Gap, Inc. (the) · NYSE:GAP
Gap, Inc. (the) — Q3 2021 Earnings Presentation
16 slides from Gap, Inc. (the)'s earnings presentation, Nov 23, 2021
Slide 1: Gap Inc. Fiscal 2021 Third Quarter Earnings Results
Gap Inc. Fiscal 2021 Sonia Syngal CHIEF EXECUTIVE OFFICER Katrina O’Connell CHIEF FINANCIAL OFFICER THIRD 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: We grow purpose-led, billion-dollar lifestyle brands
We grow purpose-led, billion-dollar lifestyle brands
Slide 4: Power Plan 2023
Power Plan 2023 Power of our Brands Grow purpose-led, billion-dollar lifestyle brands Power of our Platform Leverage our omni capabilities and scaled operations, and extend our engineered approach to cost and growth Power of our Portfolio Extend customer reach across every age, body and occasion thr
Slide 5: P&L Summary (Reported)
Q3 2021 P&L Summary (REPORTED) Q3 Q3 Q3 2021 vs. Q3 Q3 2021 vs. ($ Millions) 2021 (1) 2020 Q3 2020 2019 (2) Q3 2019 Net Sales $3,943 $3,994 (1%) $3,998 -1% Gross Profit $1,661 $1,620 +3% $1,559 +7% % of Sales 42.1% 40.6% +150 bps 39.0% +310 bps Merchandise Margin B/(W) +180 bps (10 bps) ROD % of Sal
Slide 6: P&L Summary (Adjusted)
Q3 2021 P&L Summary (ADJUSTED) Q3 Q3 Q3 2021 vs. Q3 Q3 2021 vs. ($ Millions) 2021 2020 Q3 2020 2019 (2) Q3 2019 Net Sales $3,943 $3,994 (1%) $3,998 (1%) Adjusted Gross Profit $1,652 (1) $1,620 +2% $1,560 +6% % of Sales 41.9% (1) 40.6% +130 bps 39.0% +290 bps Merchandise Margin B/(W) +190 bps (10 bps
Slide 7: Financial Highlights
Q3 2021 Financial Highlights Port delays and factory closures, especially in Vietnam, materially impacted Q3 performance and FY21 outlook, despite strong demand for our brands. • Sales of $3.9B were down 1% versus 2019 due to a significant deceleration in the global supply chain, negatively impactin
Slide 8: Supply Chain Update
Q3 2021 Supply Chain Update • Port delays, especially LA/Long Beach worsened during the quarter, extending to up to 15 days Situation • Factory closures in Vietnam extended over 2 ½ months from August through October leading to Holiday inventory cancellations and delays • Sales: Estimated $300M lost
Slide 9: Net Sales Growth
Q3 2021 Net Sales Growth vs. FY20 (1%) (6%) +5% +24% +10% vs. FY19 (1%) +8% (10%) (18%) +48% vs. FY19 STORE CLOSURES/ STORE CLOSURES: STORE CLOSURES: ESTIMATED DIVESTITURES ~18 points ~10 points ~9 points IMPACT + FROM: SUPPLY CONSTRAINTS: ~8 points Note: Consistent with 1H 2021 presentation, compar
Slide 10: Comparable Sales
Q3 2021 Comparable Sales vs. FY20 (1%) (9%) +7% +28% +2% vs. FY19 +5% +6% +3% (10%) +41% NORTH AMERICA COMP VS. FY19: +13% Note: Consistent with 1H 2021 presentation, comparisons for the third quarter of 2019 are also included.
Slide 11: We have Omni-Strength in North America
Q3 2021 We have Omni-Strength in North America • Higher-margin Old Navy and Athleta were 62% of company sales • Less than 20% of revenue generated from indoor malls • Over 90% of company sales generated in North America and partnering to amplify our reach internationally BRAND C HANNE L REGION ■ Old
Slide 12: Rationalizing our North America Fleet
Q3 2021 Rationalizing our North America Fleet • On-track to close ~350 N.A. Gap and Banana Republic stores by end of FY23 • Expect to complete ~75% of North America closures by end of FY21 NORTH AM ERIC A STORE C OUNT Banana Republic Gap 121 6 ~953 ~866 2019 2021E 2023E
Slide 13: Optimizing the Profitability of our Global Fleet
Q3 2021 Optimizing the Profitability of our Global Fleet • Finalized agreements to transition European markets to a partnership model • Strategically closing underperforming North America store locations to drive profitability • Investing in store growth for Old Navy and Athleta GAP INC . STORE C OU
Slide 14: Improving Value by Turning Customers into Lifetime Loyalists
Q3 2021 Improving Value by Turning Customers into Lifetime Loyalists Spend 2X more annually 45+ 3X more likely to shop across MILLION channels members of our integrated loyalty program (1) 2X more likely to shop multiple brands (1) Includes credit card holders.
Slide 15: Commitment to Environmental, Social & Governance Performance
Q3 2021 Commitment to Environmental, Social & Governance Performance ENVIRONMENT SOCIAL GOVERNANCE 1M 1st Gap Inc. Equality + Belonging Report 6 of 13 people have improved released Directors access to drinking water to share progress on are women through USAID and Gap Inc. 2025 Commitments Women + W
Slide 16: Fiscal 2021 Outlook
Q3 2021 Fiscal 2021 Outlook AS OF NOV. 23, 2021 Diluted Earnings per Share $0.45- $0.60 Adjusted Diluted Earnings per Share (1) $1.25 - $1.40 Net Sales Growth (2) About 20% Operating Margin About 4.5% Adjusted Operating Margin (3) About 5% Interest Expense, Net $163 million Effective Tax Rate About