On August 29, 2024, Gap Inc (GAP, Financial) released its 8-K filing for the second quarter of fiscal 2024, showcasing a robust performance that surpassed analyst expectations. The company, known for its iconic brands such as Old Navy, Gap, Banana Republic, and Athleta, reported significant improvements across key financial metrics.
Company Overview
Gap Inc (GAP, Financial) retails apparel, accessories, and personal-care products under the Gap, Old Navy, Banana Republic, and Athleta brands. Old Navy generates more than half of Gap's sales. The firm also operates e-commerce sites, outlet stores, and specialty stores under various Gap names. Gap operates approximately 2,600 stores in North America, Europe, and Asia and franchises about 1,000 more in Asia, Europe, Latin America, and other regions. Gap was founded in 1969 and is based in San Francisco.
Q2 Fiscal 2024 Financial Highlights
Gap Inc (GAP, Financial) reported net sales of $3.7 billion, a 5% increase compared to the same period last year, surpassing the estimated revenue of $3.63 billion. Comparable sales were up 3% year-over-year, driven by strong performances from Old Navy and Gap brands.
Store sales increased by 4%, while online sales saw a 7% rise, representing 33% of total net sales. The company ended the quarter with 3,568 store locations in about 40 countries, of which 2,541 were company-operated.
Key Financial Metrics
Gap Inc (GAP, Financial) achieved a gross margin of 42.6%, up 500 basis points from last year, primarily due to lower commodity costs and improved promotional activity. Operating income was $293 million, with an operating margin of 7.9%, a significant improvement from the previous year's 4.9%.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $3.7 billion | $3.55 billion |
| Gross Margin | 42.6% | 37.6% |
| Operating Income | $293 million | $106 million |
| Net Income | $206 million | $117 million |
| Diluted EPS | $0.54 | $0.32 |
Balance Sheet and Cash Flow
Gap Inc (GAP, Financial) ended the quarter with $2.1 billion in cash, cash equivalents, and short-term investments, a 59% increase from the prior year. Net cash from operating activities was $579 million, and free cash flow was $397 million. The company also paid a second-quarter dividend of $0.15 per share, totaling $56 million.
Brand Performance
Old Navy continued to lead with net sales of $2.1 billion, up 8% from last year, and comparable sales up 5%. Gap brand also showed positive momentum with net sales of $766 million, a 1% increase, and comparable sales up 3%. Banana Republic's net sales remained flat at $479 million, while Athleta saw a slight decline with net sales of $338 million, down 1%.
Outlook for Fiscal 2024
Given the strong second-quarter results, Gap Inc (GAP, Financial) has reaffirmed its net sales and operating expense outlook for fiscal 2024. The company has increased its outlook for gross margin and operating income growth, reflecting its confidence in continued performance improvements.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Gap Inc for further details.
