Gap Inc. (GPS) has reported 2.80 percent rise in profit for the quarter ended Jan. 28, 2017. The company has earned $220 million, or $0.55 a share in the quarter, compared with $214 million, or $0.53 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $203 million, or $0.51 a share compared with $230 million or $0.57 a share, a year ago.
Revenue during the quarter went up marginally by 1 percent to $4,429 million from $4,385 million in the previous year period. Gross margin for the quarter expanded 105 basis points over the previous year period to 33.89 percent. Total expenses were 93.20 percent of quarterly revenues, up from 91.90 percent for the same period last year. That has resulted in a contraction of 130 basis points in operating margin to 6.80 percent.
Operating income for the quarter was $301 million, compared with $355 million in the previous year period.
"We're pleased to finish the year strong, with positive comp and sales growth during the critical holiday quarter," said Art Peck, chief executive officer, Gap Inc. "Going forward, we will maintain our focus on improving the quality and relevance of our products, increasing our responsiveness to trends and demand, and creating more synergy across channels to deliver the experiences our customers want and expect, however they choose to shop."
For financial year 2017, the company projects diluted earnings per share to be in the range of $1.95 to $2.05.
Operating cash flow improves
Gap Inc. has generated cash of $1,719 million from operating activities during the year, up 7.84 percent or $125 million, when compared with the last year.
The company has spent $529 million cash to meet investing activities during the year as against cash outgo of $730 million in the last year.
The company has spent $777 million cash to carry out financing activities during the year as against cash outgo of $990 million in the last year period.
Cash and cash equivalents stood at $1,783 million as on Jan. 28, 2017, up 30.15 percent or $413 million from $1,370 million on Jan. 30, 2016.
Working capital increases sharply
Gap Inc. has recorded an increase in the working capital over the last year. It stood at $1,862 million as at Jan. 28, 2017, up 28.41 percent or $412 million from $1,450 million on Jan. 30, 2016. Current ratio was at 1.76 as on Jan. 28, 2017, up from 1.57 on Jan. 30, 2016.
Days inventory outstanding was almost stable at 28 days for the quarter, when compared with the last year period. At the same time, days payable outstanding went up to 19 days for the quarter from 17 for the same period last year.
Debt comes down
Gap Inc. has recorded a decline in total debt over the last one year. It stood at $1,313 million as on Jan. 28, 2017, down 24.15 percent or $418 million from $1,731 million on Jan. 30, 2016. Total debt was 17.25 percent of total assets as on Jan. 28, 2017, compared with 23.16 percent on Jan. 30, 2016. Debt to equity ratio was at 0.45 as on Jan. 28, 2017, down from 0.68 as on Jan. 30, 2016. Interest coverage ratio deteriorated to 18.81 for the quarter from 23.67 for the same period last year.
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