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Gap Inc moves back to black in FY23 on tighter cost control measures

Gap Inc has turned a FY23 profit despite a fall in sales on “continued financial and operational rigour".

Gap Inc's Net income for the year ending 3 February 2024 (FY23) rose to $502m from a loss of $202 a year earlier.

Operating income for Gap Inc in FY23 increased to $560m from a $69m loss a year earlier while net sales fell to $14.9bn from $15.6bn a year earlier.

In the fourth quarter, net income increased to $185m from a $273m loss.

Operating income increased to $214m from a $30m loss and net sales inched up to $4.3bn from $4.2bn.

Q4 brand performance

Old Navy booked fourth-quarter net sales of $2.29bn up 6% compared to last year. Full-year net sales of $8.2bn were flat versus last year. Comparable sales were down 1%.

Gap reported fourth-quarter net sales of $1.01bn which were down 5% compared to last year. Comparable sales were up 4%. Performance was driven by continued strength in Women's, which gained market share for the fifth quarter in a row. Full-year net sales of $3.3bn were down 11% versus last year. Comparable sales were up 1%.

Banana Republic booked fourth quarter net sales of $567m which were down 2% compared to last year. Comparable sales were down 4%. Full-year net sales of $1.9bn were down 8% versus last year. Comparable sales were down 7%.

Gap Inc said: “While the brand has been making progress elevating its aesthetic, re-establishing Banana Republic will take time and there is work to be done to better execute many of the fundamentals.”

Athleta recorded fourth-quarter net sales of $419m, down 4% compared to last year. Comparable sales were down 10%. Gap Inc said Athleta's performance improved sequentially versus the prior quarter. Still, sales continue to be challenged due to tougher comparisons as the brand laps a period of elevated discounting last year. Full-year net sales of $1.4bn were down 8% versus last year. Comparable sales were down 12%.

“The fourth quarter exceeded expectations on several key metrics along with market share gains, reflecting improved trends at Old Navy and Gap and strong continued progress on margins and cash flow," said Gap Inc. president and CEO Richard Dickson.

He continued: "The financial and operational rigour we have worked to develop, and will continue to pursue, is enabling us to focus on reinvigorating our brands to generate profitable growth and value for shareholders. While there is a lot of work to do, I am inspired by the team's commitment and energised by the opportunities ahead."