Gap Inc. Reports First Quarter Fiscal 2023 Results.

SAN FRANCISCO: Gap Inc. (NYSE: GPS), a portfolio of purpose-led, billion-dollar lifestyle brands including Old Navy, Gap, Banana Republic, and Athleta, and the largest specialty apparel company in the U.S., today reported financial results for its first quarter ended April 29, 2023.

"We continue to take the necessary actions to drive critical change at Gap Inc., ultimately getting us back on a path toward delivering consistent results long-term," said Bob Martin, Executive Chairman and Interim CEO, Gap Inc. "While the macro and consumer environment remain uncertain, Q1 underscores our ability to deliver improvements to the business including share gains at Old Navy and Gap Brand, adjusted operating margin expansion, reduction in inventory, and strength in our balance sheet. The need for lasting change is permeating the organization and I want to express my gratitude to our employees for embracing a new operating model and organizational structure, a renewed focus on our customer, and for their continued belief in our incredible brands."

"The Gap Inc. Board of Directors and I have deep appreciation for and confidence in the work that has taken hold under Bobby Martin and the Leadership Team, with results already showing progress, and more importantly, a collective focus on continued improvement still ahead. As we are engaged toward the appointment of a new Gap Inc. CEO to carry this work into the future, we look forward to the time when we will introduce this great company's next leader - one who will bring passion, vision and an unwavering focus on the customer," said Mayo Shattuck, Lead Independent Director, Gap Inc.

First Quarter Fiscal 2023 - Financial Results

Net sales of $3.28 billion, down 6% compared to last year, inclusive of an estimated 1-point foreign exchange headwind and 2 percentage points of negative impact from the sale of Gap China. Net sales were in line with the company's expectations for a mid-single digit decline in the quarter.

Comparable sales were down 3%.

Store sales decreased 4% compared to last year. The company ended the quarter with 3,453 store locations in over 40 countries, of which 2,601 were company operated.

Online sales decreased 9% compared to last year and represented 37% of total net sales.

Reported gross margin was 37.1%. Excluding $4 million in restructuring costs, adjusted gross margin of 37.2% increased 570 basis points versus last year.

Merchandise margin increased 600 basis points versus last...