14 slides from Gap, Inc. (the)'s earnings presentation, Jun 4, 2020
Slide 1: Gap Inc. Fiscal 2020 First Quarter Earnings Results
Gap Inc. Fiscal 2020 Sonia Syngal Katrina O’Connell PRESIDENT & EXECUTIVE VICE PRESIDENT CHIEF EXECUTIVE OFFICER & CHIEF FINANCIAL OFFICER FIRST QUARTER EARNINGS RESULTS
Slide 2: Forward Looking Statements / Non-GAAP Financial Measures
Forward Looking Statements / Non-GAAP Financial Measures Forward Looking Statements This 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 histori
Slide 3: Statement from the CEO
Statement from the CEO For us, the health and safety of our employees, customers and communities is our top priority. In working with industry partners and public officials to define Safe Shopping practices, we’re thrilled to be welcoming our teams and customers back to our stores. As we leverage th
Slide 4: Protecting the safety of employees, customers and communities
Slowing the Spread Protecting the • On March 19, Gap Inc. closed all North American stores in order to safety of • slow the spread of COVID-19 Temporarily furloughed more than 80,000 employees in the US and employees, Canada, pausing pay but continuing to offer applicable benefits customers and Safe
Slide 5: Decisive Actions to Address COVID-19 Impact
Decisive Actions to Address COVID-19 Impact Gap Inc. has taken a number of precautionary actions to strengthen its financial flexibility in response to the COVID-19 pandemic: • Deferred Q1 FY20 Dividend; Suspended cash dividend and share buybacks for the remainder of FY20 • Reduced capital expenditu
Slide 6: Connecting with Customers during crisis and beyond
Connecting with Customers during crisis and beyond Our leading omni-channel platform is allowing our 60 million known customers to seamlessly shop with us from anywhere 40% INCREASE in customers migrating from retail only to multi-channel in Q1 2020 vs. last year ~2100 STORES operating as mini fulfi
Slide 7: Well Positioned to Gain Share Post Crisis
Portfolio of Powerful Brands with Room to Grow Two advantaged and growing brands in Old Navy and Athleta, playing in the value and active space, as well as improvement opportunities in Gap and Banana Republic. Ample opportunity to increase apparel market share currently only at Well Positioned ~5% i
Slide 8: Revenue by Brand
Revenue by Brand Powerful portfolio of brands that serves 60M known customers OLD NAVY 49% FY2019 GAP 28% $16B BANANA REPUBLIC 15% IN NET SALES ATHLETA 6% OTHER 2% 8
Slide 9: Significant Operating Cash Flow Generation
Significant Operating Cash Flow Generation >$1B cash from operations for 10+ years Provides financial stability and funds for growth investments $1.7B $1.6B $1.4B $1.4B $1.4B 2015 2016 2017 2018 2019 9
Slide 10: Deeply Experienced Retail Team Committed to Taking Decisive Action
Deeply Experienced Retail Team Committed to Taking Decisive Action § Committed to taking SONIA KATRINA MARK NANCY MARY BETH swift and decisive SYNGAL O’CONNELL BREITBARD GREEN LAUGHTON action to reduce Chief Executive Chief Financial Head of Gap Head of Old Head of Athleta Officer Officer Inc. Speci
Slide 11: Q1 2020 P&L Summary
Q1 2020 P&L Summary Primary Causes of Operating Loss: • Over 50% of the decline due to non-cash impairment charges for store/operating lease assets and inventory of $484 million and $235 million, respectively • 43% decline in net sales Q1 2020 Q1 Q1 vs. ($ Millions) 2020 2019 Q1 2019 Net Sales $2,10
Slide 12: Q1 2020 Online Sales Growth
Q1 2020 Online Sales Growth (Year-Over-Year) +13% +20% +49% (2%) (5%) Online Sales Growth April = 40% May > 100% 12
Slide 13: Rationalizing Specialty Store Fleet
Rationalizing Specialty Store Fleet Investing in faster-growing, more profitable brands Growing online Rationalizing Stores: Gap and Banana Republic Investing in Growth: Old Navy and Athleta NORTH AMERICA SPECIALTY STORE COUNT NORTH AMERICA STORE COUNT 1,397 886 1,300 807 1,214 718 2017 2018 2019 Q1
Slide 14: Capital Expenditures: Significantly Reduced Cash Outflows
Significantly Reduced Cash Outflows Historically, capital expenditures represent ~4% of sales Stores IT Supply Chain Other 800 $726M $731M $705M $702M (1) 700 CAPITAL EXPENDITURES 600 $524M Initial 500 Guidance ~$600M 400 Most reduction coming from stores capital 300 200 Revised Guidance 100 ~$300M