Earnings Review - The Gap

LONDON, December 12, 2014 /PRNewswire/ --

Investor-Edge.com has issued free earnings review on The Gap Inc. (NYSE: GPS). On November 20, 2014, the company announced its financial results for Q3 FY14 (period ended November 01, 2014). Click on www.investor-edge.com/FreeReports to read our free earnings review on The Gap Inc. (Gap). In Q3 FY14, the company's net income increased $0.08 per diluted share from Q3 FY13. Our free coverage report can be accessed at:

www.investor-edge.com/register

Earnings Overview 

During Q3 FY14, Gap reported net sales of $3.97 billion compared to $3.98 billion in Q3 FY13. The company's reported net sales came in line with Bloomberg analysts' forecasts of $3.97 billion. The company informed that the translation of net sales in foreign currencies into US dollars negatively impacted reported net sales by approximately $31 million. Gap's comparable sales for Q3 FY14 declined by 2% compared to 1% growth in Q3 FY13, and the comparable sales from its Gap Global decreased 5% compared to a 1% increase in Q3 FY13. Meanwhile, The Gap's Q3 FY14 comparable sales from Banana Republic Global were flat compared to a 1% decline in Q3 FY13, and for its Old Navy Global comparable sales grew 1% compared to flat sales in Q3 FY13. In addition, the company's Q3 FY14 total online sales increased to $621 million from $589 million in Q3 FY13. The free research on GPS can be downloaded as in PDF format at:

http://get.investor-edge.com/pdf/?c=Gap&d=12-Dec-2014&s=GPS

Gap's operating expenses increased $29 million Y-o-Y to $1.04 billion in Q3 FY14, while its operating margin for Q3 FY14 declined to 13.9% from 14.5% in Q3 FY13. Further, the company's marketing expenses increased $14 million Y-o-Y to $176 million, primarily due to increased spending at Gap brand. Gap's Q3 FY14 net income increased to $351 million, or $0.80 per diluted share, from $337 million, or $0.72 per diluted share, in Q3 FY13. The company's diluted EPS for Q3 FY14 included a non-recurring benefit of about $0.06 from a lower effective tax rate versus Q3 FY13, primarily due to the recognition of certain foreign tax credits. The company's Q3 FY14 net income exceeded Bloomberg analysts' forecasts of $337 million, or $0.79 per diluted share.

During Q3 FY14, Gap bought 11.4 million shares for $433 million, ending the reported quarter with 424 million shares outstanding. The company also paid a dividend of $0.22 per share during the quarter, and on November 12, 2014, the company's board of directors authorized a dividend of same amount for Q4 FY14. Gap had cash and cash equivalents of $954 million at the end of Q3 FY14.

During the reported quarter, the company opened 84 and closed 18 company-operated stores, and as of November 1, 2014, Gap had 3,680 stores in 50 countries. Sign up and read the free analyst's notes on GPS at:

http://get.investor-edge.com/pdf/?c=Gap&d=12-Dec-2014&s=GPS

For full-year FY14, the company updated its diluted earnings per share guidance in the range of $2.73 to $2.78, which includes the gain on the asset sale of $39 million communicated in connection with the company's Q2 FY14 financial results. Gap expects full-year FY14 operating margin to be about 12.5% compared to 13.3% in FY13. The company updated its full-year FY14 tax rate guidance to about 38.0%, down from its previous guidance of 38.5%, reflecting a third quarter tax benefit. Further, at the end of Q4 FY14, the company expects Y-o-Y inventory dollars per store to be down slightly compared with Q4 FY13.

Stock Performance  

On the day following the earnings release, November 21, 2014, Gap's stock ended the session at $38.46, down 4.19%. Since then, shares of the company have witnessed a mixed momentum. On the last close, Thursday, December 11, 2014, the stock finished 1.71% higher at $39.89, after vacillating between $39.52 and $40.46. A total of 3.82 million shares were traded, which was below its three months average volume of 5.02 million shares. Over the last one month and since the start of 2014, the company's shares have advanced 2.76% and 2.07%, respectively. However, the stock has lost 0.45% in the previous three trading sessions and 10.00% in the past three months. Shares in Gap closed above their 50-day moving average of $38.71. Furthermore, the stock traded at a PE ratio of 14.48 and has a Relative Strength Index (RSI) of 47.74. Visit Investor-Edge and access the latest research on GPS at:

http://get.investor-edge.com/pdf/?c=Gap&d=12-Dec-2014&s=GPS

Sneak Peek to Corporate Insider Trading 

In the last one month, there were 5 insider transactions made by 2 individuals. Between November 26, 2014 and December 08, 2014, a total of 121,271 shares have been sold at an average price of $40.47 per share and for a total value of $4.91 million. During the stated period, Jack Calhoun, Global President at Banana Republic, a subsidiary of Gap, sold 97,250 shares at an average price of $40.45. Furthermore, on December 08, 2014, he bought 86,250 shares at an average price of $19.61. On the same day, Stefan Larsson, Global President at Old Navy, a subsidiary of Gap, sold 24,021 shares at $40.56 per share. Complimentary in-depth research on GPS is available at:

http://get.investor-edge.com/pdf/?c=Gap&d=12-Dec-2014&s=GPS

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