For the 13 weeks period ended May 2, 2015, net sales at NYSE listed and apparel marketer Gap Inc were down 3 per cent year over year.
Gap Inc.’s net sales declined 3 per cent to $3.66 billion in the first quarter of fiscal 2016 compared with $3.77 billion for the first quarter of previous fiscal.
In a press release, Gap noted that translation of net sales from foreign currencies into US dollars negatively impacted the company’s reported sales by about $90 million.
On a constant currency basis, net sales for the first quarter of fiscal 2015 fell by just 1 per cent over the prior fiscal first quarter.
Gap explained that while calculating net sales change on a constant currency basis, current year foreign exchange rates are applied to both current year and prior year net sales.
“This is done to enhance the visibility of underlying sales trends, excluding the impact of foreign currency exchange rate fluctuations,” it said.
For the quarter ended May 2, 2015 comparable sales were down higher by 4 per cent versus also a negative 1 per cent in the first quarter of fiscal 2015.
In the reporting quarter, operating expenses amounted to $996 million, down $27 million compared with $1.02 billion in the same quarter of last fiscal.
The apparel marketer’s operating margin fell to 10.6 per cent in the first quarter of fiscal 2016 from 11.7 per cent from the fiscal ago quarter.
The company continues to expect operating margin to be down about 1 percentage point in fiscal 2016 when compared with fiscal 2015.
The effective tax rate for the quarter under review was 37.4 per and Gap Inc continues to expect its full fiscal effective tax rate to be about 38 per cent.
At the end of the first quarter of fiscal 2016, inventory dollars per store were up about 4 per cent on a year-over-year basis.
At the end of the second quarter of fiscal 2016, it expects year-on-year inventory dollars per store to be up slightly compared with last fiscal’s same quarter.
In the reporting quarter, diluted earnings per share were down to $0.56 vis-à-vis diluted earnings per share of $0.58 in the first quarter of fiscal 2015.
The company observed that impact of foreign exchange reduced its diluted earnings per share growth rate in the first quarter of fiscal 2016 by about 3 per cent.
The company reaffirmed its guidance for fiscal 2016 diluted earnings per share to be in the range of $2.75 to $2.80.
