Gap posts lower Q4 profit, plans to close 100 stores in 2009
Delivering solid financial results, Gap Inc reported net earnings for fiscal year 2008 increased to $967 million, or $1.34 per share on a diluted basis, compared with $833 million, or $1.05 per share on a diluted basis, for fiscal year 2007. Net earnings increased by 16 percent over fiscal year 2007, while earnings per share increased 28 percent over the prior year.
For the fourth quarter, which ended January 31, 2009, the company's net earnings were $243 million, or $0.34 per share on a diluted basis, compared with $265 million, or $0.35 per share on a diluted basis, for the same period last year.
“Our ability to drive healthy margins and achieve significant cost savings helped us deliver earnings growth of 16 percent over the course of a very challenging year,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “With nearly $2 billion in cash on hand and virtually no debt, we have a strong foundation that will allow our globally recognized brands to compete effectively this year as we navigate the current environment.”
The company generated $981 million of free cash flow in fiscal year 2008, defined as net cash provided by operating activities less purchases of property and equipment, and ended the fiscal year with $1.8 billion in cash.
Fourth Quarter Results:
Fourth quarter net sales were $4.1 billion, compared with $4.7 billion for the fourth quarter of last year. The company's fourth quarter comparable store sales decreased 14 percent, compared with a decrease of 3 percent in the fourth quarter of last year. The company's online sales for the fourth quarter increased 10 percent to $319 million, compared with $289 million for the fourth quarter of last year.
Fiscal Year 2008 Results:
Net sales for the 52 weeks ended January 31, 2009 were $14.5 billion compared with $15.8 billion for the 52 weeks ended February 2, 2008. The company's fiscal year 2008 comparable store sales decreased 12 percent compared with a decrease of 4 percent for the prior year. The company's online sales for the fiscal year increased 14 percent to $1.03 billion, compared with $903 million in the prior year.
Additional Results and 2009 Outlook:
Gross margin for fiscal year 2008 was 37.5 percent and increased 140 basis points compared with fiscal year 2007.
Operating margin for fiscal year 2008 was 10.7 percent compared with 8.3 percent for fiscal year 2007.
During the fourth quarter, the company repurchased 12.2 million shares for a total of $146 million. For fiscal year 2008, the company repurchased 45.6 million shares for a total of $745 million.
The company paid a dividend of $0.085 per share during the fourth quarter. The company announced that it intends to maintain its annual dividend per share at $0.34 for fiscal year 2009.
Effective Tax Rate: