Gap's Q4 sales increase 1 percent, the company names new CFO
Prachi Singh| Friday, March 13 2020
On a reported basis, Gap Inc. said its diluted loss per share was 49 cents for the fourth quarter and diluted earnings per share for fiscal year 2019 were 93 cents, while the company’s adjusted diluted earnings per share were 58 cents for the fourth quarter and 1.97 dollars for fiscal year 2019. The company’s fourth quarter comparable sales were down 1 percent, while full year comparable sales were down 3 percent compared with flat last year. The company added that fourth quarter net sales were 4.7 billion dollars, an increase of 1 percent compared with last year, while fiscal year 2019 net sales were 16.4 billion dollars, a decrease of 1 percent compared with last year.
Commenting on the Q4 and full year trading, interim Chief Executive Officer, Bob Fisher, said in a statement: “While fiscal 2019 was a challenging year, I am proud of our teams and their commitment to Gap Inc. Thanks to their efforts, we began to see stabilization in our business in the fourth quarter, driven primarily by improvement in Old Navy’s performance. The current environment presents new challenges, but I am confident in Sonia’s leadership and her ability to deliver the transformational change required.”
Gap announces leadership changes
Following the earlier announcement of the appointment of Sonia Syngal to Gap CEO effective March 23, 2020, the company has announced a series of additional leadership changes. The company said, Katrina O’Connell, chief financial officer of Old Navy, will become the company’s Chief Financial Officer, succeeding Teri List-Stoll who has served in the role since January 2017.
“Katrina brings more than two decades of Gap, Inc. experience, across both brands and functions. Her command of finance, portfolio management and strategy, coupled with her strong operating capabilities from her time leading inventory management, make her uniquely qualified to take on this role,” said incoming Gap Inc. CEO Sonia Syngal.
The company added that additionally, Mark Breitbard will lead the company’s specialty brands, as well as Asia business and franchise; Nancy Green will step up to lead the Old Navy brand while the board and management undergo an internal and external search for the next president and chief executive officer.
Comparable sales results of brands under Gap Inc. portfolio
Comparable sales at Old Navy Global were flat versus flat last year, at Gap Global, negative 5 percent versus negative 5 percent last year, at Banana Republic Global, flat versus negative 1 percent last year and at Athleta, positive 2 percent versus positive 7 percent last year.
Comparable sales at Old Navy Global in fiscal 2019 were negative 2 percent versus positive 3 percent last year, at Gap Global, negative 7 percent versus negative 5 percent last year, at Banana Republic Global, negative 2 percent versus positive 1 percent last year and at Athleta positive 5 percent versus positive 9 percent last year.
Fourth quarter gross profit was 1.67 billion dollars, an increase of 2 percent compared with last year, while 2019 gross profit was 6.13 billion dollars, a decrease of 3 percent compared with last year. Fourth quarter adjusted gross profit was 1.70 billion dollars, an increase of 3 percent and fiscal year 2019 adjusted gross profit was 6.16 billion dollars, a decrease of 3 percent compared with last year. Fourth quarter gross margin was 35.8 percent, an increase of 20 basis points and fiscal year 2019 gross margin was 37.4 percent, a decrease of 70 basis points compared with last year, while adjusted gross margin was 36.3 percent, an increase of 70 basis points and full year adjusted gross margin was 37.6 percent, a decrease of 50 basis points compared with last year.
Gap expects coronavirus impact on Q1 profit and sales
For fiscal 2020, the company expects its reported diluted earnings per share for fiscal year 2020 to be in the range of 1.23 dollars to 1.35 dollars. Excluding costs related to restructure the Gap brand specialty fleet, the company expects its adjusted diluted earnings per share to be in the range of 1.80 dollars to 1.92 dollars. Gap added that the fiscal year 2020 guidance largely does not incorporate any estimated impact from the coronavirus outbreak, with the exception of approximately 100 million dollars in sales or 10 cents in diluted earnings per share for the first quarter impact in Asia and Europe.
“Due to the evolving coronavirus situation, we are facing a period of uncertainty regarding the potential impact on both our supply chain and customer demand,” said Sonia Syngal.
The company expects both comparable sales and net sales for fiscal year 2020 to be down low-single digits, as the company continues the Gap specialty fleet restructuring efforts.
The company paid a dividend of 2425 cents per share during the fourth quarter of fiscal year 2019. In addition, on March 4, 2020, the company announced that its board of directors authorized a first quarter fiscal year 2020 dividend of 2425 cents per share.