☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-1697231 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Two Folsom Street, San Francisco, California | 94105 | |
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, $0.05 par value | GPS | The New York Stock Exchange |
Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
Emerging growth company | ☐ |
• | the impact of recent accounting pronouncements; |
• | recognition of revenue deferrals as revenue; |
• | unrealized gains and losses from designated cash flow hedges; |
• | total gross unrecognized tax benefits; |
• | the impact of losses due to indemnification obligations; |
• | the outcome of proceedings, lawsuits, disputes, and claims; |
• | structure and timing of completion of the planned separation transaction; |
• | process of completing the separation transaction, including estimated costs; |
• | anticipated strategic, financial, operational or other benefits of the separation transaction, including future financial performance of the independent companies following the proposed separation transaction; |
• | plans to restructure the Gap brand specialty fleet, including anticipated store closures and timing, impact to annualized sales, associated costs, and effect on annualized savings; |
• | investing in digital and customer capabilities, as well as store experience; |
• | increasing productivity by leveraging our scale and streamlining operations and processes; |
• | attracting and retaining strong talent in our businesses and functions; |
• | continuing to integrate social and environmental sustainability into business practices; |
• | investing strategically in the business while maintaining operating discipline and driving efficiency; |
• | continuing our investment in customer experience to drive higher customer engagement and loyalty; |
• | continuing to invest in strengthening brand awareness, customer acquisition, and digital capabilities; |
• | current cash balances and cash flows being sufficient to support our business operations, including growth initiatives, Gap specialty fleet rationalization efforts, and planned capital expenditures; |
• | ability to supplement near-term liquidity, if necessary, with our $500 million revolving credit facility or other available market instruments; |
• | the impact of the seasonality of our operations; |
• | dividend payments in fiscal 2019; and |
• | the impact of changes in internal control over financial reporting. |
• | the risks associated with our plan to separate into two independent publicly-traded companies, including that the separation may not be completed in accordance with the expected plans or anticipated timeframe, or at all; |
• | the risk that our plan to separate into two publicly-traded companies may not achieve some or all of the anticipated benefits; |
• | the risk that we or our franchisees will be unsuccessful in gauging apparel trends and changing consumer preferences; |
• | the highly competitive nature of our business in the United States and internationally; |
• | the risk that failure to maintain, enhance and protect our brand image could have an adverse effect on our results of operations; |
• | the risk that the failure to attract and retain key personnel, or effectively manage succession, could have an adverse impact on our results of operations; |
• | the risk that our investments in customer, digital, and omni-channel shopping initiatives may not deliver the results we anticipate; |
• | the risk that if we are unable to manage our inventory effectively, our gross margins will be adversely affected; |
• | the risk that we are 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 our security measures, which could have an adverse effect on our results of operations and our reputation; |
• | the risk that a failure of, or updates or changes to, our information technology (“IT”) systems may disrupt our operations; |
• | the risks to our business, including our 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 our results of operations; |
• | the risks to our efforts to expand internationally, including our ability to operate in regions where we have less experience; |
• | the risks to our reputation or operations associated with importing merchandise from foreign countries, including failure of our vendors to adhere to our Code of Vendor Conduct; |
• | the risk that our franchisees’ operation of franchise stores is not directly within our control and could impair the value of our brands; |
• | the risk that we or our 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 foreign currency exchange rate fluctuations could adversely impact our financial results; |
• | the risk that comparable sales and margins will experience fluctuations; |
• | the risk that changes in our credit profile or deterioration in market conditions may limit our access to the capital markets and adversely impact our financial results or our business initiatives; |
• | the risk that trade matters could increase the cost or reduce the supply of apparel available to us and adversely affect our business, financial condition, and results of operations; |
• | the risk that changes in the regulatory or administrative landscape could adversely affect our financial condition and results of operations; |
• | the risk that natural disasters, public health crises, political crises, negative global climate patterns, or other catastrophic events could adversely affect our operations and financial results, or those of our franchisees or vendors; |
• | the risk that reductions in income and cash flow from our credit card 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 we do not repurchase some or all of the shares we anticipate purchasing pursuant to our repurchase program; and |
• | the risk that we will not be successful in defending various proceedings, lawsuits, disputes, and claims. |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. |
Item 1. | Financial Statements. |
($ and shares in millions except par value) | May 4, 2019 | February 2, 2019 | May 5, 2018 | ||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 941 | $ | 1,081 | $ | 1,210 | |||||
Short-term investments | 272 | 288 | 164 | ||||||||
Merchandise inventory | 2,242 | 2,131 | 2,035 | ||||||||
Other current assets | 757 | 751 | 778 | ||||||||
Total current assets | 4,212 | 4,251 | 4,187 | ||||||||
Property and equipment, net of accumulated depreciation of $5,871, $5,755, and $6,025 | 3,129 | 2,912 | 2,791 | ||||||||
Operating lease assets | 5,732 | — | — | ||||||||
Other long-term assets | 547 | 886 | 607 | ||||||||
Total assets | $ | 13,620 | $ | 8,049 | $ | 7,585 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 994 | $ | 1,126 | $ | 1,072 | |||||
Accrued expenses and other current liabilities | 882 | 1,024 | 975 | ||||||||
Current portion of operating lease liabilities | 929 | — | — | ||||||||
Income taxes payable | 26 | 24 | 11 | ||||||||
Total current liabilities | 2,831 | 2,174 | 2,058 | ||||||||
Long-term liabilities: | |||||||||||
Long-term debt | 1,249 | 1,249 | 1,249 | ||||||||
Long-term operating lease liabilities | 5,597 | — | — | ||||||||
Lease incentives and other long-term liabilities | 372 | 1,073 | 1,081 | ||||||||
Total long-term liabilities | 7,218 | 2,322 | 2,330 | ||||||||
Commitments and contingencies (see Note 12) | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock $0.05 par value | |||||||||||
Authorized 2,300 shares for all periods presented; Issued and Outstanding 378, 378, and 387 shares | 19 | 19 | 19 | ||||||||
Additional paid-in capital | — | — | — | ||||||||
Retained earnings | 3,495 | 3,481 | 3,127 | ||||||||
Accumulated other comprehensive income | 57 | 53 | 51 | ||||||||
Total stockholders’ equity | 3,571 | 3,553 | 3,197 | ||||||||
Total liabilities and stockholders’ equity | $ | 13,620 | $ | 8,049 | $ | 7,585 |
13 Weeks Ended | |||||||
($ and shares in millions except per share amounts) | May 4, 2019 | May 5, 2018 | |||||
Net sales | $ | 3,706 | $ | 3,783 | |||
Cost of goods sold and occupancy expenses | 2,362 | 2,356 | |||||
Gross profit | 1,344 | 1,427 | |||||
Operating expenses | 1,028 | 1,198 | |||||
Operating income | 316 | 229 | |||||
Interest expense | 20 | 16 | |||||
Interest income | (6 | ) | (6 | ) | |||
Income before income taxes | 302 | 219 | |||||
Income taxes | 75 | 55 | |||||
Net income | $ | 227 | $ | 164 | |||
Weighted-average number of shares - basic | 379 | 389 | |||||
Weighted-average number of shares - diluted | 381 | 393 | |||||
Earnings per share - basic | $ | 0.60 | $ | 0.42 | |||
Earnings per share - diluted | $ | 0.60 | $ | 0.42 | |||
Cash dividends declared and paid per share | $ | 0.2425 | $ | 0.2425 |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Net income | $ | 227 | $ | 164 | |||
Other comprehensive income (loss), net of tax | |||||||
Foreign currency translation | (1 | ) | (7 | ) | |||
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $4 and $(6) | 9 | 28 | |||||
Reclassification adjustment for gains on derivative financial instruments, net of (tax) tax benefit of $(2) and $9 | (4 | ) | (6 | ) | |||
Other comprehensive income, net of tax | 4 | 15 | |||||
Comprehensive income | $ | 231 | $ | 179 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | ||||||||||||||||||||
($ and shares in millions except per share amounts) | Shares | Amount | Total | ||||||||||||||||||||
Balance as of February 3, 2018 | 389 | $ | 19 | $ | 8 | $ | 3,081 | $ | 36 | $ | 3,144 | ||||||||||||
Cumulative effect of a change in accounting principle related to revenue recognition | 36 | 36 | |||||||||||||||||||||
Net income | 164 | 164 | |||||||||||||||||||||
Other comprehensive loss, net of tax | 15 | 15 | |||||||||||||||||||||
Repurchases and retirement of common stock | (3 | ) | — | (40 | ) | (60 | ) | (100 | ) | ||||||||||||||
Issuance of common stock related to stock options and employee stock purchase plans | 1 | — | 20 | 20 | |||||||||||||||||||
Issuance of common stock and withholding tax payments related to vesting of stock units | — | — | (19 | ) | (19 | ) | |||||||||||||||||
Share-based compensation, net of estimated forfeitures | 31 | 31 | |||||||||||||||||||||
Common stock dividends ($0.2425 per share) | (94 | ) | (94 | ) | |||||||||||||||||||
Balance as of May 5, 2018 | 387 | $ | 19 | $ | — | $ | 3,127 | $ | 51 | $ | 3,197 | ||||||||||||
Balance as of February 2, 2019 | 378 | $ | 19 | — | $ | 3,481 | $ | 53 | $ | 3,553 | |||||||||||||
Cumulative effect of a change in accounting principle related to operating leases | (86 | ) | (86 | ) | |||||||||||||||||||
Net income | 227 | 227 | |||||||||||||||||||||
Other comprehensive loss, net of tax | 4 | 4 | |||||||||||||||||||||
Repurchases and retirement of common stock | (2 | ) | — | (15 | ) | (35 | ) | (50 | ) | ||||||||||||||
Issuance of common stock related to stock options and employee stock purchase plans | 1 | — | 10 | 10 | |||||||||||||||||||
Issuance of common stock and withholding tax payments related to vesting of stock units | 1 | — | (19 | ) | (19 | ) | |||||||||||||||||
Share-based compensation, net of forfeitures | 24 | 24 | |||||||||||||||||||||
Common stock dividends ($0.2425 per share) | (92 | ) | (92 | ) | |||||||||||||||||||
Balance as of May 4, 2019 | 378 | $ | 19 | $ | — | $ | 3,495 | $ | 57 | $ | 3,571 |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 227 | $ | 164 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 138 | 140 | |||||
Amortization of lease incentives | — | (14 | ) | ||||
Share-based compensation | 24 | 21 | |||||
Non-cash and other items | 7 | 7 | |||||
Gain on sale of building | (191 | ) | — | ||||
Deferred income taxes | 23 | 6 | |||||
Changes in operating assets and liabilities: | |||||||
Merchandise inventory | (83 | ) | (46 | ) | |||
Other current assets and other long-term assets | 25 | (40 | ) | ||||
Accounts payable | (100 | ) | (120 | ) | |||
Accrued expenses and other current liabilities | (37 | ) | (232 | ) | |||
Income taxes payable, net of prepaid and other tax-related items | 36 | 31 | |||||
Lease incentives and other long-term liabilities | 14 | 17 | |||||
Operating lease assets and liabilities, net | (54 | ) | — | ||||
