Gap Inc. a portfolio of purpose-led, billion-dollar lifestyle brands including Old Navy, Gap, Banana Republic, and Athleta, and the largest specialty apparel company in the U.S., recently reported fiscal 2022 financial results for its first quarter ended April 30, 2022.
“Our Q1 results and updated fiscal 2022 outlook primarily reflect industry-wide headwinds as well as challenges at Old Navy that are impacting our near-term performance. While we are disappointed to deliver results below expectations, we are confident in our ability to navigate the headwinds and re-stabilize the Old Navy business in order to deliver continued progress on our long-term strategy,” said Sonia Syngal, CEO, Gap Inc. “We believe that we can navigate this period of acute disruption and build an even more resilient and agile company. We remain anchored by our belief in our iconic purpose-led brands – Old Navy, Gap, Banana Republic, and Athleta – and are focused on making continued progress against our Power Plan strategy and getting back on track toward delivering growth, margin expansion, and value for our shareholders over the long term.”
First Quarter Fiscal 2022 – Financial Results
- Net sales of $3.5 billion, down 13% compared to last year.
- Net sales growth in the first quarter fiscal 2022 was negatively impacted by an estimated 5 percentage points related to lapping the benefit of stimulus last year and approximately 3 percentage points from divestitures, store closures, and the transition of the company’s European business to a partnership model.
- Comparable sales were down 14% year-over-year.
- Online sales declined 17% compared to last year and represented 39% of total net sales.
- Store sales declined 10% compared to last year. The company ended the quarter with 3,414 store locations in over 40 countries, of which 2,825 were company operated.
- The gross margin was 31.5%, 930 basis points lower than last year.
- Merchandise margins were down 760 basis points versus last year and included approximately $170 million, or 480 basis points, of incremental transitory air freight costs. Higher discounting at Old Navy and inflationary commodity price increases partially offset by the benefit of lower discounting at the Banana Republic drove the remaining decline of approximately 280 basis points.
- Rent, Occupancy and Depreciation deleveraged 170 basis points versus last year primarily due to lower sales volume in the quarter.
- Operating loss was $197 million in the quarter; operating margin of negative 5.7%.
Net loss of $162 million; diluted loss per share of $0.44.