The company registered gross profit of $1.63 billion during the reported period, an increase of 10 per cent compared with last year. Excluding the impact of presentation changes from the adoption of the new revenue recognition standard, gross profit increased about 4 per cent compared with last year.
Gross margin was 39.8 per cent, an increase of 90 basis points compared with last year. Excluding the impact of presentation changes from the adoption of the new revenue recognition standard, gross margin was 38.8 per cent, a decrease of 10 basis points compared with last year, largely due to Gap Brand.
"We delivered our seventh consecutive quarter of positive comparable sales growth, led by the strength of Old Navy," said Art Peck, president and chief executive officer, Gap Inc. "Our balanced growth strategy supports continued growth and improved profitability, and our investments are focused on leveraging the advantages of our scaled operating platform and accelerating the impact of our significant data assets."
The company ended the second quarter of fiscal year 2018 with $1.6 billion in cash, cash equivalents, and short-term investments. Year-to-date free cash flow, defined as net cash from operating activities less purchases of property and equipment, was $220 million, compared to second quarter 2017 year-to-date free cash flow of $270 million, which included approximately $59 million in insurance proceeds related to loss on property and equipment due to the Fishkill fire.
"The second quarter played out largely as expected, and we are reaffirming our guidance on the year," said Teri List-Stoll, executive vice president and chief financial officer, Gap Inc. "We are pleased with the meaningful improvement at Banana Republic, and our work to increase productivity is funding investments in the business to drive differentiation and continued growth." (RR)
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