News

Gap wows Street as Q4 profit surges 61%; plans call for expanding Athleta

BY Marianne Wilson

San Francisco — Gap Inc. offered further proof that its turnaround has taken hold, reporting a 61% increase in fourth quarter profit amid strong same-store sales growth across its banners. The results end a strong year for the chain, which also said it was increasing its dividend by 20%.

“Our results in 2012 were stellar in many ways, and I’m very pleased with how well our product resonated with customers,” said Glenn Murphy, chairman and CEO of Gap Inc. “We enter 2013 focused on leveraging our global brands to gain more market share and continuing to increase shareholder value.”

Gap plans to open about 35 Athleta stores in North American in fiscal 2013. But the bulk of its expansion will be focused on foreign markets as the company opens up to 20 Old Navy stores in Japan and 35 namesake stores in China.

In the quarter ended Feb.2, Gap earned a better-than-expected $351 million, compared with net income of $218 million. Revenue rose 10% to $4.73 billion in the period. (The company noted that fiscal year 2012 had 53 weeks versus 52 weeks in fiscal year 2011. As a result, the company’s results for the fourth quarter of fiscal year 2012 and for the fiscal year 2012 include the additional week, while comparable sales calculations exclude the 53rd week.)

Same-store sales in the quarter rose 5%. By division, Gap North America’s sales rose 4%, and Banana Republic North America’s sales rose 3%. Same-store sales at Old Navy were up 8%. The company’s international same-store sales were down 2%.

Net sales for the 53 weeks ended February 2, 2013, were $15.7 billion compared with net sales of $14.5 billion for the 52 weeks ended January 28, 2012. Same-store rose 5%.

For the full year, Gap reported net income of $1.1 billion, compared with net income of $833 million for the 52 weeks ended January 28, 2012.

Gap ended the year with 3,407 stores in 47 countries, 3,095 of which are company-operated. Square footage of company-operated stores decreased 1% from the end of fiscal year 2011.

In fiscal 2013, the retailer expects to open about 160 company-operated stores, focused on Athleta, Gap China, Old Navy Japan, and global outlet stores. The company expects that it will close about 80 company-operated stores. The closures are weighted towards Gap North America, consistent with Gap’s previously stated strategy.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...
News

Great For You! gathers momentum

BY CSA STAFF

A Walmart Neighborhood Market store in Springfield, Mo., was ground zero Thursdayas the retailer showcased efforts to make food healthier and more affordable to First Lady Michelle Obama.

Three years ago, the First Lady created the Let’s Move healthy food initiative and the following year Walmart unveiled five broad commitments that aligned with her vision for ending childhood obesity within a generation.

As Walmart EVP of corporate affairs Leslie Dach noted during a media briefing that preceded the First Lady’s store visit, Walmart recognized that shoppers want to eat healthier food, but don’t always know or have the information available to make the right choices and oftentimes cost is a consideration, especially given lingering economic challenges, surging gas prices and the impact of payroll tax changes.

"for years, the conventional wisdom said that healthy products simply didn’t sell – that the demand wasn’t there, that higher profits were found elsewhere, so it just wasn’t worth the investment,"the First Lady said while standing at a podium in the store’s produce section. "Thanks to Walmart and so many other great American businesses, we are proving the conventional wisdom wrong. Every day, with their success, these companies are showin us that what’s good for kids and good for family budgets can also be good for business."

One of the goals Walmart set two years ago was to help customers save $1 billion on healthy foods and that goal has already been surpassed, according to SVP of sustainability Andrea Thomas. Walmart has helped shoppers save $2.3 billion on healthy food through lower prices with three years remaining on the company’s five year timetable for accomplishing its five main objectives.

Another key initiative involved the creation of an icon that could be used to alert shoppers to healthier options. The "Great For You" icon was launched last year and today can be found on 1,300 items including fruits, vegetables and select private label products under the Great Value banner.

"The icon is really helpful for parents because it gives them a simple tool to make healthy choices," Thomas said.

She added that Walmart evaluated more than 4,000 of its private label products and found that 32% of them were worthy of the "Great For You," distinction. More are on the way as Walmart opens up usage of the icon to branded suppliers next week during an event in Orlando known internally as the Year Beginning Meeting.

Another of Walmart’s commitment involved opening stores in areas known as food desserts where residents lack access to affordable fresh foods. The Neighborhood Market visited by the First Lady was one of 86 such stores Walmart has opened in food deserts during the past two years and plans call for a total of 300.

As a result of those 86 opening, Thomas said 264,000 Americans now have improved access to fresh, healthy and affordable food.

To make food healthier, Walmart also sought to reduce sugar and salt and eliminate trans-fats by reformulating products. The company took a targeted approach by category and managed to reformulate private label and branded items without altering the flavor profile in a way that would disrupt sales. In the bread category, Thomas said sodium was reduced by 13%.

"We are proud of our work, but we have more to do. Our suppliers have been very positive and cooperative with us," Thomas said.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...
News

Gap Inc. ends year with strong earnings growth

BY CSA STAFF

SAN FRANCISCO — Gap Inc. reported that net sales for the fourth quarter were $4.73 billion, compared with $4.28 billion for the same period last year. Same-store sales were up 5% for the quarter, compared with a 4% decrease during the same period last year.

Net income for the quarter was $351 million, or 73 cents per share on a diluted basis. This compares with net income of $218 million, or 44 cents per share on a diluted basis, for the same period last year.

For the fiscal year, the company said improved product performance and global expansion helped drive net sales up 8% for the year.

The company reported earnings per share for the fiscal yearincreased 49% to $2.33 on a diluted basis, compared with $1.56 for the same period last year.

“Our results in 2012 were stellar in many ways, and I’m very pleased with how well our productresonated with customers,” said Glenn Murphy, chairman and chief executive officer of Gap Inc.“We enter 2013 focused on leveraging our global brands to gain more market share andcontinuing to increase shareholder value.”

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Are you hiring seasonal employees this year?

View Results

Loading ... Loading ...