Gap adjusted EPS tops pre-announced range; revs & comps in line with pre-announcement; increases FY15 guidance to reflect gain on asset sale (guidance reaffirmed ex gain)
Reports Q2 (Jul) earnings of $0.70 per share, excluding non-recurring items ($0.05 asset sale gain), $0.01 better than the Capital IQ Consensus Estimate of $0.69; revenues rose 2.9% year/year to $3.98 bln vs the $3.96 bln consensus. GPS pre-announced EPS of $0.68-0.69 on rev of $3.98 bln
Co issues guidance for FY15, sees EPS of $2.95-3.00 (prior guidance $2.90-2.95) vs. $2.95 Capital IQ Consensus Estimate. The company updated its guidance for full-year 2014 diluted earnings per share to be in the range of $2.95 to $3.00, to reflect the $0.05 related to the gain on asset sale.
The company's second quarter comparable sales were flat compared with a 5 percent increase in the second quarter of last year. Comparable sales by global brand for the second quarter of fiscal year 2014 were as follows: Gap Global: negative 5 percent versus positive 6 percent last year. Banana Republic Global: flat versus negative 1 percent last year. Old Navy Global: positive 4 percent versus positive 6 percent last year. (Pre-announced on Aug 7th).
The company's operating margin was 14.2 percent in the second quarter versus 13.5 percent last year. The company continues to expect operating margin to be about flat for fiscal year 2014.
On a year-over-year basis, inventory dollars per store were up 2 percent at the end of the second quarter of fiscal year 2014. At the end of the third quarter of fiscal year 2014, the company expects year-over-year inventory dollars per store to be up in the low single digits compared with the third quarter last year.
The company will report August sales on September 4, 2014.