Gap sets sights on improving business in 2012
Gap Inc reported fourth quarter and full year results for fiscal year 2011 and provided commentary on 2012. For the fourth quarter of fiscal year 2011, which ended January 28, 2012, the company reported net income of $218 million, or $0.44 per share on a diluted basis. This compares with net income of $365 million, or $0.60 per share on a diluted basis, in the same period last year.
Fourth quarter net sales were $4.3 billion compared with $4.4 billion for the fourth quarter of last year. The company's fourth quarter comparable sales, which include the associated comparable online sales, were down 4 percent compared with a 1 percent increase in the fourth quarter last year.
For fiscal year 2011, which ended January 28, 2012, the company reported net income of $833 million, or $1.56 per share on a diluted basis -- a decrease of 17 percent compared with last year. This compares with net income of $1.2 billion in the same period last year.
Net sales for fiscal year 2011 were $14.5 billion, a decrease of 1 percent compared with net sales of $14.7 billion last year. The company's fiscal year 2011 comparable sales, which include the associated comparable online sales, were down 4 percent compared with a 2 percent increase last year.
“In spite of 2011 earnings being below last year, we're pleased with the progress we made against our long-term strategic plan, including growing our online business and expanding internationally,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “There's no doubt that improving our performance, especially in our base businesses, is the top priority in 2012, and we're confident this is the right time to invest wisely to win back customers.”
In fiscal year 2011, Gap Inc. improved its performance in a number of areas, including a 20 percent increase in net sales in its Direct division and a 45 percent net sales increase in its franchise business. The company now operates stores in 39 countries having entered eight new franchise markets in fiscal year 2011. Specific initiatives also began to gain steam, with 14 Gap stores in China, on the way to a total of about 45 stores by the end of fiscal year 2012, and 10 Athleta stores on the way to a total of 50 by the end of fiscal year 2013.
Additional Fiscal Year 2011 Financial Performance Highlights
• Generated $815 million in free cash flow and reinforced its commitment to deliver value by returning $2.3 billion to shareholders through share repurchases and dividends.
• The International and Direct divisions together represented 26 percent of net sales for the year, indicating progress on the company's stated goal of reaching 30 percent of net sales from these divisions by the end of 2013.
• Delivered higher Average Unit Retails throughout the year enabled by disciplined inventory management.
• Tightly managed operating expenses while continuing to invest in long-term growth initiatives.