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Gap Inc. Outlines Strategies for Global Growth

Related: Gap
Gap Inc. Outlines Strategies for Global Growth

Gap Inc. announced detailed plans to strategically gain market share in North America and around the world through its portfolio of six brands - Gap, Banana Republic, Old Navy, Athleta, Piperlime and newly-acquired Intermix - while investing further in its leading digital and online capabilities.

"Gap Inc. is determined to build upon its product and revenue momentum in 2012, which was achieved as we focused on becoming the world's favorite for American style," says Glenn Murphy, chairman and chief executive officer of Gap Inc. "There is meaningful opportunity for our diverse portfolio of brands to gain share in the $1.4 trillion global apparel market."

"Over the next five years, key to our continued success will be pushing the envelope further to make shopping seamless to customers through our digital strategy, while seizing the opportunity for Old Navy in many untapped international markets," Murphy adds.

Company executives have confidence about the long-term growth potential of the brands and will reaffirm their intention to expand through geographies and channels including specialty, online, outlet and franchise. The company is announcing it expects to start to franchise Old Navy in 2014 in key international markets. Additionally, it will consider building upon its success with Gap in China by exploring adding company-operated Old Navy and Banana Republic stores to this important market. Murphy and company leaders are discussing the opportunities to continue the growth of its emerging brands - Athleta, Piperlime and Intermix - in North America.

In addition to Gap Inc.'s competitive advantage given its multiple brand, channel and geography model, the company plans to build upon its online success by delivering an industry-leading omni-channel platform for consumers as the retail landscape continues to merge online and brick-and-mortar shopping experiences. This end-to-end system, which includes capabilities such as ship-from-store, find-in-store and reserve-in-store, is designed to leverage Gap Inc. channels and resources to drive store traffic and conversion, while meeting the needs of customers who increasingly demand an integrated shopping experience.

As it has the last number of years, the company will underscore its commitment to delivering against long-term financial strategies and goals.

"We are committed to driving shareholder value and remain focused on our economic model of consistently growing sales, maintaining strong expense discipline, growing earnings per share and returning excess cash to shareholders," says Sabrina Simmons, executive vice president and chief financial officer, Gap Inc.

In addition to Murphy and Simmons, the following members of Gap Inc.'s management team are slated to provide updates at today's meeting (in the following order):

  • Steve Sunnucks, Global President, Gap
  • Jack Calhoun, Global President, Banana Republic
  • Stefan Larsson, Global President, Old Navy
  • Art Peck, President, Growth, Innovation & Digital

The live webcast is accessible on the Financial News and Events page at www.gapinc.com/investors until approximately noon PT. A replay of this event will be available on www.gapinc.com.

Alternatively, audio of the meeting will be accessible until its conclusion via phone by dialing 855-5000-GPS (855-500-0477) for domestic callers or 913-643-0954 for international callers. The conference ID number is 7402090.

Forward-Looking Statements

This press release and the related conference call and webcast contain forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Words such as "expect," "anticipate," "believe," "estimate," "intend," "plan," "project," and similar expressions also identify forward-looking statements. Forward-looking statements include statements regarding:

  • Revenue growth, comparable sales growth, shifting sales mix to higher-return channels, and gaining market share;
  • International expansion, including Old Navy expansion, franchise expansion, and expansion in China;
  • Investing in growth opportunities, including Online, Outlet, Athleta, Piperlime, and Intermix;
  • Digital innovation, and omni-channel development;
  • Maintaining expense discipline and leveraging expenses;
  • Distributing cash to shareholders, including share repurchases and dividends;
  • Margin expansion, operating leverage, and growing earnings per share;
  • Productivity improvements, including through optimizing North America store count, square footage, and sales per square foot;
  • Disciplined inventory management;
  • Strong free cash flow; and
  • Improving return on invested capital.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause the company's actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the following:

  • the risk that adoption of new accounting pronouncements will impact future results;
  • the risk that changes in general economic conditions or consumer spending patterns could adversely impact the company's results of operations;
  • the highly competitive nature of the company's business in the United States and internationally;
  • the risk that the company or its franchisees will be unsuccessful in gauging apparel trends and changing consumer preferences;
  • the risk to the company's business associated with global sourcing and manufacturing, including sourcing costs, events causing disruptions in product shipment, or an inability to secure sufficient manufacturing capacity;
  • the risk that the company's franchisees will be unable to successfully open, operate, and grow their franchised stores in a manner consistent with the company's requirements regarding its brand identities and customer experience standards;
  • the risk that the company or its franchisees will be unsuccessful in identifying, negotiating, and securing new store locations and renewing, modifying or terminating leases for existing store locations effectively;
  • the risk that comparable sales and margins will experience fluctuations;
  • the risk that changes in the company's credit profile or deterioration in market conditions may limit its access to the capital markets and adversely impact its financial results or business initiatives;
  • the risk that trade matters could increase the cost or reduce the supply of apparel available to the company and adversely affect its business, financial condition, and results of operations;
  • the risk that updates or changes to the company's information technology ("IT") systems may disrupt its operations;
  • the risk that actual or anticipated cyber attacks, and other cybersecurity risks, may cause the company to incur increasing costs;
  • the risk that natural disasters, public health crises, political crises, or other catastrophic events could adversely affect the company's operations and financial results;
  • the risk that acts or omissions by the company's third-party vendors, including a failure to comply with the company's code of vendor conduct, could have a negative impact on its reputation or operations;
  • the risk that the company does not repurchase some or all of the shares it anticipates purchasing pursuant to its repurchase program;
  • the risk that the company will not be successful in defending various proceedings, lawsuits, disputes, claims, and audits; and
  • the risk that changes in the regulatory or administrative landscape could adversely affect the company's financial condition, strategies, and results of operations.

Additional information regarding factors that could cause results to differ can be found in the company's Annual Report on Form 10-K for the fiscal year ended February 2, 2013.

Future economic and industry trends that could potentially impact net sales and profitability are difficult to predict. These forward-looking statements are based on information as of April 17, 2013. The company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

SEC Regulation G

The related conference call and webcast also includes the non-GAAP measure-free cash flow-which under SEC Regulation G we are required to reconcile to GAAP measures. Reconciliations of the free cash flow measures to GAAP financial measures are included in the table at the end of this release.

About Gap Inc.

Gap Inc. is a leading global retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Piperlime, Athleta, and Intermix brands. Fiscal year 2012 net sales were $15.7 billion. Gap Inc. products are available for purchase in more than 90 countries worldwide through about 3,100 company-operated stores, over 300 franchise stores, and e-commerce sites. For more information, please visit www.gapinc.com.

SOURCE: BUSINESS WIRE ©2014 Business Wire


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