Operating Expenses
First quarter operating expenses were $980 million, up $62 million compared with the first quarter last year. Marketing expenses for the quarter were $139 million, up $20 million compared with the first quarter last year, driven primarily by increased investments in customer relationship marketing and Gap brand marketing.
The company does not expect to leverage operating expenses for the full year given its plans to invest prudently in growth initiatives and its domestic business.
Operating Margin
The company continues to expect operating margin for fiscal year 2012 will be about 10 percent.
The effective tax rate was 37.5 percent for the first quarter of fiscal year 2012. The company continues to expect the full year effective tax rate will be about 39.5 percent for fiscal year 2012.
Inventory On a year-over-year basis, inventory per store was down about 7 percent at the end of the first quarter of fiscal year 2012. The company expects inventory per store to be about flat at the end of the second quarter of fiscal year 2012 compared with the end of the second quarter last year.
The company paid a dividend of $0.125 per share during the first quarter of fiscal year 2012, which was an increase of 11 percent compared with the first quarter last year. Including this first quarter dividend, the company expects to pay $0.50 per share in dividends for fiscal year 2012.
Capital Expenditures
Year to date, capital expenditures were $148 million. The company maintains its expectation that fiscal year 2012 capital spending will be approximately $600 million.
Real Estate
The company ended the first quarter of fiscal year 2012 with a total of 3,270 store locations in 41 countries, 3,026 of which were company-operated.
During the first quarter of fiscal year 2012, the company opened 32 and closed 42 company-operated store locations. Net square footage of company-operated stores was 36.9 million at the end of the first quarter, a decrease of 2 percent from 37.8 million at the end of the first quarter of fiscal year 2011. This decrease reflects Gap Inc.'s strategy to optimize square footage in North America.
The company now expects net openings of about 15 company-operated stores and about 50 to 75 franchise stores during fiscal year 2012. Net square footage for company-operated stores is expected to decrease by about 1 percent by the end of fiscal year 2012 compared with the end of fiscal year 2011.
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