Net cash provided by (used for) operating activities | 29 | (66 | ) | ||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (165 | ) | (138 | ) | |||
Purchase of building | (343 | ) | — | ||||
Proceeds from sale of building | 220 | — | |||||
Purchases of short-term investments | (69 | ) | (167 | ) | |||
Proceeds from sales and maturities of short-term investments | 86 | 3 | |||||
Purchase of Janie and Jack | (69 | ) | — | ||||
Other | — | (7 | ) | ||||
Net cash used for investing activities | (340 | ) | (309 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuances under share-based compensation plans | 10 | 20 | |||||
Withholding tax payments related to vesting of stock units | (19 | ) | (19 | ) | |||
Repurchases of common stock | (50 | ) | (100 | ) | |||
Cash dividends paid | (92 | ) | (94 | ) | |||
Net cash used for financing activities | (151 | ) | (193 | ) | |||
Effect of foreign exchange rate fluctuations on cash, cash equivalents, and restricted cash | — | (2 | ) | ||||
Net decrease in cash, cash equivalents, and restricted cash | (462 | ) | (570 | ) | |||
Cash, cash equivalents, and restricted cash at beginning of period | 1,420 | 1,799 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 958 | $ | 1,229 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest during the period | $ | 38 | $ | 38 | |||
Cash paid for income taxes during the period, net of refunds | $ | 18 | $ | 19 | |||
Cash paid for operating lease liabilities | $ | 301 | $ | — |
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Cash and cash equivalents, per Condensed Consolidated Balance Sheets | $ | 941 | $ | 1,210 | |||
Restricted cash included in other current assets | — | 1 | |||||
Restricted cash included in other long-term assets | 17 | 18 | |||||
Total cash, cash equivalents, and restricted cash, per Condensed Consolidated Statements of Cash Flows | $ | 958 | $ | 1,229 |
Fair Value Measurements at Reporting Date Using | |||||||||||||||
($ in millions) | May 4, 2019 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 222 | $ | 13 | $ | 209 | $ | — | |||||||
Short-term investments | 272 | 129 | 143 | — | |||||||||||
Derivative financial instruments | 27 | — | 27 | — | |||||||||||
Deferred compensation plan assets | 51 | 51 | — | — | |||||||||||
Other assets | 2 | — | — | 2 | |||||||||||
Total | $ | 574 | $ | 193 | $ | 379 | $ | 2 | |||||||
Liabilities: | |||||||||||||||
Derivative financial instruments | $ | 6 | $ | — | $ | 6 | $ | — | |||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||
($ in millions) | February 2, 2019 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 373 | $ | 26 | $ | 347 | $ | — | |||||||
Short-term investments | 288 | 125 | 163 | — | |||||||||||
Derivative financial instruments | 20 | — | 20 | — | |||||||||||
Deferred compensation plan assets | 48 | 48 | — | — | |||||||||||
Other assets | 2 | — | — | 2 | |||||||||||
Total | $ | 731 | $ | 199 | $ | 530 | $ | 2 | |||||||
Liabilities: | |||||||||||||||
Derivative financial instruments | $ | 11 | $ | — | $ | 11 | $ | — | |||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||
($ in millions) | May 5, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 642 | $ | 28 | $ | 614 | $ | — | |||||||
Short-term investments | 164 | 57 | 107 | — | |||||||||||
Derivative financial instruments | 26 | — | 26 | — | |||||||||||
Deferred compensation plan assets | 51 | 51 | — | — | |||||||||||
Total | $ | 883 | $ | 136 | $ | 747 | $ | — | |||||||
Liabilities: | |||||||||||||||
Derivative financial instruments | $ | 15 | $ | — | $ | 15 | $ | — |
($ in millions) | May 4, 2019 | February 2, 2019 | May 5, 2018 | ||||||||
Derivatives designated as cash flow hedges | $ | 610 | $ | 774 | $ | 865 | |||||
Derivatives not designated as hedging instruments | 666 | 660 | 647 | ||||||||
Total | $ | 1,276 | $ | 1,434 | $ | 1,512 |
($ in millions) | May 4, 2019 | February 2, 2019 | May 5, 2018 | ||||||||
Derivatives designated as cash flow hedges: | |||||||||||
Other current assets | $ | 20 | $ | 15 | $ | 12 | |||||
Other long-term assets | — | — | 3 | ||||||||
Accrued expenses and other current liabilities | 2 | 3 | 12 | ||||||||
Derivatives not designated as hedging instruments: | |||||||||||
Other current assets | 7 | 5 | 11 | ||||||||
Accrued expenses and other current liabilities | 4 | 8 | 3 | ||||||||
Total derivatives in an asset position | $ | 27 | $ | 20 | $ | 26 | |||||
Total derivatives in a liability position | $ | 6 | $ | 11 | $ | 15 |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Gain recognized in other comprehensive income | $ | 13 | $ | 22 |
Location and Amount of (Gain) Loss Recognized in Income | |||||||||||||||
13 Weeks Ended May 4, 2019 | 13 Weeks Ended May 5, 2018 | ||||||||||||||
($ in millions) | Cost of goods sold and occupancy expense | Operating expenses | Cost of goods sold and occupancy expense | Operating expenses | |||||||||||
Total amount of expense line items presented in the Condensed Consolidated Income Statement in which the effects of derivatives are recorded | $ | 2,362 | $ | 1,028 | $ | 2,356 | $ | 1,198 | |||||||
(Gain) recognized in income | |||||||||||||||
Derivatives designated as cash flow hedges | $ | (6 | ) | $ | — | $ | (3 | ) | $ | — | |||||
Derivatives not designated as hedging instruments | — | (9 | ) | — | (12 | ) | |||||||||
Total (gain) recognized in income | $ | (6 | ) | $ | (9 | ) | $ | (3 | ) | $ | (12 | ) |
13 Weeks Ended | |||||||
($ and shares in millions except average per share cost) | May 4, 2019 | May 5, 2018 | |||||
Number of shares repurchased (1) | 1.9 | 3.2 | |||||
Total cost | $ | 50 | $ | 100 | |||
Average per share cost including commissions | $ | 25.96 | $ | 31.22 |
(1) | Excludes shares withheld to settle employee statutory tax withholding related to the vesting of stock units. |
($ in millions) | Foreign Currency Translation | Cash Flow Hedges | Total | ||||||||
Balance at February 2, 2019 | $ | 47 | $ | 6 | $ | 53 | |||||
13 Weeks Ended May 4, 2019: | |||||||||||
Foreign currency translation | (1 | ) | — | (1 | ) | ||||||
Change in fair value of derivative financial instruments | — | 9 | 9 | ||||||||
Amounts reclassified from accumulated other comprehensive income | — | (4 | ) | (4 | ) | ||||||
Other comprehensive income (loss), net of tax | (1 | ) | 5 | 4 | |||||||
Balance at May 4, 2019 | $ | 46 | $ | 11 | $ | 57 | |||||
($ in millions) | Foreign Currency Translation | Cash Flow Hedges | Total | ||||||||
Balance at February 3, 2018 | $ | 64 | $ | (28 | ) | $ | 36 | ||||
13 Weeks Ended May 5, 2018: | |||||||||||
Foreign currency translation | (7 | ) | — | (7 | ) | ||||||
Change in fair value of derivative financial instruments | — | 28 | 28 | ||||||||
Amounts reclassified from accumulated other comprehensive income | — | (6 | ) | (6 | ) | ||||||
Other comprehensive income (loss), net of tax | (7 | ) | 22 | 15 | |||||||
Balance at May 5, 2018 | $ | 57 | $ | (6 | ) | $ | 51 |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Stock units | $ | 19 | $ | 16 | |||
Stock options | 4 | 4 | |||||
Employee stock purchase plan | 1 | 1 | |||||
Share-based compensation expense | 24 | 21 | |||||
Less: Income tax benefit | (6 | ) | (5 | ) | |||
Share-based compensation expense, net of tax | $ | 18 | $ | 16 |
13 Weeks Ended | |||
($ in millions) | May 4, 2019 | ||
Operating lease cost | $ | 296 | |
Variable lease cost | 165 | ||
Sublease income | (5 | ) | |
Net lease cost | $ | 456 |
($ in millions) | |||
Fiscal Year | |||
Remainder of 2019 | $ | 902 | |
2020 | 1,080 | ||
2021 | 953 | ||
2022 | 856 | ||
2023 | 753 | ||
Thereafter | 3,537 | ||
Total minimum lease payments | 8,081 | ||
Less: Interest | (1,555 | ) | |
Present value of operating lease liabilities | 6,526 | ||
Less: Current portion of operating lease liabilities | (929 | ) | |
Long-term operating lease liabilities | $ | 5,597 |
($ in millions) | |||
Fiscal Year | |||
2019 | $ | 1,156 | |
2020 | 1,098 | ||
2021 | 892 | ||
2022 | 730 | ||
2023 | 539 | ||
Thereafter | 1,520 | ||
Total minimum lease commitments | $ | 5,935 |
13 Weeks Ended | |||||
(shares in millions) | May 4, 2019 | May 5, 2018 | |||
Weighted-average number of shares - basic | 379 | 389 | |||
Common stock equivalents | 2 | 4 | |||
Weighted-average number of shares - diluted | 381 | 393 |
($ in millions) | Old Navy Global | Gap Global | Banana Republic Global (2) | Other (3) | Total | Percentage of Net Sales | |||||||||||||||||
13 Weeks Ended May 4, 2019 | |||||||||||||||||||||||
U.S. (1) | $ | 1,641 | $ | 608 | $ | 487 | $ | 286 | $ | 3,022 | 82 | % | |||||||||||
Canada | 128 | 69 | 47 | 1 | 245 | 7 | |||||||||||||||||
Europe | — | 121 | 3 | — | 124 | 3 | |||||||||||||||||
Asia | 10 | 233 | 26 | — | 269 | 7 | |||||||||||||||||
Other regions | 20 | 21 | 5 | — | 46 | 1 | |||||||||||||||||
Total | $ | 1,799 | $ | 1,052 | $ | 568 | $ | 287 | $ | 3,706 | 100 | % | |||||||||||
($ in millions) | Old Navy Global | Gap Global | Banana Republic Global | Other (3) | Total | Percentage of Net Sales | |||||||||||||||||
13 Weeks Ended May 5, 2018 | |||||||||||||||||||||||
U.S. (1) | $ | 1,590 | $ | 680 | $ | 479 | $ | 269 | $ | 3,018 | 80 | % | |||||||||||
Canada | 127 | 77 | 50 | 1 | 255 | 7 | |||||||||||||||||
Europe | — | 135 | 4 | — | 139 | 4 | |||||||||||||||||
Asia | 12 | 284 | 25 | — | 321 | 8 | |||||||||||||||||
Other regions | 16 | 28 | 6 | — | 50 | 1 | |||||||||||||||||
Total | $ | 1,745 | $ | 1,204 | $ | 564 | $ | 270 | $ | 3,783 | 100 | % |
(1) | U.S. includes the United States, Puerto Rico, and Guam. |
(2) | Beginning on March 4, 2019, Banana Republic Global includes net sales for Janie and Jack brand. |
(3) | Primarily consists of net sales for the Athleta and Intermix brands. Beginning in the third quarter of fiscal year 2018, the Hill City brand is also included. |
($ in millions) | As of March 4, 2019 | ||
Inventory | $ | 34 | |
Property and equipment | 15 | ||
Operating lease assets | 51 | ||
Intangible assets | 37 | ||
Net assets acquired | 137 | ||
Operating lease liabilities | (64 | ) | |
Other liabilities | (4 | ) | |
Total consideration paid | $ | 69 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | Net sales for the first quarter of fiscal 2019 decreased 2 percent compared with the first quarter of fiscal 2018. |
• | Comparable sales for the first quarter of fiscal 2019 decreased 4 percent compared with a 1 percent increase for the first quarter of fiscal 2018. |
• | Gross profit for the first quarter of fiscal 2019 was $1.34 billion compared with $1.43 billion for the first quarter of fiscal 2018. Gross margin for the first quarter of fiscal 2019 was 36.3 percent compared with 37.7 percent for the first quarter of fiscal 2018. |
• | Operating margin for the first quarter of fiscal 2019 was 8.5 percent compared with 6.1 percent for the first quarter of fiscal 2018. Fiscal 2019 includes a positive impact from the gain on the sale of a building of approximately 5 percentage points. |
• | Net income for the first quarter of fiscal 2019 was $227 million compared with $164 million for the first quarter of fiscal 2018. |
• | Diluted earnings per share were $0.60 for the first quarter of fiscal 2019 compared with $0.42 for the first quarter of fiscal 2018. Fiscal 2019 includes about a $0.37 positive impact from the gain on the sale of a building. |
• | During the first quarter of fiscal 2019, we paid dividends of $92 million. |
• | During the first quarter of fiscal 2019, share repurchases were $50 million. |
• | offering product that is consistently brand-appropriate and on-trend with high customer acceptance, with a focus on expanding our advantage in core businesses and loyalty categories, with leading customer-focused product innovation; |
• | preparing for successful separation; |
• | restructuring the Gap brand specialty fleet globally to create a healthier, more profitable base from which to grow; |
• | investing in digital and customer capabilities as well as store experience to create a unique and differentiated converged retail experience that attracts new customers, retains existing customers, and builds loyalty; |
• | increasing productivity by leveraging our scale and streamlining operations and processes throughout the organization; |
• | attracting and retaining strong talent in our businesses and functions; and |
