Gap’s net sales for FY24 reached $15.1bn, reflecting a 1% increase from the previous year. This figure includes a roughly 1 percentage point negative impact owing to the absence of a 53rd week in the fiscal calendar. Adjusting for this factor, net sales showed a 2% rise on an annual basis.
Comparable sales over the year also saw a 3% uptick, while ecommerce revenue climbed by 4%, constituting 38% of the company’s total net sales.
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Gap president and chief executive officer Richard Dickson said: “We ended the year delivering another successful quarter, exceeding financial expectations and gaining market share for the eighth consecutive quarter.
“For the full year 2024, Gap delivered positive comps in all four quarters, achieved one of the highest gross margins in the last 20 years and meaningfully increased operating margin versus the prior year. These strong results are underpinned by the momentum we’re seeing in our operational execution, our culture and the reinvigoration of our brands as they climb in the cultural conversation.”
Gap’s FY24 key financial highlights
Gap’s net income stood at $844m in FY24, translating to diluted earnings per share (EPS) of $2.20 for the fiscal year.
The company’s operating income reached $1.1bn, resulting in an operating margin of 7.4%.
Gross margin of Gap expanded by 250 basis points over the previous year, arriving at 41.3% for fiscal 2024. Its merchandise margins improved by 210 basis points, largely fuelled by reduced commodity costs.
The company’s rent, occupancy, and depreciation (ROD) expenses leveraged by 40 basis points as a percentage of sales, primarily due to an increase in net sales for the year.
Operating expenses were reported at $5.1bn, marking a decrease of 2% from the prior year’s reported figures and a reduction of 1% from adjusted operating expenses that excluded restructuring costs and gains from asset sales.
Gap’s Q4 2024 performance
Gap’s net sales dipped by 3% to $4.1bn when compared with the same period in the previous year. This includes an approximate negative impact of seven percentage points due to calendar shifts and the loss of an additional week.
Sales from the company’s store portfolio fell by 4%, and online sales saw a decrease of 2% against last year’s figures with both declines said to reflect the impact of the missing 53rd week.
Despite this, online transactions accounted for 41% of total net sales and comparable sales increased by 3%.
Net income for the quarter was recorded at $206m, equating to diluted EPS of $0.54.
The quarter’s operating income was $259m with an operating margin of 6.2%. Its gross margin remained unchanged from last year at 38.9%, while merchandise margin experienced a slight increase of 20 basis points over the previous year.
Brand performance in Q4 FY24
Old Navy: Net sales were down by 3% to $2.2bn compared to last year, but comparable sales rose by 3%.
Gap: Net sales decreased by 3% to $980m, however, comparable sales surged by 7%, as efforts to rejuvenate the brand proved successful.
Banana Republic: A decline of 4% brought Q4 net sales to $545m despite a comparable sales increase of 4%, with women’s wear showing notable improvement.
Athleta: Net sales fell by 5% to $396m with comparable sales down by 2%. The brand maintained its market share but recognised the need for enhanced execution strategies.
Gap fiscal year and Q1 FY25 outlook
For the full fiscal year ahead, Gap anticipates net sales growth between 1% and 2% and operating income is projected to rise between 8% and 10%.
The company plans to close around 35 stores throughout the fiscal period.
At the close of FY24, Gap operated 3,569 stores across approximately 40 nations, with 2,506 of these being company-owned locations.
In Q1 FY25, Gap forecasts net sales to remain flat or experience a slight increase and projects modest year-over-year gross margin expansion.
“Looking ahead, 2025 represents an exciting step in our ongoing transformation as we continue to drive toward becoming a high performing house of iconic American brands that delivers long-term value for our shareholders,” Dickson added.
