GAP BLAMES FOREIGN CURRENCY EXCHANGE ON NEGATIVE 2015 PERFORMANCE

by Stephen Garner Feb 26, 2016

Gap Inc.Gap, Inc. has reported the company’s fourth quarter and fiscal year 2015 comparable sales were down 7 percent versus positive 2 percent last year. For fiscal year 2015, the company’s comparable sales were down 4 percent versus flat last year. Gap Global was negative 6 percent versus 5 percent last year, Banana Republic Global was negative 10 percent versus flat sales last year, and Old Navy Global reported flat sales versus 5 percent last year.

“With a year of transition behind us, I’m confident that we have the right strategies in place to fuel our long-term growth,” said Art Peck, chief executive officer, Gap Inc. “We made significant progress in 2015 transforming our product operating model, enabling us to be more responsive to trends and market conditions, and consistently deliver on-brand product collections.”

The company noted that the translation of foreign currencies into U.S. dollars negatively impacted the company’s reported net sales for fiscal year 2015 by about $363 million. In calculating net sales on a constant currency basis, current year foreign exchange rates are applied to both current year and prior year net sales. The company also noted that foreign currency fluctuations negatively impacted earnings per share for fiscal year 2015 by an estimated $0.14, or about 5 percentage points of earnings per share growth.

Peck continued, “Our brands are strengthening their connections with customers through digital, and especially mobile, enhancements that create richer experiences whether shopping online or in stores, or any combination of channels.”

The company ended fiscal year 2015 with 3,721 store locations in 51 countries, of which 3,275 were company-operated. Square footage of company-operated stores was flat compared with the end of fiscal year 2014.

In fiscal year 2016, the company expects to open about 40 company-operated stores. In line with its strategy, the company expects store openings to be focused on greater China, global outlet stores and Athleta.