• | continuing to integrate social and environmental sustainability into business practices to support long term growth. |
13 Weeks Ended | |||||
May 4, 2019 | May 5, 2018 | ||||
Old Navy Global | (1 | )% | 3 | % | |
Gap Global | (10 | )% | (4 | )% | |
Banana Republic Global | (3 | )% | 3 | % | |
The Gap, Inc. | (4 | )% | 1 | % |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Net sales per average square foot (1) | $ | 75 | $ | 79 |
(1) | Excludes net sales associated with our online and franchise businesses. Online sales includes both sales through our online channels as well as ship-from-store sales. |
February 2, 2019 | 13 Weeks Ended May 4, 2019 | May 4, 2019 | ||||||||||||
Number of Store Locations | Number of Stores Opened | Number of Stores Closed | Number of Store Locations | Square Footage (in millions) | ||||||||||
Old Navy North America | 1,139 | 6 | 1 | 1,144 | 18.7 | |||||||||
Old Navy Asia | 15 | 1 | — | 16 | 0.2 | |||||||||
Gap North America | 758 | 1 | 15 | 744 | 7.7 | |||||||||
Gap Asia | 332 | 20 | 14 | 338 | 3.1 | |||||||||
Gap Europe | 152 | 1 | 1 | 152 | 1.2 | |||||||||
Banana Republic North America | 556 | 2 | 4 | 554 | 4.7 | |||||||||
Banana Republic Asia | 45 | 2 | 1 | 46 | 0.2 | |||||||||
Athleta North America | 161 | 4 | — | 165 | 0.7 | |||||||||
Intermix North America | 36 | — | — | 36 | 0.1 | |||||||||
Janie and Jack North America (1) | — | — | — | 140 | 0.2 | |||||||||
Company-operated stores total | 3,194 | 37 | 36 | 3,335 | 36.8 | |||||||||
Franchise | 472 | 46 | 4 | 514 | N/A | |||||||||
Total | 3,666 | 83 | 40 | 3,849 | 36.8 | |||||||||
Increase over prior year | 6.4 | % | 0.8 | % | ||||||||||
February 3, 2018 | 13 Weeks Ended May 5, 2018 | May 5, 2018 | ||||||||||||
Number of Store Locations | Number of Stores Opened | Number of Stores Closed | Number of Store Locations | Square Footage (in millions) | ||||||||||
Old Navy North America | 1,066 | 9 | 1 | 1,074 | 17.8 | |||||||||
Old Navy Asia | 14 | — | — | 14 | 0.2 | |||||||||
Gap North America | 810 | 3 | 7 | 806 | 8.4 | |||||||||
Gap Asia | 313 | 8 | 1 | 320 | 3.1 | |||||||||
Gap Europe | 155 | 3 | 3 | 155 | 1.3 | |||||||||
Banana Republic North America | 576 | 1 | 5 | 572 | 4.8 | |||||||||
Banana Republic Asia | 45 | 2 | 2 | 45 | 0.2 | |||||||||
Athleta North America | 148 | — | 1 | 147 | 0.6 | |||||||||
Intermix North America | 38 | — | — | 38 | 0.1 | |||||||||
Company-operated stores total | 3,165 | 26 | 20 | 3,171 | 36.5 | |||||||||
Franchise | 429 | 36 | 19 | 446 | N/A | |||||||||
Total | 3,594 | 62 | 39 | 3,617 | 36.5 | |||||||||
Decrease over prior year | (1.0 | )% | — | % |
(1) | On March 4, 2019, we acquired select assets of Gymboree, Inc. related to Janie and Jack. The 140 stores acquired were not included as store openings for fiscal 2019; however, they are included in the ending number of store locations as of May 4, 2019. |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Cost of goods sold and occupancy expenses | $ | 2,362 | $ | 2,356 | |||
Gross profit | $ | 1,344 | $ | 1,427 | |||
Cost of goods sold and occupancy expenses as a percentage of net sales | 63.7 | % | 62.3 | % | |||
Gross margin | 36.3 | % | 37.7 | % |
• | Cost of goods sold increased 1.2 percentage points as a percentage of net sales in the first quarter of fiscal 2019 compared with the first quarter of fiscal 2018, primarily driven by higher promotional activity. |
• | Occupancy expenses increased 0.2 percentage points as a percentage of net sales in the first quarter of fiscal 2019 compared with the first quarter of fiscal 2018, due to lower net sales without a corresponding decrease in occupancy expenses. |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Operating expenses | $ | 1,028 | $ | 1,198 | |||
Operating expenses as a percentage of net sales | 27.7 | % | 31.7 | % | |||
Operating margin | 8.5 | % | 6.1 | % |
• | higher information technology costs, operating expenses related to Janie and Jack, and higher store payroll at Old Navy Global; partially offset by |
• | a decrease in advertising expense, primarily for Gap Global and Old Navy Global, and lower store payroll at Gap Global. |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Interest expense | $ | 20 | $ | 16 |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Income taxes | $ | 75 | $ | 55 | |||
Effective tax rate | 24.8 | % | 25.1 | % |
• | an increase of $195 million primarily due to a lower bonus payout in fiscal 2019 compared with the bonus payout in fiscal 2018, which impacts accrued expenses and other current liabilities; partially offset by |
• | lower net income, after excluding the $191 million gain on the sale of a building, during the first quarter of fiscal 2019. |
• | $343 million purchase of a building during the first quarter of fiscal 2019; and |
• | $69 million purchase of Janie and Jack during the first quarter of fiscal 2019; partially offset by |
• | $220 million of proceeds received for the sale of a building during the first quarter of fiscal 2019; and |
• | $181 million fewer net purchases of available-for-sale debt securities during the first quarter of fiscal 2019 compared with the first quarter of fiscal 2018. |
13 Weeks Ended | |||||||
($ in millions) | May 4, 2019 | May 5, 2018 | |||||
Net cash provided by operating activities | $ | 29 | $ | (66 | ) | ||
Less: Purchases of property and equipment (1) | (165 | ) | (138 | ) | |||
Free cash flow | $ | (136 | ) | $ | (204 | ) |
(1) | Excludes purchase of building. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Total Number of Shares Purchased (1) | Average Price Paid Per Share Including Commissions | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or approximate dollar amount) of Shares that May Yet be Purchased Under the Plans or Programs (2) | ||||||||||
Month #1 (February 3 - March 2) | — | $ | — | — | $ | 1,000 | million | ||||||
Month #2 (March 3 - April 6) | 1,146,294 | $ | 25.97 | 1,146,294 | $ | 970 | million | ||||||
Month #3 (April 7 - May 4) | 780,103 | $ | 25.93 | 780,103 | $ | 950 | million | ||||||
Total | 1,926,397 | $ | 25.96 | 1,926,397 |
(1) | Excludes shares withheld to settle employee statutory tax withholding related to the vesting of stock units. |
(2) | On February 26, 2019, we announced that the Board of Directors approved a $1 billion share repurchase authorization, which superseded the February 2016 repurchase program and has no expiration date. |
Item 6. | Exhibits. |
10.1 | Agreement with Brent Hyder dated February 25, 2019 and confirmed on February 26, 2019. (1) | |
10.2 | Form of Non-Qualified Stock Option Agreement under the 2016 Long-Term Incentive Plan, filed as Exhibit 10.1 to Registrant's Form 8-K on March 15, 2019, Commission File No. 1-7562. | |
10.3 | Form of Restricted Stock Unit Agreement under the 2016 Long-Term Incentive Plan, filed as Exhibit 10.2 to Registrant's Form 8-K on March 15, 2019, Commission File No. 1-7562. | |
10.4 | Form of Performance Share Agreement under the 2016 Long-Term Incentive Plan, filed as Exhibit 10.3 to Registrant's Form 8-K on March 15, 2019, Commission File No. 1-7562. | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1) | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1) | |
32.1 | Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2) | |
32.2 | Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2) | |
101 | The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended May 4, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders' Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements. (1) |
(1) | Filed herewith. |
(2) | Furnished herewith. |
THE GAP, INC. | |||
Date: | May 31, 2019 | By | /s/ Arthur Peck |
Arthur Peck | |||
Chief Executive Officer | |||
Date: | May 31, 2019 | By | /s/ Teri List-Stoll |
Teri List-Stoll | |||
Executive Vice President and Chief Financial Officer |
Agreement with Brent Hyder dated February 25, 2019 and confirmed on February 26, 2019. (1) | ||
Form of Non-Qualified Stock Option Agreement under the 2016 Long-Term Incentive Plan, filed as Exhibit 10.1 to Registrant's Form 8-K on March 15, 2019, Commission File No. 1-7562. | ||
Form of Restricted Stock Unit Agreement under the 2016 Long-Term Incentive Plan, filed as Exhibit 10.2 to Registrant's Form 8-K on March 15, 2019, Commission File No. 1-7562. | ||
Form of Performance Share Agreement under the 2016 Long-Term Incentive Plan, filed as Exhibit 10.3 to Registrant's Form 8-K on March 15, 2019, Commission File No. 1-7562. | ||
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1) | ||
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1) | ||
Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2) | ||
Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2) | ||
101 | The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended May 4, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders' Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements. (1) |
(1) | Filed herewith. |
(2) | Furnished herewith. |
1. | I have reviewed this quarterly report on Form 10-Q of The Gap, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 31, 2019 | |
/s/ Arthur Peck | ||
Arthur Peck | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of The Gap, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 31, 2019 | |
/s/ Teri List-Stoll | ||
Teri List-Stoll | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 31, 2019 | |
/s/ Arthur Peck | ||
Arthur Peck | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 31, 2019 | |
/s/ Teri List-Stoll | ||
Teri List-Stoll | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |||||||||||||||||||||||||||||||||
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May 04, 2019 |
May 24, 2019 |
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Document Information [Line Items] | ||||||||||||||||||||||||||||||||||
Document Type | 10-Q | |||||||||||||||||||||||||||||||||
Amendment Flag | false | |||||||||||||||||||||||||||||||||
Entity Emerging Growth Company | false | |||||||||||||||||||||||||||||||||
Entity Small Business | false | |||||||||||||||||||||||||||||||||
Document Period End Date | May 04, 2019 | |||||||||||||||||||||||||||||||||
Lease, Cost [Table Text Block] | As of May 4, 2019, the Company's finance leases were not material to our Condensed Consolidated Financial Statements. Net lease cost recognized on our Condensed Consolidated Statement of Income is summarized as follows:
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Document Fiscal Year Focus | 2019 | |||||||||||||||||||||||||||||||||
Document Fiscal Period Focus | Q1 | |||||||||||||||||||||||||||||||||
Trading Symbol | GPS | |||||||||||||||||||||||||||||||||
Entity Registrant Name | GAP INC | |||||||||||||||||||||||||||||||||
Entity Central Index Key | 0000039911 | |||||||||||||||||||||||||||||||||
Current Fiscal Year End Date | --02-01 | |||||||||||||||||||||||||||||||||
Entity Filer Category | Large Accelerated Filer | |||||||||||||||||||||||||||||||||
Entity Common Stock, Shares Outstanding | 377,971,511 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions |
May 04, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
---|---|---|---|
Property and equipment, accumulated depreciation | $ 5,871 | $ 5,755 | $ 6,025 |
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 | $ 0.05 |
Common stock, shares authorized (in shares) | 2,300 | 2,300 | 2,300 |
Common stock, shares issued (in shares) | 378 | 378 | 387 |
Common stock, shares outstanding (in shares) | 378 | 378 | 387 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
May 04, 2019 |
May 05, 2018 |
|||
Net Sales | [1] | $ 3,706 | $ 3,783 | |
Cost of goods sold and occupancy expenses | 2,362 | 2,356 | ||
Gross profit | 1,344 | 1,427 | ||
Operating Expenses | 1,028 | 1,198 | ||
Operating income | 316 | 229 | ||
Interest Expense | 20 | 16 | ||
Interest income | (6) | (6) | ||
Income before income taxes | 302 | 219 | ||
Income taxes | 75 | 55 | ||
Net income | $ 227 | $ 164 | ||
Weighted-average number of shares - basic (in shares) | 379 | 389 | ||
Weighted-average number of shares - diluted (in shares) | 381 | 393 | ||
Earnings per share - basic (in dollars per share) | $ 0.60 | $ 0.42 | ||
Earnings per share - diluted (in dollars per share) | 0.60 | 0.42 | ||
Cash dividends declared and paid per share (in dollars per share) | $ 0.2425 | $ 0.2425 | ||
