 | ) | (139 | ) | |||
Add: Insurance proceeds related to loss on property and equipment (a) | 14 | — | |||||
Free cash flow | $ | (5 | ) | $ | 29 |
($ in millions) | Gap Global | Old Navy Global | Banana Republic Global | Other (2) | Total | Percentage of Net Sales | |||||||||||||||||
13 Weeks Ended April 29, 2017 | |||||||||||||||||||||||
U.S. (1) | $ | 668 | $ | 1,426 | $ | 437 | $ | 202 | $ | 2,733 | 79 | % | |||||||||||
Canada | 77 | 111 | 45 | 1 | 234 | 7 | % | ||||||||||||||||
Europe | 133 | — | 4 | — | 137 | 4 | % | ||||||||||||||||
Asia | 250 | 9 | 24 | — | 283 | 8 | % | ||||||||||||||||
Other regions | 30 | 16 | 7 | — | 53 | 2 | % | ||||||||||||||||
Total | $ | 1,158 | $ | 1,562 | $ | 517 | $ | 203 | $ | 3,440 | 100 | % | |||||||||||
($ in millions) | Gap Global | Old Navy Global | Banana Republic Global | Other (3) | Total | Percentage of Net Sales | |||||||||||||||||
13 Weeks Ended April 30, 2016 | |||||||||||||||||||||||
U.S. (1) | $ | 698 | $ | 1,328 | $ | 454 | $ | 178 | $ | 2,658 | 77 | % | |||||||||||
Canada | 70 | 98 | 47 | 1 | 216 | 6 | % | ||||||||||||||||
Europe | 144 | — | 14 | — | 158 | 5 | % | ||||||||||||||||
Asia | 280 | 50 | 26 | — | 356 | 11 | % | ||||||||||||||||
Other regions | 31 | 10 | 9 | — | 50 | 1 | % | ||||||||||||||||
Total | $ | 1,223 | $ | 1,486 | $ | 550 | $ | 179 | $ | 3,438 | 100 | % |
(1) | U.S. includes the United States, Puerto Rico, and Guam. |
(2) | Includes Athleta, Intermix, and Weddington Way. |
13 Weeks Ended April 29, 2017 | ||||||||||||||
Store Locations Beginning of Q1 | Store Locations Opened | Store Locations Closed | Store Locations End of Q1 | Square Feet (millions) | ||||||||||
Gap North America | 844 | — | 9 | 835 | 8.6 | |||||||||
Gap Asia | 311 | 2 | 6 | 307 | 2.9 | |||||||||
Gap Europe | 164 | — | 1 | 163 | 1.4 | |||||||||
Old Navy North America | 1,043 | 5 | 1 | 1,047 | 17.5 | |||||||||
Old Navy Asia | 13 | — | — | 13 | 0.2 | |||||||||
Banana Republic North America | 601 | — | 4 | 597 | 5.0 | |||||||||
Banana Republic Asia | 48 | 1 | — | 49 | 0.2 | |||||||||
Banana Republic Europe | 1 | — | 1 | — | — | |||||||||
Athleta North America | 132 | 1 | — | 133 | 0.6 | |||||||||
Intermix North America | 43 | — | 1 | 42 | 0.1 | |||||||||
Company-operated stores total | 3,200 | 9 | 23 | 3,186 | 36.5 | |||||||||
Franchise | 459 | 15 | 8 | 466 | N/A | |||||||||
Total | 3,659 | 24 | 31 | 3,652 | 36.5 |