Currency fluctuations negatively impact Gap earnings

Gap reported adjusted diluted earnings per share of 0.57 dollar for the fourth quarter of fiscal year 2015 and 2.43 dollars for fiscal year 2015. On a reported basis, the company’s diluted earnings per share were 0.53 dollar for the fourth quarter and 2.23 dollars for fiscal year 2015. The company said that the translation of foreign currencies into US dollars negatively impacted the company’s reported net sales for fiscal year 2015 by about 363 million dollars and earnings per shareby an estimated 0.14 dollar.

“With a year of transition behind us, I’m confident that we have the right strategies in place to fuel our long term growth,” said Art Peck, CEO of Gap, adding, “Our brands are strengthening their connections with customers through digital, and especially mobile, enhancements that create richer experiences whether shopping online or in stores, or any combination of channels.”

New initiatives planned in 2016 to drive growth

Old Navy delivered its fourth consecutive year of net sales growth in 2015 and Gap brand made significant progress on its transformation agenda during fiscal year 2015, implementing a new product operating model, as well as actions to create a smaller, more vibrant fleet of stores.

Athleta grew its footprint to 120 US store locations by the end of 2015, and is scheduled to open about 15 additional US stores in fiscal year 2016. A new category for the brand, Athleta Girl will launch in summer 2016 for 14 years old. At the end of fiscal year 2015, Gap Factory and Banana Republic Factory launched on a dedicated, fully responsive ecommerce platform, making it more convenient for value shoppers to engage in a multi-channel shopping experience.

Currency fluctuations negatively impact Gap earnings

Comparable sales results for Q4 and FY15

The company’s fourth quarter comparable sales were down 7 percent versus positive 2 percent last year. For fiscal year 2015, the company’s comparable sales were down 4 percent versus flat last year. Comparable sales at Gap Global were negative 6 percent versus negative 5 percent last year, at Banana Republic Global: negative 10 percent versus flat last year and Old Navy Global: flat versus positive 5 percent last year.

On a constant currency basis, net sales were 16.2 billion dollars for fiscal year 2015. On a reported basis, fourth quarter net sales were 4.4 billion dollars and fiscal year 2015 net sales were 15.8 billion dollars. Total online sales were 803 million dollars for the quarter and 2.53 billion dollars for fiscal year 2015.

Outlook for 2016

The company expects diluted earnings per share to be in the range of 2.20 dollars to 2.25 dollars for fiscal year 2016, which includes the estimated negative impact of approximately 0.19 dollar, or over 120 million dollars pretax, due to foreign currency fluctuations at current exchange rates. This impact equates to approximately 8 percentage points of earnings per share growth, when compared with the company’s adjusted diluted earnings per share of 2.43 dollars for fiscal year 2015.





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