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
May 04, 2019 |
May 05, 2018 |
|
Net income | $ 227 | $ 164 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation | (1) | (7) |
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $3, $(12), $(3) and $(8) | 9 | 28 |
Reclassification adjustment for gains on derivative financial instruments, net of (tax) tax benefit of $-, $-, $9 and $(2) | (4) | (6) |
Other comprehensive income (loss), net of tax | 4 | 15 |
Comprehensive income | $ 231 | $ 179 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
May 04, 2019 |
May 05, 2018 |
|
Change in fair value of derivative financial instruments, net of tax (tax benefit) | $ 4 | $ (6) |
Reclassification adjustment for (gains) losses on derivative financial instruments, net of (tax) tax benefit | $ (2) | $ 9 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY CONSOLIDATED STATEMENTS OF STOCKHOLDERS" EQUITY (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
May 04, 2019 |
May 05, 2018 |
|
Statement of Stockholders' Equity [Abstract] | ||
Common Stock, Dividends, Per Share, Declared | $ 0.2425 | $ 0.2425 |
Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 04, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Significant Accounting Policies [Text Block] | Note 1. Accounting Policies Basis of Presentation The Condensed Consolidated Balance Sheets as of May 4, 2019 and May 5, 2018, and the Condensed Consolidated Statements of Income, the Condensed Consolidated Statements of Comprehensive Income, the Condensed Consolidated Statements of Stockholders' Equity, and the Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended May 4, 2019 and May 5, 2018 have been prepared by The Gap, Inc. (the “Company,” “we,” and “our”). In the opinion of management, such statements include all adjustments (which include normal recurring adjustments) considered necessary to present fairly our financial position, results of operations, stockholders' equity, and cash flows as of May 4, 2019 and May 5, 2018 and for all periods presented. The Condensed Consolidated Balance Sheet as of February 2, 2019 has been derived from our audited financial statements. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted from these interim financial statements, although the Company believes that the disclosures made are adequate to make the information not misleading. We suggest that you read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019. The results of operations for the thirteen weeks ended May 4, 2019 are not necessarily indicative of the operating results that may be expected for the 52-week period ending February 1, 2020. Accounting Pronouncements Recently Adopted ASU No. 2016-02, Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No. 2016-02, Leases. Under the new guidance, lessees are required to recognize a lease liability and a right-of-use asset for leases at the commencement date. We adopted ASU No. 2016-02 and related amendments (collectively "ASC 842") on February 3, 2019 using the optional transition method, which allows for the prospective application of the standard. As of the effective date, we recorded a decrease to opening retained earnings of $86 million, net of tax, which consisted primarily of impairments for certain store and operating lease assets. In addition, we elected the package of practical expedients permitted under the transition guidance within the standard, which allowed us to carry forward our historical lease classification, to not reassess prior conclusions related to initial direct costs, and to not reassess whether any expired or existing contracts are or contain leases. We also elected the lessee practical expedient to combine lease and nonlease components for new leases and modified leases. The adoption of ASC 842 resulted in the recording of operating lease assets and operating lease liabilities of $5.7 billion and $6.6 billion, respectively, on our Condensed Consolidated Balance Sheet as of February 3, 2019. See Note 9 of Notes to Condensed Consolidated Financial Statements for information regarding required disclosures related to our leases. ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The amendments are intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. In addition, this guidance amends and expands disclosure requirements. We adopted this ASU on a prospective basis on February 3, 2019. The adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements. See Note 5 of Notes to Condensed Consolidated Financial Statements for information regarding derivative financial instruments. Accounting Pronouncements Not Yet Adopted Except as noted below, the Company has considered all recent accounting pronouncements and concluded that there are no recent accounting pronouncements that may have a material impact on our Condensed Consolidated Financial Statements, based on current information. ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU is intended to align the requirements for capitalization of implementation costs incurred in a cloud computing arrangement that is a service contract with the existing guidance for internal-use software. This guidance is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The guidance provides flexibility in adoption, allowing for either retrospective adjustment or prospective adjustment for all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact this guidance may have on our Consolidated Financial Statements and related disclosures. Restricted Cash Any cash that is legally restricted from use is classified as restricted cash. If the purpose of restricted cash is related to acquiring a long-term asset, liquidating a long-term liability, or is otherwise unavailable for a period longer than one year from the balance sheet date, the restricted cash is included within other long-term assets on our Condensed Consolidated Balance Sheets. Otherwise, restricted cash is included within other current assets on our Condensed Consolidated Balance Sheets. As of May 4, 2019, restricted cash primarily included consideration that serves as collateral for our insurance obligations. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within our Condensed Consolidated Balance Sheets to the total shown on our Condensed Consolidated Statements of Cash Flows:
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Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Basis of Presentation The Condensed Consolidated Balance Sheets as of May 4, 2019 and May 5, 2018, and the Condensed Consolidated Statements of Income, the Condensed Consolidated Statements of Comprehensive Income, the Condensed Consolidated Statements of Stockholders' Equity, and the Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended May 4, 2019 and May 5, 2018 have been prepared by The Gap, Inc. (the “Company,” “we,” and “our”). In the opinion of management, such statements include all adjustments (which include normal recurring adjustments) considered necessary to present fairly our financial position, results of operations, stockholders' equity, and cash flows as of May 4, 2019 and May 5, 2018 and for all periods presented. The Condensed Consolidated Balance Sheet as of February 2, 2019 has been derived from our audited financial statements. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted from these interim financial statements, although the Company believes that the disclosures made are adequate to make the information not misleading. We suggest that you read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019. The results of operations for the thirteen weeks ended May 4, 2019 are not necessarily indicative of the operating results that may be expected for the 52-week period ending February 1, 2020. |
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Recent Accounting Pronouncements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted ASU No. 2016-02, Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No. 2016-02, Leases. Under the new guidance, lessees are required to recognize a lease liability and a right-of-use asset for leases at the commencement date. We adopted ASU No. 2016-02 and related amendments (collectively "ASC 842") on February 3, 2019 using the optional transition method, which allows for the prospective application of the standard. As of the effective date, we recorded a decrease to opening retained earnings of $86 million, net of tax, which consisted primarily of impairments for certain store and operating lease assets. In addition, we elected the package of practical expedients permitted under the transition guidance within the standard, which allowed us to carry forward our historical lease classification, to not reassess prior conclusions related to initial direct costs, and to not reassess whether any expired or existing contracts are or contain leases. We also elected the lessee practical expedient to combine lease and nonlease components for new leases and modified leases. The adoption of ASC 842 resulted in the recording of operating lease assets and operating lease liabilities of $5.7 billion and $6.6 billion, respectively, on our Condensed Consolidated Balance Sheet as of February 3, 2019. See Note 9 of Notes to Condensed Consolidated Financial Statements for information regarding required disclosures related to our leases. ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The amendments are intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. In addition, this guidance amends and expands disclosure requirements. We adopted this ASU on a prospective basis on February 3, 2019. The adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements. See Note 5 of Notes to Condensed Consolidated Financial Statements for information regarding derivative financial instruments. Accounting Pronouncements Not Yet Adopted Except as noted below, the Company has considered all recent accounting pronouncements and concluded that there are no recent accounting pronouncements that may have a material impact on our Condensed Consolidated Financial Statements, based on current information. ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU is intended to align the requirements for capitalization of implementation costs incurred in a cloud computing arrangement that is a service contract with the existing guidance for internal-use software. This guidance is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The guidance provides flexibility in adoption, allowing for either retrospective adjustment or prospective adjustment for all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact this guidance may have on our Consolidated Financial Statements and related disclosures. |
Revenue Revenue |
3 Months Ended |
