Gap, Inc. (GPS) July Comps Rose 2%; Prelim. Q2 EPS Tops Views

Gap, Inc. (NYSE: GPS) reported that July net sales for the four-week period ended August 2, 2014 increased 5 percent to $1.17 billion compared with net sales of $1.12 billion for the four-week period ended August 3, 2013. For the second quarter of fiscal year 2014, Gap Inc.’s net sales increased 3 percent to $3.98 billion compared with $3.87 billion for the second quarter last year.

“We’re pleased to close out the first half of the year with a positive comp in July and look forward to the new product and marketing campaigns our brands will launch this fall,” said Glenn Murphy, chairman and chief executive officer, Gap Inc.

July Comparable Sales Results

Gap Inc. comparable sales for July 2014 were up 2 percent versus a 1 percent increase last year. Comparable sales by global brand for July 2014 were as follows:

• Gap Global: negative 2 percent versus positive 7 percent last year
• Banana Republic Global: positive 6 percent versus negative 1 percent last year
• Old Navy Global: positive 3 percent versus negative 5 percent last year

Second Quarter Comparable Sales Results

Gap Inc. comparable sales for the second quarter of fiscal year 2014 were flat versus a 5 percent increase last year. Comparable sales by global brand for the second quarter of fiscal year 2014 were as follows:

• Gap Global: negative 5 percent versus positive 6 percent last year
• Banana Republic Global: flat versus negative 1 percent last year
• Old Navy Global: positive 4 percent versus positive 6 percent last year

Second Quarter Guidance

The company expects diluted earnings per share for the second quarter of fiscal year 2014 to be in the range of $0.73 to $0.74. This compares to diluted earnings per share for the second quarter of fiscal year 2013 of $0.64.

The company noted that its second quarter of fiscal year 2014 diluted earnings per share range includes a benefit of about $0.05 from a gain on the sale of a building owned but not occupied by the company. Excluding this benefit, the company expects its adjusted diluted earnings per share to be in the range of $0.68 to $0.69 for the second quarter of fiscal year 2014. Please see the reconciliation of adjusted diluted earnings per share, a non-GAAP financial measure, from the GAAP financial measure in the table at the end of this press release.

*** The Street sees Q2 PS of $0.66.

Additional insight into Gap Inc.’s sales performance is available by calling 1-800-GAP-NEWS (1-800-427-6397). International callers may call 706-902-4949. The recording will be available at approximately 1:00 p.m. Pacific Time on August 7, 2014 and available for replay until 1:00 p.m. Pacific Time on August 15, 2014.

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