Pic: Gap Inc
Capital expenditures are forecast at $600 million, up from $447 million, while the company plans approximately 35 net store closures, compared to 56 closures in FY24, Gap Inc said in a press release.
In the first quarter (Q1) of FY25, the company expects net sales to be flat to slightly up from the $3.4 billion reported in Q1 FY24. The gross margin is projected to expand slightly YoY from 41.2 per cent in Q1 FY24. Operating expenses as a percentage of net sales are expected to leverage slightly compared to the 35.2 per cent reported in the same period in FY24.
Fiscal 2024 (FY24) financial
The company reported net sales of $15.1 billion in FY24, reflecting a 1 per cent increase compared to last year, despite a negative 1 percentage point impact from the loss of the 53rd week. Excluding this, net sales grew 2 per cent YoY.
The gross margin expanded by 250 bps to 41.3 per cent, driven by a 210 bps increase in merchandise margin, mainly due to lower commodity costs. Rent, occupancy, and depreciation (ROD) as a percentage of sales leveraged 40 bps, benefiting from higher net sales.
The operating expenses totalled $5.1 billion, decreasing 2 per cent YoY and 1 per cent compared to last year’s adjusted operating expense, which excluded $89 million in restructuring costs and a $47 million gain on a building sale.
Store sales remained flat, with the company operating 3,569 store locations across 40 countries, including 2,506 company-operated stores. Online sales increased 4 per cent, accounting for 38 per cent of total net sales, while comparable sales rose by 3 per cent.
The company reported operating income of $1.1 billion, with an operating margin of 7.4 per cent. The effective tax rate stood at 25.8 per cent, while net income was $844 million, translating to diluted earnings per share (EPS) of $2.20.
Brand-wise, Old Navy’s net sales increased by 2 per cent to $8.4 billion, with comparable sales up 3 per cent. Gap’s net sales remained flat at $3.3 billion, while comparable sales increased by 4 per cent. The net sales of Banana Republic remained steady at $1.9 billion, with comparable sales up 1 per cent. Athleta generated net sales of $1.4 billion, a decline of 1 per cent with comparable sales remaining flat.
Fourth quarter (Q4) financial
Q4 FY24 financial results show net sales of $4.1 billion, down 3 per cent compared to FY23, impacted by approximately 7 percentage points due to weekly calendar shifts and the loss of the 53rd week. Store sales declined 4 per cent, and online sales decreased 2 per cent, with online sales accounting for 41 per cent of total net sales. Comparable sales increased by 3 per cent.
The gross margin remained flat at 38.9 per cent, with a merchandise margin increase of 20 bps, while ROD deleveraged by 20 bps. The operating expenses stood at $1.4 billion, leading to an operating income of $259 million and an operating margin of 6.2 per cent. The net income stood at $206 million and diluted EPS at $0.54.
Brand-wise, Old Navy reported net sales of $2.2 billion, a 3 per cent decline YoY in Q4, driven by strong performance in key categories like activewear and denim. Gap recorded net sales of $980 million, down 3 per cent YoY, but comparable sales grew by 7 per cent as the brand successfully executed its reinvigoration strategy. Banana Republic’s net sales fell 4 per cent to $545 million, with a 4 per cent YoY, supported by improvements in its women’s segment and continued strength in men’s. Athleta saw Q4 net sales of $396 million, a 5 per cent decline, with comparable sales down 2 per cent as the brand-maintained market share but continued working on execution improvements.
Fibre2Fashion News Desk (SG)