Gap net income increases 11 percent in Q3

REPORT_ Gap reported that its third quarter fiscal year 2014 net income was 351 million dollars, or 0.80 dollars per share on a diluted basis, representing an 11 percent increase over last year. Less than four years after the first Gap store opened in greater China, the brand surpassed 100 stores in the region in November and is on track to finish fiscal year 2014 with approximately 110 Gap and Gap Outlet stores across mainland China, Hong Kong and Taiwan.

“As we move into the holiday season, our teams are focused on delivering unique customer experiences which will differentiate our portfolio of brands in the marketplace,” said Glenn Murphy, Chairman and Chief Executive Officer, Gap.

Old Navy continues its plans to expand to a broader global customer base with its announcement to open franchise-operated stores in six Middle Eastern countries beginning in spring 2015. Following its debut in China earlier in the year, Old Navy announced that it expects to expand its footprint faster than originally planned in mainland China, reaching seven stores in five cities by the end of the fiscal year. Athleta continues to build on its success as a performance and lifestyle brand, opening 14 new stores during the quarter for a total of 92 stores, and the brand remains on track to end fiscal year 2014 with about 100 stores in the US.

The comparable sales for the third quarter of fiscal year 2014 were down 2 percent versus a 1 percent increase last year. Comparable sales at Gap Global were negative 5 percent versus positive 1 percent last year, at Banana Republic Global, flat versus negative 1 percent last year and Old Navy Global, positive 1 percent versus flat last year. Gap’s net sales were 3.97 billion dollars compared with 3.98 billion dollars for the third quarter last year. Net sales increased 1 percent on a constant currency basis. Third quarter fiscal year 2014 diluted earnings per share were 0.80 dollars compared with diluted earnings per share of 0.72 dollars in the third quarter of fiscal year 2013.

The company updated its diluted earnings per share guidance for the full fiscal year 2014 to be in the range of 2.73 dollars to 2.78 dollars, which includes the gain on the asset sale of 39 million dollars communicated in connection with the company’s second quarter of fiscal year 2014 financial results. The company ended the third quarter of fiscal year 2014 with 3,680 store locations in 50 countries, of which 3,266 were company-operated. During the third quarter of fiscal year 2014, the company opened 84 and closed 18 company-operated stores.

For the full fiscal year 2014, the company continues to expect to open about 185 company-operated stores, focused on China, Old Navy in Japan, Athleta, and global outlet stores. In addition, for the full fiscal year 2014 the company plans to close about 70 company-operated stores, which are weighted toward Gap North America.