Impacted by foreign exchange fluctuations, NYSE listed, apparel marketer, Gap Inc reported flat sales growth in the third quarter of fiscal 2014-15 as against the same period of previous fiscal year.
For the third quarter of 2014, Gap net sales reached $3.97 billion compared with $3.98 billion for the third quarter last year.
Gap said translation of net sales in foreign currencies into US dollars negatively impacted reported net sales by approximately $31 million in the third quarter of fiscal year 2014.
However, net sales increased 1 per cent on a constant currency basis for the third quarter of 2014, by applying current year foreign exchange rates to both current year and prior year net sales.
Third quarter of 2014 diluted earnings per share rose to $0.80 vis-a-vis $0.72 in the third quarter of 2013.
During the quarter under review, operating expenses were up $29 million to $1.04 billion, compared with $1.01 billion in the third quarter of last year.
Marketing expenses also went up by $14 million to $176 million, driven primarily by increased spending at Gap brand.
Gap posted operating margin at 13.9 per cent in the third quarter of 2014 versus 14.5 per cent in prior year quarter.
The apparel marketer also now expects its full-year fiscal 2014 operating margin to be about 12.5 per cent, down from 13.3 per cent in fiscal year 2013.
By maintaining strong discipline over inventory management, inventory dollars per store were down 2 per cent year-on-year at the end of the third quarter of year 2014.
At the end of the fourth quarter of 2014, the company forecasts year-over-year inventory dollars per store to be down slightly compared with the fourth quarter last year.
Gap ended the reporting quarter with $954 million in cash and cash equivalents.
The apparel marketer used $433 million to repurchase 11.4 million shares in the quarter under review and ended the third quarter with 424 million shares outstanding.
As announced on October 16, 2014, GAP directors approved a $500 million share repurchase authorization, of which about $450 million was still available as of the end of the third quarter.
The company paid a dividend of $0.22 per share during the third quarter of fiscal year 2014. In addition, its board of directors authorized a fourth quarter dividend of $0.22 per share.
Gap updated its diluted earnings per share guidance for the full fiscal year 2014 to be in the range of $2.73 to $2.78, which includes the gain on the asset sale of $39 million. (AR)
