Gap Inc. reported strong third quarter earnings, underscoring its continued progress on key business strategies.
Net sales for the third quarter, which ended October 27, 2012, increased 8 percent to $3.86 billion compared with $3.59 billion for the third quarter last year. The company’s third quarter comparable sales increased 6 percent. Net income for the third quarter was $308 million, up 60 percent compared with the third quarter last year. Third quarter diluted earnings per share rose 66 percent to $0.63 compared with $0.38 last year.
“We're very pleased with our strong third quarter financial performance, highlighted by how well customers have responded to our product,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “We are ready to compete and win this holiday season as we drive to build upon our top line growth.”
Given its progress year-to-date, the company raised its estimate for fiscal year 2012 diluted earnings per share to be in the range of $2.20 to $2.25. It also increased its fiscal year 2012 operating margin guidance from about 11 percent to about 12 percent.
Third Quarter Financial and Business Highlights
- In North America, Gap, Banana Republic, and Old Navy each delivered positive comparable sales for the third consecutive quarter.
- Total net sales for the Gap Inc. Direct division increased 23 percent to $509 million compared with $414 million last year, and the company launched e-commerce in Japan.
- Net sales outside of the U.S. and Canada (including Gap Inc. Direct and Franchise) increased 7 percent, and the company opened its first Gap Outlet store in China in September.
- The company opened 8 Athleta stores in the quarter, toward its goal of about 50 stores by the end of 2013.
- The company announced a transition to a global brand management structure to support long-term growth.
- Gap Foundation celebrated its 35th anniversary and, in November, Gap Inc. announced a donation of more than $1 million to aid recovery efforts following Hurricane Sandy.
Third Quarter Comparable Sales Results
Comparable sales for the third quarter of fiscal year 2012 were as follows:
- Gap North America: positive 7 percent versus negative 6 percent last year
- Banana Republic North America: positive 6 percent versus negative 1 percent last year2
- Old Navy North America: positive 9 percent versus negative 4 percent last year
- International: negative 3 percent versus negative 10 percent last year
Gap Inc. is a leading global specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Piperlime, and Athleta brands.