Gap Inc. Reports 25 Percent Profit Increase

Gap Inc. Reports 25 Percent Profit Increase
November 23, 2009

San Francisco-based Gap Inc. reported that net earnings for the third quarter, which ended Oct. 31, increased 25 percent to $307 million, compared with $246 million for the same period last year. Third-quarter net sales increased 1 percent to $3.59 billion, compared with $3.56 billion last year. The company’s third quarter comparable-store sales were flat, compared with a decrease of 12 percent for the third quarter of last year. Gross margin of 42.5 percent for the third quarter increased 380 basis points compared with the prior year, while operating margin was 13.9 percent for the third quarter, compared with 11.1 percent for the prior year. Due largely to investments in fall marketing at Gap and Old Navy, operating expenses were up $40 million in the third quarter of fiscal year 2009, compared with last year.

During the third quarter of fiscal year 2009, the company opened 13 store locations and closed 15 stores--compared with 37 openings and 17 closings for the third quarter of the prior year. The company ended the third quarter of fiscal year 2009 with 3,143 store locations. Year to date, the company has opened 36 store locations, weighted towards its international and outlet divisions, and closed 42 store locations, weighted towards the Gap brand. The company continues to expect that it will open about 50 stores and close about 100 stores for fiscal year 2009, including repositions.