American firm Gap posts net sales of $3.8 bn in Q3 FY23

Store sales saw a 6 per cent decrease from the previous year, and online sales fell by 8 per cent, accounting for 38 per cent of the total net sales. Despite these reductions, Gap ended the quarter with 3,533 store locations in over 40 countries, of which 2,598 are company-operated.

In a positive turn, the gross margin for the quarter increased to 41.3 per cent, up 390 basis points compared to last year's reported gross margin and up 260 basis points versus last year's adjusted gross margin. The reported operating income was $250 million, resulting in a reported operating margin of 6.6 per cent. Net income stood at $218 million, with reported diluted earnings per share of $0.58. Additionally, the ending inventory was down 22 per cent compared to the previous year, amounting to $2.38 billion, the company said in its Q3 FY23 results.

Breaking down the performance by brand, Old Navy reported net sales of $2.13 billion in Q3 FY23, a slight 1 per cent decrease from last year. However, comparable sales were up by 1 per cent, with notable strength in women's, kids, baby, and an acceleration in the active category.

Gap brand experienced a more significant decrease, with net sales down 15 per cent to $887 million. Excluding the negative impact from the sale of Gap China and the shutdown of Yeezy Gap, net sales were down about 6 per cent. The brand did see strength in women's and baby categories, although comparable sales were down 1 per cent.

Banana Republic reported net sales of $460 million, down 11 per cent compared to last year. The brand is in the process of re-positioning itself as a premium lifestyle brand and is focused on acquiring new, high-value customers. Comparable sales for Banana Republic were down by 8 per cent.

Athleta faced a more challenging quarter, with net sales down 18 per cent to $279 million and comparable sales down 19 per cent.

"Gap delivered a solid performance in the third quarter. We were pleased to see market share gains as well as improvements in both gross margins and operating margins, demonstrating our ability to drive operating and financial discipline. This rigor has put the company on stronger financial footing and is enabling us to focus on reinvigorating our portfolio of brands, strengthening our operating platform, and reviving our culture for success," said Richard Dickson, president and chief executive officer.

Fibre2Fashion News Desk (DP)