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May 04, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | Revenue The Company’s revenues include merchandise sales at stores, online, and through franchise agreements. We also receive revenue sharing from our credit card agreement for private label and co-branded credit cards, and breakage revenue related to our gift cards, credit vouchers, and outstanding loyalty points. Breakage revenue is recognized based upon historical redemption patterns. For online sales and catalog sales, the Company has elected to treat shipping and handling as fulfillment activities and not a separate performance obligation. Accordingly, we recognize revenue for our single performance obligation related to online sales and catalog sales at the time control of the merchandise passes to the customer, which is generally at the time of shipment. We also record an allowance for estimated returns based on our historical return patterns and various other assumptions that management believes to be reasonable. Revenues are presented net of any taxes collected from customers and remitted to governmental authorities. Our credit card agreement provides for certain payments to be made to us, including a share of revenue from the performance of the credit card portfolios and reimbursements of loyalty program discounts. We have identified separate performance obligations related to our credit card agreement that include both providing a license and an obligation to redeem loyalty points issued under the loyalty rewards program. Our obligation to provide a license is satisfied when the subsequent sale or usage occurs and our obligation to redeem loyalty points is deferred until those loyalty points are redeemed. Income related to our credit card agreement is classified within net sales on our Condensed Consolidated Statements of Income. We also have franchise agreements with unaffiliated franchisees to operate Gap, Banana Republic, and Old Navy stores in a number of countries throughout Asia, Europe, Latin America, the Middle East, and Africa. Under these agreements, third parties operate, or will operate, stores that sell apparel and related products under our brand names. We have identified separate performance obligations related to our franchise agreements that include both providing our franchise partners with a license and an obligation to supply franchise partners with our merchandise. Our obligation to provide a license is satisfied when the subsequent sale or usage occurs and our obligation to supply franchise partners with our merchandise is satisfied when control of the merchandise transfers. As of the quarter ended May 4, 2019 and May 5, 2018, there were no material contract liabilities related to our franchise agreements. We defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards, credit vouchers, outstanding loyalty points, and reimbursements of loyalty program discounts associated with our credit card agreement. For the thirteen weeks ended May 4, 2019, the opening and closing balance of deferred revenue for these obligations was $227 million and $206 million, respectively; $97 million of the opening balance was recognized as revenue during the period. For the thirteen weeks ended May 5, 2018, the opening and closing balance of deferred revenue for these obligations was $232 million and $201 million, respectively; $97 million of the opening balance was recognized as revenue during the period. We expect that the majority of our revenue deferrals as of the quarter ended May 4, 2019, will be recognized as revenue in the next 12 months as our performance obligations are satisfied. See Note 13 of Notes to Condensed Consolidated Financial Statements for disaggregation of revenue by brand and by region. |
Debt and Credit Facilities |
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May 04, 2019 | |
Debt Disclosure [Abstract] | |
Debt and Credit Facilities | Debt and Credit Facilities As of May 4, 2019, February 2, 2019, and May 5, 2018, the estimated fair value of our $1.25 billion aggregate principal amount of 5.95 percent notes (the “Notes”) due April 2021 was $1.30 billion, $1.30 billion, and $1.31 billion, respectively, and was based on the quoted market price of the Notes (level 1 inputs) as of the last business day of the respective fiscal quarter. The aggregate principal amount of the Notes is recorded in long-term debt on the Condensed Consolidated Balance Sheets, net of the unamortized discount. We have a $500 million, five-year, unsecured revolving credit facility (the “Facility”), which is scheduled to expire in May 2023. There were no borrowings and no material outstanding standby letters of credit under the Facility as of May 4, 2019. We maintain multiple agreements with third parties that make unsecured revolving credit facilities available for our operations in foreign locations (the “Foreign Facilities”). These Foreign Facilities are uncommitted and are generally available for borrowings, overdraft borrowings, and the issuance of bank guarantees. The total capacity of the Foreign Facilities was $57 million as of May 4, 2019. As of May 4, 2019, there were no borrowings under the Foreign Facilities. There were $16 million in bank guarantees issued and outstanding primarily related to store leases under the Foreign Facilities as of May 4, 2019. We have bilateral unsecured standby letter of credit agreements that are uncommitted and do not have expiration dates. As of May 4, 2019, we had $13 million in standby letters of credit issued under these agreements. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives and available-for-sale debt securities. The Company categorizes financial assets and liabilities recorded at fair value based upon a three-level hierarchy that considers the related valuation techniques. There were no purchases, sales, issuances, or settlements related to recurring level 3 measurements during the thirteen weeks ended May 4, 2019 or May 5, 2018. There were no transfers of financial assets or liabilities into or out of level 1, level 2, and level 3 during the thirteen weeks ended May 4, 2019 or May 5, 2018. Financial Assets and Liabilities Financial assets and liabilities measured at fair value on a recurring basis and cash equivalents are as follows:
We have highly liquid investments classified as cash equivalents, which are placed primarily in time deposits, money market funds, and commercial paper. With the exception of our available-for-sale investments noted below, we value these investments at their original purchase prices plus interest that has accrued at the stated rate. Our available-for-sale securities are comprised of investments in debt securities. These securities are recorded at fair value using market prices. As of May 4, 2019 and May 5, 2018, the Company held $272 million and $164 million, respectively, of available-for-sale debt securities with maturity dates greater than three months and less than two years within short-term investments on the Condensed Consolidated Balance Sheets. In addition, as of May 4, 2019 and May 5, 2018, the Company held $35 million of available-for-sale debt securities with maturities of less than three months at the time of purchase within cash and cash equivalents on the Condensed Consolidated Balance Sheets. Unrealized gains or losses on available-for-sale debt securities included within accumulated other comprehensive income were immaterial as of May 4, 2019 and May 5, 2018. The Company regularly reviews its available-for-sale debt securities for other-than-temporary impairment. For the thirteen weeks ended May 4, 2019 and May 5, 2018, the Company did not consider any of its securities to be other-than-temporarily impaired and, accordingly, did not recognize any impairment loss. Derivative financial instruments primarily include foreign exchange forward contracts. The currencies hedged against changes in the U.S. dollar are Canadian dollars, Japanese yen, British pounds, Euro, Mexican pesos, Chinese yuan, and Taiwan dollars. The fair value of the Company’s derivative financial instruments is determined using pricing models based on current market rates. Derivative financial instruments in an asset position are recorded in other current assets or other long-term assets on the Condensed Consolidated Balance Sheets. Derivative financial instruments in a liability position are recorded in accrued expenses and other current liabilities or lease incentives and other long-term liabilities on the Condensed Consolidated Balance Sheets. We maintain the Gap Inc. Deferred Compensation Plan (“DCP”), which allows eligible employees and non-employee directors to defer base compensation up to a maximum percentage. Plan investments are directed by participants and are recorded at market value and designated for the DCP. The fair value of the Company’s DCP assets is determined based on quoted market prices, and the assets are recorded in other long-term assets on the Condensed Consolidated Balance Sheets. Nonfinancial Assets We review the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of the long-lived assets is determined using level 3 inputs and based on discounted future cash flows of the asset or asset group using a discount rate commensurate with the risk. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores, is primarily at the store level. There were no material impairment charges recorded for long-lived assets for the thirteen weeks ended May 4, 2019, or May 5, 2018. As discussed in Note 1, we recorded a decrease to opening retained earnings due to the adoption of ASC 842 related to impairments as of the effective date. We review the carrying amount of goodwill and other indefinite-lived intangible assets for impairment annually and whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable. There were no impairment charges recorded for goodwill or other indefinite-lived intangible assets for the thirteen weeks ended May 4, 2019, or May 5, 2018. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. We use derivative financial instruments to manage our exposure to foreign currency exchange rate risk and do not enter into derivative financial contracts for trading purposes. Consistent with our risk management guidelines, we hedge a portion of our transactions related to merchandise purchases for foreign operations and certain intercompany transactions using foreign exchange forward contracts. These contracts are entered into with large, reputable, financial institutions that are monitored for counterparty risk. The currencies hedged against changes in the U.S. dollar are Canadian dollars, Japanese yen, British pounds, Euro, Mexican pesos, Chinese yuan, and Taiwan dollars. Cash flows from derivative financial instruments are classified as cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows. Cash Flow Hedges We designate the following foreign exchange forward contracts as cash flow hedges: (1) forward contracts used to hedge forecasted merchandise purchases and related costs denominated in U.S. dollars made by our international subsidiaries whose functional currencies are their local currencies; (2) forward contracts used to hedge forecasted intercompany royalty payments denominated in foreign currencies received by entities whose functional currencies are U.S. dollars; and (3) forward contracts used to hedge forecasted intercompany revenue transactions related to merchandise sold from our regional purchasing entity, whose functional currency is the U.S. dollar, to certain international subsidiaries in their local currencies. The foreign exchange forward contracts entered into to hedge forecasted merchandise purchases and related costs, intercompany royalty payments, and intercompany revenue transactions generally have terms of up to 24 months. The effective portion of the gain or loss on the derivative financial instruments is reported as a component of other comprehensive income and is recognized into income during the period in which the underlying transaction impacts the Condensed Consolidated Statements of Income. Net Investment Hedges We may also use foreign exchange forward contracts to hedge the net assets of international subsidiaries to offset the foreign currency translation and economic exposures related to our investment in these subsidiaries. Other Derivatives Not Designated as Hedging Instruments We use foreign exchange forward contracts to hedge our market risk exposure associated with foreign currency exchange rate fluctuations for certain intercompany balances denominated in currencies other than the functional currency of the entity with the intercompany balance. The gain or loss on the derivative financial instruments that represent economic hedges, as well as the remeasurement impact of the underlying intercompany balances, is recorded in operating expenses on the Condensed Consolidated Statements of Income in the same period and generally offset. Outstanding Notional Amounts We had foreign exchange forward contracts outstanding in the following notional amounts:
Quantitative Disclosures about Derivative Financial Instruments The fair values of foreign exchange forward contracts are as follows:
