Today, Gap Inc. (NYSE: GPS) will provide an overview of its
balanced growth strategy at the Goldman Sachs 24th Annual Global
Retailing Conference.
“Over the past two years, we’ve made significant progress
evolving how we operate – starting with getting great product into
the hands of our customers, more consistently and faster than ever
before,” said Art Peck, president and chief executive officer, Gap
Inc. “With much of this foundation in place, we’re now shifting our
focus to growth. We will leverage our iconic brands and significant
scale to deliver growth by shifting to where our customers are
shopping – online, value and active.”
Growth Brands: Old Navy and
Athleta
Demonstrating Gap Inc.’s continued focus on its growth brands,
the company expects Old Navy to exceed $10 billion and Athleta to
exceed $1 billion in net sales in the next few years, driven by
growth in online and mobile channels, U.S. store expansion, and
continued market share leadership in loyalty categories.
Expanded Investment in Online and
Digital
The company has built a highly profitable online and mobile
business with double-digit sales growth and industry leading
capabilities. Gap Inc. sites are built on a proprietary e-commerce
platform that enables wide-ranging capabilities, including
cross-brand shopping, omni-channel services, and an upcoming buy
online, pick-up in store service, as well as a new personalization
engine powered by customer data. Over the next three years, Gap
Inc. will accelerate this work with a continued significant
investment in areas including direct fulfillment capacity, loyalty,
personalization, omni-channel services, artificial intelligence and
other data-driven customer experiences.
Advantaged Real Estate
Portfolio
To support its growth strategy, the company will be shifting its
focus to where customers are shopping, simultaneously increasing
its presence in its more profitable value and online channels,
while continuing to shed square footage in lower productivity
specialty locations. Over the next three years, the company expects
to add about 70 net new stores, with the addition of about 270 Old
Navy, Athleta and value expressions across the portfolio, and the
closure of about 200 underperforming Gap and Banana Republic
specialty locations.
Productivity and Scale
Taking advantage of Gap Inc.’s scale creates an opportunity to
drive greater efficiency, speed and profitability. The company
expects about $500 million in expense savings over the next three
years by better leveraging its size and scale, cross-brand
synergies and streamlining operations and processes. The company
plans to reinvest a portion of productivity related savings in its
growth initiatives, providing opportunity for margin expansion.
Webcast
A live webcast of the presentation will be available at
www.gapinc.com/investors (follow the Quicklinks / Webcast link)
from approximately 11:20 a.m. to 12:00 p.m. Eastern Time today. An
archive of the webcast presentation will be available for 90
days.
Forward-Looking Statements
This press release, and related investor day conference 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. Words such as “expect,”
“anticipate,” “believe,” “estimate,” “intend,” “plan,” “project,”
and similar expressions also identify forward-looking statements.
Forward-looking statements include statements regarding the
following: Old Navy, Athleta, and online net sales; investments in
areas including direct fulfillment capacity, loyalty,
personalization, omni-channel services, artificial intelligence and
other data-driven customer experiences; shifting toward online,
value and active; net store openings over the next three years,
including the addition of Old Navy, Athleta and value expressions
across the portfolio, and closure of underperforming Gap and Banana
Republic specialty locations; expense savings over the next three
years; and reinvestment of a portion of productivity related
savings in growth initiatives.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause the
company’s actual results to differ materially from those in the
forward-looking statements. These factors include, without
limitation, the following risks, any of which could have an adverse
effect on the Company’s financial condition, results of operations,
and reputation: the risk that the company or its franchisees will
be unsuccessful in gauging apparel trends and changing consumer
preferences; the highly competitive nature of the company’s
business in the United States and internationally; the risk of
failure to maintain, enhance and protect the company’s brand image;
the risk of failure to attract and retain key personnel, or
effectively manage succession; the risk that trade matters could
increase the cost or reduce the supply of apparel available to the
company; the risk of changes in the regulatory or administrative
landscape; the risk that the company’s investments in omni-channel
shopping initiatives may not deliver the results the company
anticipates; the risk if the company is unable to manage its
inventory effectively; the risk that the company is subject to data
or other security breaches that may result in increased costs,
violations of law, significant legal and financial exposure, and a
loss of confidence in the company’s security measures; the risk of
foreign currency exchange rate fluctuations; the risks to the
company’s business, including its costs and supply chain,
associated with global sourcing and manufacturing; the risk of
changes in global economic conditions or consumer spending
patterns; the risks to the company’s efforts to expand
internationally, including its ability to operate under a global
brand structure and operating in regions where it has less
experience; the risks to the company’s reputation or operations
associated with importing merchandise from foreign countries,
including failure of the company’s vendors to adhere to its Code of
Vendor Conduct; the risk that the company’s franchisees’ operation
of franchise stores is not directly within the company’s control
and could impair the value of its brands; the risk that the company
or its franchisees will be unsuccessful in identifying,
negotiating, and securing new store locations and renewing,
modifying, or terminating leases for existing store locations
effectively; the risk that comparable sales and margins will
experience fluctuations; the risk that changes in the company’s
credit profile or deterioration in market conditions may limit the
company’s access to the capital markets; the risk that updates or
changes to the company’s information technology systems may disrupt
its operations; the risk of natural disasters, public health
crises, political crises, or other catastrophic events; the risk of
reductions in income and cash flow from our marketing and servicing
arrangement related to our private label and co-branded credit
cards; the risk that the adoption of new accounting pronouncements
will impact future results; the risk that the company does not
repurchase some or all of the shares it anticipates purchasing
pursuant to its repurchase program; and the risk that the company
will not be successful in defending various proceedings, lawsuits,
disputes, claims, and audits.
Additional information regarding factors that could cause
results to differ can be found in the company’s Annual Report on
Form 10-K for the fiscal year ended January 28, 2017, as well as
the company’s subsequent filings with the Securities and Exchange
Commission.
These forward-looking statements are based on information as of
September 6, 2017. The company assumes no obligation to publicly
update or revise its forward-looking statements even if experience
or future changes make it clear that any projected results
expressed or implied therein will not be realized.
About Gap Inc.
Gap Inc. is a leading global retailer offering clothing,
accessories, and personal care products for men, women, and
children under the Gap, Banana Republic, Old Navy, Athleta,
Intermix, and Weddington Way brands. Fiscal year 2016 net sales
were $15.5 billion. Gap Inc. products are available for purchase in
more than 90 countries worldwide through about 3,200
company-operated stores, about 450 franchise stores, and e-commerce
sites. For more information, please visit www.gapinc.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20170906006041/en/
Gap Inc.Investor Relations Contact:Tina Romani,
415-427-5264Investor_relations@gap.comorMedia Relations
Contact:Kari Shellhorn, 415-427-1805Press@gap.com
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