Gap, Inc. (the) · NYSE:GAP
Gap, Inc. (the) — FY2018 Earnings Presentation
19 slides from Gap, Inc. (the)'s earnings presentation, Feb 28, 2019
Slide 1: Gap Inc. to Separate into Two Independent Companies
Exhibit 99.3 Gap Inc. to Separate into Two Independent Companies to Maximize Long-Term Value Creation February 28, 2019 Gap Inc. GAP BANANA REPUBLIC t oL navy J ATHLETA XMIX HILL CITY/
Slide 2: Forward Looking Statements
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 historical are forward-looking statements. Forward-looking state
Slide 3: Unique Strengths — Different Paths
Unique Strengths — Different Paths Creates Two Independent Companies with Unique Strategies and Opportunities NewCo (Yetto be named) BANANA REPUBLIC MV | @ATHLETA (MIN HILL CITY + Scaled and enviable portfolio of iconic brands + Large, loyal and complementary customer base + Data-driven, omni-channe
Slide 4: Compelling Strategic Rationale for Separation
@ATHLETA Compelling Strategic Rationale for Separation Separation creates two independent companies with sharpened strategic focus and operating structure } Enables each company to capitalize on unique HILL CITY/ business models, growth plans and customer bases > Compelling and distinct financial pr
Slide 5: Spin-Off is Gap Inc.'s Transformational Next Step
Spin-Off is Gap Inc.’s Transformational Next Step Evolving Retail Market [A] [+] [el [+] ‘Consumer Focus on Value, ‘Speed and Convenience Declining Mall Traffic Digitally-Led Omni-Channel ‘Customer Old Navy's Business Model and Customers have Increasingly Diverged from Traditional Specialty Modet ?
Slide 6: NewCo: Unique and Differentiated Brand Portfolio
NewCo: Unique and Differentiated Brand Portfolio Strategic Brand Perspective z > Oo 2 Online + Mobile = ‘or All Brands 8 @ATHLETA 6 / HILL CITY7 BANANA REPUBLIC BANANA REPUBLIC MIN 2018 Revenue Breakdown $8.7Bn Revenue $2.1Bn / 24% Online Revenue By Brand Athleta / Intermix 38 Key Investment Highlig
Slide 7: Significant Opportunities at NewCo
Significant Opportunities at NewCo Further Drive Growth Momentum f \ p BANANA REPUBLIC @ATHLETA {MIX HILL CITY/ Growth Brands REFINE GAP BRAND STORE FLEET INVESTMENT IN DIGITAL, OMNI-CHANNEL AND DATA ANALYTIC SUPPLY CHAIN AND INVENTORY OPTIMIZATION EXPLORE ADDITIONAL FRANCHISING AND OUTLET OPPORTUNI
Slide 8: Old Navy — One of the Fastest-Growing Apparel Brands in the U.S.
Old Navy — One of the Fastest-Growing Apparel Brands in the U.S. Well-Positioned at the Intersection of Value, Key Investment Highlights. Speed and Curation * Delivers quality product at attractive margins by ‘Strong foundati pore haey = leveraging vendor expertise repeatable product- OLD NAVY. to-m
Slide 9: Old Navy Has a Long Runway for Growth
Old Navy Has a Long Runway for Growth Path to $10Bn in Net Sales New International Loyalty Categories Online and Categories Mobile Market U.S. Store Share Growth Expansion Key Benefits of Standalone Old Navy + Capitalize on scale, broad customer awareness and unique positioning to extend category le
Slide 10: Transaction Details
Transaction Details Transaction Structure Capital Structure Plans Timing and Conditions Separation to be effected through a spin-off intended to generally be tax-free to Gap Inc. shareholders for U.S. federal income tax purposes Upon separation, Gap Inc. shareholders are expected to receive a pro-ra
Slide 11: Gap Inc.
Slide 12: Gap Inc. Fiscal 2018 Fourth Quarter Earnings Results
GAP INC. FISCAL 2018 FOURTH QUARTER EARNINGS RESULTS ART PECK TERI LIST-STOLL Gap Inc.
Slide 13: Disclosure Statement
DISCLOSURE STATEMENT 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 historical are forward-looking statements.
Slide 14: Q4 P&L Summary
Q4 P&L SUMMARY IN MILLIONS os2018 NET SALES $4,623 comp (1%) GROSS PROFIT $1,645 % 35.6% MERCHANDISE MARGIN B/(W) LY (60bps) ROD % OF SALES B/(W) LY (60bps) +180bps +130bps (110bps) OPERATING EXPENSES $1,273 % 27.5% OPERATING INCOME $372 % 8.0% NET INCOME $276 DILUTED EPS $0.72 +270bps +10bps (2) Te
Slide 15: FY 2018 P&L Summary
FY 2018 P&L SUMMARY IN MILLIONS Fy 2018 without FY 2018 without Jo) Presentation Changes F208 bresmtacon changes | F207 aed Tonsscom se NET SALES $16,580 $15,961 $15,855 1% comp 0% 0% 3% GROSS PROFIT $6,322 $5,879 $6,066 (3%) % 38.1% 36.8% 38.3% (150bps) (MERCHANDISE MARGIN B/(W) LY (70bps) (140bps)
Slide 16: Q4 2018: Presentation Changes from ASC 606
Q4 2018: PRESENTATION CHANGES FROM ASC 606 IN MILLIONS 113 WEEKS ENDED FEBRUARY 2, 2019 ‘BALANCES WITHOUT ASREPORTED RECLASSIFICATIONS' PRESENTATION CHANGES trom ASC 606 NET SALES $4,623 $(170) $4,453 ‘COST OF GOODS SOLD AND OCCUPANCY EXPENSES 2,978 (47) 2,931 GROSS PROFIT 1,645 (123) 1,522 OPERATIN
Slide 17: FY 2018: Presentation Changes from ASC 606
FY 2018: PRESENTATION CHANGES FROM ASC 606 IN MILLIONS '52 WEEKS ENDED FEBRUARY 2, 2019 ‘BALANCES WITHOUT -ASREPORTED RECLASSIFICATIONS" PRESENTATION CHANGES, ‘from ASC 6062 NET SALES $16,580 $(619) $15,961 COST OF GOODS SOLD AND OCCUPANCY EXPENSES (176) GROSS PROFIT 6,322 (443) 5,879 OPERATING EXPE
Slide 18: Fiscal 2019 Outlook
FISCAL 2019 OUTLOOK AS OF FEBRUARY 28, 2019 Reported Diluted Earnings per Share $2.11 - $2.26 Adjusted Diluted Earnings per Share $2.40 - $2.55 ‘Comp Sales Flat to up slightly Net Company-Operated Store Closures About 50 Capital Expenditures About $750 million Effective Tax Rate About 26% Share Repu
Slide 19: Gap Inc.