All of the unrealized gains and losses from designated cash flow hedges as of May 4, 2019, will be recognized into income within the next 12 months at the then-current values, which may differ from the fair values as of May 4, 2019, shown above. Our foreign exchange forward contracts are subject to master netting arrangements with each of our counterparties and such arrangements are enforceable in the event of default or early termination of the contract. We do not elect to offset the fair values of our derivative financial instruments on the Condensed Consolidated Balance Sheets, and as such, the fair values shown above represent gross amounts. The amounts subject to enforceable master netting arrangements were $2 million, $4 million, and $8 million as of May 4, 2019, February 2, 2019, and May 5, 2018, respectively. If we did elect to offset, the net amounts of our derivative financial instruments in an asset position would have been $25 million, $16 million, and $18 million and the net amounts of the derivative financial instruments in a liability position would have been $4 million, $7 million, and $7 million as of May 4, 2019, February 2, 2019, and May 5, 2018, respectively. See Note 4 of Notes to Condensed Consolidated Financial Statements for disclosures on the fair value measurements of our derivative financial instruments. The effective portion of gains and losses on foreign exchange forward contracts designated in a cash flow hedging relationship recorded in other comprehensive income, on a pre-tax basis, are as follows:
The pre-tax amounts recognized in income related to derivative instruments are as follows:
For the thirteen weeks ended May 4, 2019, and May 5, 2018, there were no amounts of gains or losses reclassified from accumulated other comprehensive income into net income for derivative financial instruments in net investment hedging relationships, as we did not sell or liquidate (or substantially liquidate) any of our hedged subsidiaries during the periods. |
Share Repurchases |
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Disclosure Share Repurchase Activity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchases | Share Repurchases Share repurchase activity is as follows:
__________
In February 2019, the Board of Directors approved a new $1.0 billion share repurchase authorization (the "February 2019 repurchase program") which superseded and replaced a February 2016 repurchase authorization. The February 2019 repurchase program had $950 million remaining as of May 4, 2019. The February 2016 repurchase authorization had $287 million remaining as of February 2, 2019. All of the share repurchases were paid for as of May 4, 2019, February 2, 2019, and May 5, 2018. All common stock repurchased is immediately retired. |
Accumulated Other Comprehensive Income |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income Changes in accumulated other comprehensive income by component, net of tax, are as follows:
See Note 5 of Notes to Condensed Consolidated Financial Statements for additional disclosures about reclassifications out of accumulated other comprehensive income and their corresponding effects within the respective line items on the Condensed Consolidated Statements of Income. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation Share-based compensation expense recognized on the Condensed Consolidated Statements of Income, primarily in operating expenses, is as follows:
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Leases Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Leases [Text Block] | Leases The Company is a party to many agreements involving commitments to make payments to third parties. The majority of our long-term contractual obligations relate to operating leases for our retail stores. We also lease some of our corporate facilities and distribution centers. These operating leases expire at various dates through fiscal 2040. Most store leases have a five-year base period and include options that allow us to extend the lease term beyond the initial base period, subject to terms agreed upon at lease inception. Some leases also include early termination options, which can be exercised under specific conditions. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We record our lease liabilities at the present value of the lease payments not yet paid, discounted at the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term. As the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We recognize operating lease cost over the estimated term of the lease, which includes options to extend lease terms that are reasonably certain of being exercised, starting when possession of the property is taken from the landlord, which normally includes a construction period prior to the store opening. When a lease contains a predetermined fixed escalation of the minimum rent, we recognize the related operating lease cost on a straight-line basis over the lease term. In addition, certain of our lease agreements include variable lease payments, such as payments based on a percentage of sales that are in excess of a predetermined level and/or increases based on a change in the consumer price index or fair market value. These variable lease payments are excluded from minimum lease payments and are included in the determination of lease cost when it is probable that the expense has been incurred and the amount can be reasonably estimated. As of May 4, 2019, the Company's finance leases were not material to our Condensed Consolidated Financial Statements. Net lease cost recognized on our Condensed Consolidated Statement of Income is summarized as follows:
As of May 4, 2019, the maturities of lease liabilities based on the total minimum lease commitment amount including options to extend lease terms that are reasonably certain of being exercised are as follows:
During the thirteen weeks ended May 4, 2019, additions of operating lease assets were $166 million. As of May 4, 2019, the minimum lease commitment amount for operating leases signed but not yet commenced, primarily for retail stores, was $274 million. As of May 4, 2019, the weighted-average remaining operating lease term was 8.6 years and the weighted-average discount rate was 4.7 percent for operating leases recognized on our Condensed Consolidated Financial Statements. In accordance with Accounting Standards Codification ("ASC") 840, Leases, the aggregate minimum non-cancelable annual lease payments under operating leases in effect on February 2, 2019 were as follows:
The total minimum lease commitment amount above does not include minimum sublease income of $12 million receivable in the future under non-cancelable sublease agreements. In addition, the total minimum lease commitment amount above excludes options to extend lease terms that are reasonably certain of being exercised. |
Income Taxes |
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May 04, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company conducts business globally, and as a result, files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the United States, Canada, France, the United Kingdom, China, Hong Kong, Japan, and India. We are no longer subject to U.S. federal income tax examinations for fiscal years before 2009, and with few exceptions, we are also no longer subject to U.S. state, local, or non-U.S. income tax examinations for fiscal years before 2008. The Company is in continual discussions with taxing authorities regarding tax matters in the various U.S. and foreign jurisdictions in the normal course of business. As of May 4, 2019, it is reasonably possible that we will recognize a decrease in gross unrecognized tax benefits within the next 12 months of up to $1 million, primarily due to the closing of audits. If we do recognize such a decrease in gross unrecognized tax benefits, the net impact on the Condensed Consolidated Statements of Income would not be material. |
Earnings Per Share |
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Earnings Per Share | Earnings Per Share Weighted-average number of shares used for earnings per share is as follows:
The above computations of weighted-average number of shares – diluted exclude 11 million and 5 million shares related to stock options and other stock awards for the thirteen weeks ended May 4, 2019 and May 5, 2018, respectively, as their inclusion would have an anti-dilutive effect on earnings per share. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are a party to a variety of contractual agreements under which we may be obligated to indemnify the other party for certain matters. These contracts primarily relate to our commercial contracts, operating leases, trademarks, intellectual property, financial agreements, and various other agreements. Under these contracts, we may provide certain routine indemnifications relating to representations and warranties (e.g., ownership of assets, environmental or tax indemnifications), or personal injury matters. The terms of these indemnifications range in duration and may not be explicitly defined. Generally, the maximum obligation under such indemnifications is not explicitly stated, and as a result, the overall amount of these obligations cannot be reasonably estimated. Historically, we have not made significant payments for these indemnifications. We believe that if we were to incur a loss in any of these matters, the loss would not have a material effect on our Condensed Consolidated Financial Statements taken as a whole. As a multinational company, we are subject to various proceedings, lawsuits, disputes, and claims (“Actions”) arising in the ordinary course of our business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. As of May 4, 2019, Actions filed against us included commercial, intellectual property, customer, and employment claims, including class action lawsuits. The plaintiffs in some Actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages and some are covered in part by insurance. As of May 4, 2019, February 2, 2019, and May 5, 2018, we recorded a liability for an estimated loss if the outcome of an Action is expected to result in a loss that is considered probable and reasonably estimable. The liability recorded as of May 4, 2019, February 2, 2019, and May 5, 2018, was not material for any individual Action or in total. Subsequent to May 4, 2019, and through the filing date of this Quarterly Report on Form 10-Q, no information has become available that indicates a change is required that would be material to our Condensed Consolidated Financial Statements taken as a whole. We cannot predict with assurance the outcome of Actions brought against us. Accordingly, developments, settlements, or resolutions may occur and impact income in the quarter of such development, settlement, or resolution. However, we do not believe that the outcome of any current Action would have a material effect on our Condensed Consolidated Financial Statements taken as a whole. |
Segment Information |
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Segment Information | Segment Information We identify our operating segments according to how our business activities are managed and evaluated. As of May 4, 2019, our operating segments included Old Navy Global, Gap Global, Banana Republic Global, Athleta, and Intermix. Each operating segment has a brand president who is responsible for various geographies and channels. Each of our brands serves customers through its store and online channels, allowing us to execute on our omni-channel strategy where customers can shop seamlessly across all of our brands in retail stores and online through desktop or mobile devices. We have determined that each of our operating segments share similar economic and other qualitative characteristics, and therefore the results of our operating segments were aggregated into one reportable segment as of May 4, 2019. We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments. Net sales by brand and region are as follows:
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Net sales by region are allocated based on the location of the store where the customer paid for and received the merchandise or the distribution center or store from which the products were shipped. |
Acquisition Acquisition |
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Business Combination Disclosure [Text Block] | Acquisition On March 4, 2019, the Company acquired select assets of Gymboree, Inc. related to Janie and Jack, a premium children's clothing brand, through a bankruptcy auction. We purchased intellectual property and property and equipment at the Janie and Jack store locations. We assumed the leases for the majority of Janie and Jack stores and entered into a separate transaction to purchase Janie and Jack inventory. The purchase price for the net assets acquired was $69 million. The total purchase price was allocated to the net tangible and intangible assets acquired based on their estimated fair values. Such estimated fair values require management to make estimates and judgments, especially with respect to intangible assets. Amounts recorded for assets acquired and liabilities assumed on the acquisition date were as follows:
The results of operations for Janie and Jack since the date of acquisition were not material to the Condensed Consolidated Statement of Income. |
Accounting Policies Restricted Cash (Policies) |
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May 04, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Restricted Cash Any cash that is legally restricted from use is classified as restricted cash. If the purpose of restricted cash is related to acquiring a long-term asset, liquidating a long-term liability, or is otherwise unavailable for a period longer than one year from the balance sheet date, the restricted cash is included within other long-term assets on our Condensed Consolidated Balance Sheets. Otherwise, restricted cash is included within other current assets on our Condensed Consolidated Balance Sheets. |
Accounting Policies Accounting Pronouncements Recently Adopted (Tables) |
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Schedule of Cash and Cash Equivalents [Table Text Block] | As of May 4, 2019, restricted cash primarily included consideration that serves as collateral for our insurance obligations. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within our Condensed Consolidated Balance Sheets to the total shown on our Condensed Consolidated Statements of Cash Flows:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets And Liabilities Measured At Fair Value On Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis and cash equivalents are as follows:
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Derivative Financial Instruments (Tables) |
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Foreign Exchange Forward Contracts Outstanding | We had foreign exchange forward contracts outstanding in the following notional amounts:
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Fair Values of Asset and Liability Derivative Financial Instruments | The fair values of foreign exchange forward contracts are as follows:
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Effects of Derivative Financial Instruments on OCI and Condensed Consolidated Statements of Income | The effective portion of gains and losses on foreign exchange forward contracts designated in a cash flow hedging relationship recorded in other comprehensive income, on a pre-tax basis, are as follows:
The pre-tax amounts recognized in income related to derivative instruments are as follows:
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Share Repurchases (Tables) |
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Disclosure Share Repurchase Activity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchase Activity | Share repurchase activity is as follows:
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Accumulated Other Comprehensive Income (Tables) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income by Component | Changes in accumulated other comprehensive income by component, net of tax, are as follows:
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Share-Based Compensation (Tables) |
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Share-Based Compensation Expense | Share-based compensation expense recognized on the Condensed Consolidated Statements of Income, primarily in operating expenses, is as follows:
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Leases Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost [Table Text Block] | As of May 4, 2019, the Company's finance leases were not material to our Condensed Consolidated Financial Statements. Net lease cost recognized on our Condensed Consolidated Statement of Income is summarized as follows:
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Lessee, Operating Lease, Liability, Maturity [Table Text Block] | In accordance with Accounting Standards Codification ("ASC") 840, Leases, the aggregate minimum non-cancelable annual lease payments under operating leases in effect on February 2, 2019 were as follows:
|
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Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | As of May 4, 2019, the maturities of lease liabilities based on the total minimum lease commitment amount including options to extend lease terms that are reasonably certain of being exercised are as follows:
|
Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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May 04, 2019 | |||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Number of Shares | Weighted-average number of shares used for earnings per share is as follows:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 04, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales by Brand and Region | Net sales by brand and region are as follows:
__________
|
Acquisition Acquisition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019 | |||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | Amounts recorded for assets acquired and liabilities assumed on the acquisition date were as follows:
|
Revenue Revenue (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
May 04, 2019 |
May 05, 2018 |
Feb. 02, 2019 |
Feb. 03, 2018 |
|
Revenue from Contract with Customer [Abstract] | ||||
Contract with Customer Liabilities for Franchise Agreements | $ 0 | $ 0 | ||
Contract with Customer, Liability | 206,000,000 | 201,000,000 | $ 227,000,000 | $ 232,000,000 |
Contract with Customer, Liability, Revenue Recognized | $ 97,000,000 | $ 97,000,000 |
Debt and Credit Facilities Long Term Debt (Details) - USD ($) $ in Millions |
May 04, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Total long-term debt | $ 1,249 | $ 1,249 | $ 1,249 |
Debt and Credit Facilities - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
May 04, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
|
5.95 Percent Notes Due April 2021 | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount of notes issued | $ 1,250 | ||
Notes, interest rate | 5.95% | ||
Estimated fair value | $ 1,300 | $ 1,300 | $ 1,310 |
Notes, maturity date | Apr. 12, 2021 | ||
Foreign Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 57 | ||
Borrowings | 0 | ||
Bank guarantees related to store leases | 16 | ||
Standby Letters of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Unsecured committed letter of credit amount | $ 13 | ||
Five-Year Unsecured Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Term | 5 years | ||
Maximum borrowing capacity | $ 500 | ||
Unsecured committed letter of credit amount | 0 | ||
Borrowings | $ 0 | ||
Expiration date | May 01, 2023 |
Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
May 04, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Document Period End Date | May 04, 2019 | ||
Assets: | |||
Cash equivalents | $ 222 | $ 373 | $ 642 |
Investments, Fair Value Disclosure | 272 | 288 | 164 |
Derivative financial instruments | 27 | 20 | 26 |
Deferred compensation plan assets | 51 | 48 | 51 |
Debt Securities, Available-for-sale | 2 | 2 | |
Assets, Fair Value Disclosure | 574 | 731 | 883 |
Liabilities: | |||
Derivative financial instruments | 6 | 11 | 15 |
Fair Value, Inputs, Level 1 [Member] | |||
Assets: | |||
Cash equivalents | 13 | 26 | 28 |
Investments, Fair Value Disclosure | 129 | 125 | 57 |
Derivative financial instruments | 0 | 0 | 0 |
Deferred compensation plan assets | 51 | 48 | 51 |
Debt Securities, Available-for-sale | 0 | 0 | |
Assets, Fair Value Disclosure | 193 | 199 | 136 |
Liabilities: | |||
Derivative financial instruments | 0 | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | |||
Assets: | |||
Cash equivalents | 209 | 347 | 614 |
Investments, Fair Value Disclosure | 143 | 163 | 107 |
Derivative financial instruments | 27 | 20 | 26 |
Deferred compensation plan assets | 0 | 0 | 0 |
Debt Securities, Available-for-sale | 0 | 0 | |
Assets, Fair Value Disclosure | 379 | 530 | 747 |
Liabilities: | |||
Derivative financial instruments | 6 | 11 | 15 |
Fair Value, Inputs, Level 3 [Member] | |||
Assets: | |||
Cash equivalents | 0 | 0 | 0 |
Investments, Fair Value Disclosure | 0 | 0 | 0 |
Derivative financial instruments | 0 | 0 | 0 |
Deferred compensation plan assets | 0 | 0 | 0 |
Debt Securities, Available-for-sale | 2 | 2 | |
Assets, Fair Value Disclosure | 2 | 2 | 0 |
Liabilities: | |||
Derivative financial instruments | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Additional Information (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
May 04, 2019 |
May 05, 2018 |
Feb. 02, 2019 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Other indefinite-lived intangible assets impairment charges | $ 0 | $ 0 | |
Other long-lived asset impairment charges | 0 | 0 | |
Goodwill impairment charges | 0 | 0 | |
Transfers into or out of level 2 | 0 | 0 | |
Transfers into or out of level 1 | 0 | 0 | |
Purchases, sales, issuances, or settlements related to recurring level 3 measurements | $ 0 | 0 | |
Document Period End Date | May 04, 2019 | ||
Available-for-sale Securities, Current | $ 272,000,000 | 164,000,000 | $ 288,000,000 |
Cash and Cash Equivalents, Fair Value Disclosure | 35,000,000 | 35,000,000 | |
Debt Securities, Available-for-sale, Unrealized Gain (Loss) | 0 | 0 | |
Other-than-temporary Impairment Loss, Debt Securities, Available-for-sale | $ 0 | $ 0 |
Derivative Financial Instruments - Foreign Exchange Contracts Outstanding to Sell Various Currencies (Details) - USD ($) $ in Millions |
May 04, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
---|---|---|---|
Derivative [Line Items] | |||
Derivative, Notional Amount | $ 1,276 | $ 1,434 | $ 1,512 |
Derivatives in cash flow hedging relationships | |||
Derivative [Line Items] | |||
Derivative, Notional Amount | 610 | 774 | 865 |
Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Notional Amount | $ 666 | $ 660 | $ 647 |
Derivative Financial Instruments - Fair Values of Asset and Liability Derivative Financial Instruments (Details) - USD ($) $ in Millions |
May 04, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
---|---|---|---|
Derivatives, Fair Value [Line Items] | |||
Derivative financial instruments, assets | $ 27 | $ 20 | $ 26 |
Derivative financial instruments, liabilities | 6 | 11 | 15 |
Foreign Exchange Forward Contract | |||
Derivatives, Fair Value [Line Items] | |||
Derivative financial instruments, assets | 27 | 20 | 26 |
Derivative financial instruments, liabilities | 6 | 11 | 15 |
Derivatives in cash flow hedging relationships | Foreign Exchange Forward Contract | Other Current Assets [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative financial instruments, assets | 20 | 15 | 12 |
Derivatives in cash flow hedging relationships | Foreign Exchange Forward Contract | Other Assets [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative financial instruments, assets | 0 | 0 | 3 |
Derivatives in cash flow hedging relationships | Foreign Exchange Forward Contract | Accrued Liabilities Current [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative financial instruments, liabilities | 2 | 3 | 12 |
Not Designated as Hedging Instrument | Foreign Exchange Forward Contract | Other Current Assets [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative financial instruments, assets | 7 | 5 | 11 |
Not Designated as Hedging Instrument | Foreign Exchange Forward Contract | Accrued Liabilities Current [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative financial instruments, liabilities | $ 4 | $ 8 | $ 3 |
Derivative Financial Instruments - Effects Of Derivative Financial Instruments On OCI And Condensed Consolidated Statements Of Income (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
May 04, 2019 |
May 05, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Cost of goods sold and occupancy expenses | $ 2,362 | $ 2,356 |
Operating Expenses | 1,028 | 1,198 |
Derivatives in net investment hedging relationships | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from accumulated OCI into income, effective portion, net | 0 | 0 |
Cost of Goods Sold and Occupancy Expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from accumulated OCI into income, effective portion, net | (6) | 0 |
Operating Expenses [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from accumulated OCI into income, effective portion, net | (9) | (12) |
Foreign Exchange Forward Contract | Derivatives in cash flow hedging relationships | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative instruments, gain (loss) recognized in OCI, effective portion, net | 13 | 22 |
Foreign Exchange Forward Contract | Cost of Goods Sold and Occupancy Expense | Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from accumulated OCI into income, effective portion, net | 0 | 0 |
Foreign Exchange Forward Contract | Cost of Goods Sold and Occupancy Expense | Derivatives in cash flow hedging relationships | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from accumulated OCI into income, effective portion, net | (6) | 0 |
Foreign Exchange Forward Contract | Operating Expenses [Member] | Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from accumulated OCI into income, effective portion, net | (9) | (12) |
Foreign Exchange Forward Contract | Operating Expenses [Member] | Derivatives in cash flow hedging relationships | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) reclassified from accumulated OCI into income, effective portion, net | $ 0 | $ 0 |
Derivative Financial Instruments - Additional Information (Details) - USD ($) $ in Millions |
May 04, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
---|---|---|---|
Derivative [Line Items] | |||
Amounts Subject to Enforceable Master Netting Arrangements | $ 2 | $ 4 | $ 8 |
Derivative assets, net of amount subject to master netting arrangement | 25 | 16 | 18 |
Derivative liabilities, net of amount subject to master netting arrangement | $ 4 | $ 7 | $ 7 |
Share Repurchase Activity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
May 04, 2019 |
May 05, 2018 |
|||
Disclosure Share Repurchase Activity [Abstract] | ||||
Number of shares repurchased | [1] | 1.9 | 3.2 | |
Total cost | $ 50 | $ 100 | ||
Average per share cost including commissions (in dollars per share) | $ 25.96 | $ 31.22 | ||
|
Share Repurchases - Additional Information (Details) - USD ($) $ in Millions |
May 04, 2019 |
Feb. 26, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
---|---|---|---|---|
Disclosure Share Repurchases Additional Information [Abstract] | ||||
Stock Repurchase Program, Authorized Amount | $ 1,000 | |||
Share repurchases, remaining amount | $ 950 | $ 287 | ||
Stock Repurchase Program Amount Not Paid | $ 0 | $ 0 | $ 0 |
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
May 04, 2019 |
May 05, 2018 |
Feb. 02, 2019 |
Feb. 03, 2018 |
|
Foreign currency translation | $ (1) | $ (7) | ||
Change in fair value of derivative financial instruments | 9 | 28 | ||
Amounts reclassified from accumulated other comprehensive income | (4) | (6) | ||
Other comprehensive income (loss), net of tax | 4 | 15 | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | 57 | 51 | $ 53 | $ 36 |
Accumulated Translation Adjustment [Member] | ||||
Foreign currency translation | (1) | (7) | ||
Change in fair value of derivative financial instruments | 0 | 0 | ||
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | ||
Other comprehensive income (loss), net of tax | (1) | (7) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | 46 | 57 | 47 | 64 |
Derivatives in cash flow hedging relationships | ||||
Foreign currency translation | 0 | 0 | ||
Change in fair value of derivative financial instruments | 9 | 28 | ||
Amounts reclassified from accumulated other comprehensive income | (4) | (6) | ||
Other comprehensive income (loss), net of tax | 5 | 22 | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ 11 | $ (6) | $ 6 | $ (28) |
Share-Based Compensation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
May 04, 2019 |
May 05, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 86 | |
Share-based compensation expense | 24 | $ 21 |
Less: Income tax benefit | (6) | (5) |
Share-based compensation expense, net of tax | 18 | 16 |
Stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 19 | 16 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 4 | 4 |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 1 | $ 1 |
Leases Lease cost (Details) $ in Millions |
3 Months Ended |
---|---|
May 04, 2019
USD ($)
| |
Leases [Abstract] | |
Operating Lease, Cost | $ 296 |
Variable Lease, Cost | 165 |
Sublease Income | (5) |
Lease, Cost | $ 456 |
Leases Minimum lease liability ASC 842 (Details) - USD ($) $ in Millions |
May 04, 2019 |
Feb. 03, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
---|---|---|---|---|
Leases [Abstract] | ||||
Lessee, Operating Lease, Liability, Payments, Due Year Two | $ 1,080 | |||
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year | 902 | |||
Lessee, Operating Lease, Liability, Payments, Due Year Three | 953 | |||
Lessee, Operating Lease, Liability, Payments, Due Year Four | 856 | |||
Lessee, Operating Lease, Liability, Payments, Due Year Five | 753 | |||
Operating Leases, Future Minimum Payments Receivable, Thereafter | 3,537 | |||
Lessee, Operating Lease, Liability, Payments, Due | 8,081 | |||
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | (1,555) | |||
Operating Lease, Liability, Current | (929) | $ 0 | $ 0 | |
Operating Lease, Liability | 6,526 | $ 6,600 | ||
Operating Lease, Liability, Noncurrent | $ 5,597 | $ 0 | $ 0 |
Leases Minimum lease liability ASC 840 (Details) $ in Millions |
Feb. 02, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 1,156 |
Operating Leases, Future Minimum Payments, Due in Two Years | 1,098 |
Operating Leases, Future Minimum Payments, Due in Three Years | 892 |
Operating Leases, Future Minimum Payments, Due in Four Years | 730 |
Operating Leases, Future Minimum Payments, Due Thereafter | 539 |
Operating Leases, Future Minimum Payments, Due Thereafter | 1,520 |
Operating Leases, Future Minimum Payments Due | $ 5,935 |
Leases Leases additional information (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
May 04, 2019 |
Feb. 02, 2019 |
|
Leases [Abstract] | ||
Operating Leases, Income Statement, Sublease Revenue | $ 12 | |
Latest Lease Expiration Date | Dec. 31, 2040 | |
Operating Lease, Right-of-Use Asset | $ 166 | |
Minimum Lease Commitment Signed Not Yet Commenced | $ 274 | |
Operating Lease, Weighted Average Remaining Lease Term | 8 years 219 days | |
Operating Lease, Weighted Average Discount Rate, Percent | 4.70% |
Income Taxes - Additional Information (Details) $ in Millions |
3 Months Ended |
---|---|
May 04, 2019
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Decrease In Gross Unrecognized Tax Benefits Within The Next 12 Months | $ 1 |
Benefit To Income Taxes If Decrease In Gross Unrecognized Tax Benefits Within 12 Months Are Recognized | $ 0 |
Earnings Per Share - Weighted Average Number of Shares (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
May 04, 2019 |
May 05, 2018 |
|
Earnings Per Share [Abstract] | ||
Weighted-average number of shares - basic (in shares) | 379 | 389 |
Common stock equivalents (in shares) | 2 | 4 |
Weighted-average number of shares - diluted (in shares) | 381 | 393 |
Earnings Per Share - Additional Information (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
May 04, 2019 |
May 05, 2018 |
|
Earnings Per Share [Abstract] | ||
Shares excluded from the computations of weighted-average number of shares - diluted | 11 | 5 |
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions |
May 04, 2019 |
Feb. 02, 2019 |
May 05, 2018 |
---|---|---|---|
Commitments and Contingencies [Line Items] | |||
Loss Contingency, Estimate of Possible Loss | $ 0 | $ 0 | $ 0 |
Segment Information - Net Sales by Brand and Region (Details) - USD ($) $ in Millions |
3 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
May 04, 2019 |
May 05, 2018 |
||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | $ 3,706 | $ 3,783 | ||||||
Percentage of Net Sales | [1] | 100.00% | 100.00% | ||||||
U.S. | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[2] | $ 3,022 | $ 3,018 | ||||||
Percentage of Net Sales | [1],[2] | 82.00% | 80.00% | ||||||
Canada | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | $ 245 | $ 255 | ||||||
Percentage of Net Sales | [1] | 7.00% | 7.00% | ||||||
Europe | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | $ 124 | $ 139 | ||||||
Percentage of Net Sales | [1] | 3.00% | 4.00% | ||||||
Asia | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | $ 269 | $ 321 | ||||||
Percentage of Net Sales | [1] | 7.00% | 8.00% | ||||||
Other Regions | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | $ 46 | $ 50 | ||||||
Percentage of Net Sales | [1] | 1.00% | 1.00% | ||||||
Gap | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | $ 1,052 | $ 1,204 | ||||||
Gap | U.S. | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[2] | 608 | 680 | ||||||
Gap | Canada | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 69 | 77 | ||||||
Gap | Europe | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 121 | 135 | ||||||
Gap | Asia | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 233 | 284 | ||||||
Gap | Other Regions | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 21 | 28 | ||||||
Old Navy | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 1,799 | 1,745 | ||||||
Old Navy | U.S. | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[2] | 1,641 | 1,590 | ||||||
Old Navy | Canada | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 128 | 127 | ||||||
Old Navy | Europe | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 0 | 0 | ||||||
Old Navy | Asia | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 10 | 12 | ||||||
Old Navy | Other Regions | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 20 | 16 | ||||||
Banana Republic | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 568 | 564 | ||||||
Banana Republic | U.S. | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[2] | 487 | 479 | ||||||
Banana Republic | Canada | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 47 | 50 | ||||||
Banana Republic | Europe | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 3 | 4 | ||||||
Banana Republic | Asia | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 26 | 25 | ||||||
Banana Republic | Other Regions | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1] | 5 | 6 | ||||||
Other | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[3] | 287 | 270 | ||||||
Other | U.S. | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[2],[3] | 286 | 269 | ||||||
Other | Canada | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[3] | 1 | 1 | ||||||
Other | Europe | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[3] | 0 | 0 | ||||||
Other | Asia | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[3] | 0 | 0 | ||||||
Other | Other Regions | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Net Sales | [1],[3] | $ 0 | $ 0 | ||||||
|
Segment Information - Additional Information (Details) |
3 Months Ended |
---|---|
May 04, 2019
Segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments (in segments) | 1 |
Acquisition Acquired assets and liabilities (Details) $ in Millions |
Mar. 04, 2019
USD ($)
|
---|---|
Business Combinations [Abstract] | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | $ 34 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 15 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 37 |
Business Acquisition Operating Lease ROU | 51 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | 137 |
Business Acquisition Operating Liabilities | (64) |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other | (4) |
Consideration Paid for Acquisition | $ 69 |
Acquisition Additional Acquisition (Details) $ in Millions |
Mar. 04, 2019
USD ($)
|
---|---|
Business Combinations [Abstract] | |
Consideration Paid for Acquisition | $ 69 |
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