☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-1697231
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Two Folsom Street, San Francisco, California
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94105
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(Address of principal executive offices)
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(Zip code)
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•
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the impact of the adoption of new accounting standards;
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•
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total store closures in fiscal 2016, including winding down Old Navy operations in Japan and closure of select Banana Republic stores, primarily internationally;
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•
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impact of store closures and streamlining measures, including annualized savings, lost sales, tax expense, and restructuring costs;
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•
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recognition of unrealized gains and losses from designated cash flow hedges into income;
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•
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the impact of the potential settlement of outstanding tax matters and the closing of audits;
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•
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the impact of losses due to indemnification obligations;
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•
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the outcome of proceedings, lawsuits, disputes, and claims;
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•
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Old Navy’s near-term growth ambitions anchored in North America and Mexico, as well as China and its franchise operations;
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•
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continuing investment in our mobile digital capabilities;
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•
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further enhancing our shopping experience for our customers;
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•
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creation of a more efficient operating model;
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•
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the impact of foreign exchange rate fluctuations on our financial results;
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•
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current cash balances and cash flows being sufficient to support our business operations, including growth initiatives and planned capital expenditures;
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•
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ability to supplement near-term liquidity, if necessary, with our $500 million revolving credit facility or other available market instruments;
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•
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the impact of the seasonality of our operations;
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•
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dividend payments in fiscal 2016; and
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•
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the impact of changes in internal control over financial reporting.
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•
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the risk that adoption of new accounting pronouncements will impact future results;
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•
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the risk that we or our franchisees will be unsuccessful in gauging apparel trends and changing consumer preferences;
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•
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the risk that changes in global economic conditions or consumer spending patterns could adversely impact our results of operations;
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•
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the highly competitive nature of our business in the United States and internationally;
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•
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the risk that if we are unable to manage our inventory effectively, our gross margins will be adversely affected;
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•
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the risk that the failure to attract and retain key personnel, or effectively manage succession, could have an adverse impact on our results of operations;
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•
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the risk that we are subject to data or other security breaches that may result in increased costs, violations of law, significant legal and financial exposure, and a loss of confidence in our security measures, which could have an adverse effect on our results of operations and our reputation;
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•
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the risks to our efforts to expand internationally, including our ability to operate under a global brand structure and operating in regions where we have less experience;
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•
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the risk that foreign currency exchange rate fluctuations could adversely impact our financial results;
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•
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the risks to our business, including our costs and supply chain, associated with global sourcing and manufacturing;
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•
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the risks to our reputation or operations associated with importing merchandise from foreign countries, including failure of our vendors to adhere to our Code of Vendor Conduct;
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•
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the risk that trade matters could increase the cost or reduce the supply of apparel available to us and adversely affect our business, financial condition, and results of operations;
|
•
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the risk that our franchisees’ operation of franchise stores is not directly within our control and could impair the value of our brands;
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•
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the risk that we or our franchisees will be unsuccessful in identifying, negotiating, and securing new store locations and renewing, modifying, or terminating leases for existing store locations effectively;
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•
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the risk that our investments in omni-channel shopping initiatives may not deliver the results we anticipate;
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•
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the risk that comparable sales and margins will experience fluctuations;
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•
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the risk that changes in our credit profile or deterioration in market conditions may limit our access to the capital markets and adversely impact our financial results or our business initiatives;
|
•
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the risk that updates or changes to our information technology (“IT”) systems may disrupt our operations;
|
•
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the risk that failure to maintain, enhance, and protect our brand image could have an adverse effect on our results of operations;
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•
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the risk that natural disasters, public health crises, political crises, or other catastrophic events could adversely affect our operations and financial results, or those of our franchisees or vendors;
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•
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the risk that changes in the regulatory or administrative landscape could adversely affect our financial condition, strategies, and results of operations;
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•
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the risk that we do not repurchase some or all of the shares we anticipate purchasing pursuant to our repurchase program; and
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•
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the risk that we will not be successful in defending various proceedings, lawsuits, disputes, claims, and audits.
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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Item 1.
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Financial Statements.
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($ and shares in millions except par value)
|
July 30,
2016 |
|
January 30,
2016 |
|
August 1,
2015 |
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,681
|
|
|
$
|
1,370
|
|
|
$
|
1,043
|
|
Merchandise inventory
|
1,951
|
|
|
1,873
|
|
|
2,005
|
|
|||
Other current assets
|
669
|
|
|
742
|
|
|
899
|
|
|||
Total current assets
|
4,301
|
|
|
3,985
|
|
|
3,947
|
|
|||
Property and equipment, net of accumulated depreciation of $5,903, $5,644, and $5,671
|
2,755
|
|
|
2,850
|
|
|
2,740
|
|
|||
Other long-term assets
|
681
|
|
|
638
|
|
|
600
|
|
|||
Total assets
|
$
|
7,737
|
|
|
$
|
7,473
|
|
|
$
|
7,287
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Current maturities of debt
|
$
|
424
|
|
|
$
|
421
|
|
|
$
|
20
|
|
Accounts payable
|
1,224
|
|
|
1,112
|
|
|
1,206
|
|
|||
Accrued expenses and other current liabilities
|
1,063
|
|
|
979
|
|
|
954
|
|
|||
Income taxes payable
|
70
|
|
|
23
|
|
|
4
|
|
|||
Total current liabilities
|
2,781
|
|
|
2,535
|
|
|
2,184
|
|
|||
Long-term liabilities:
|
|
|
|
|
|
||||||
Long-term debt
|
1,321
|
|
|
1,310
|
|
|
1,328
|
|
|||
Lease incentives and other long-term liabilities
|
1,076
|
|
|
1,083
|
|
|
1,104
|
|
|||
Total long-term liabilities
|
2,397
|
|
|
2,393
|
|
|
2,432
|
|
|||
Commitments and contingencies (see Note 12)
|
|
|
|
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|
||||||
Stockholders’ equity:
|
|
|
|
|
|
||||||
Common stock $0.05 par value
|
|
|
|
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|
||||||
Authorized 2,300 shares for all periods presented; Issued and Outstanding 398, 397, and 410 shares
|
20
|
|
|
20
|
|
|
20
|
|
|||
Additional paid-in capital
|
31
|
|
|
—
|
|
|
—
|
|
|||
Retained earnings
|
2,509
|
|
|
2,440
|
|
|
2,507
|
|
|||
Accumulated other comprehensive income (loss)
|
(1
|
)
|
|
85
|
|
|
144
|
|
|||
Total stockholders’ equity
|
2,559
|
|
|
2,545
|
|
|
2,671
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
7,737
|
|
|
$
|
7,473
|
|
|
$
|
7,287
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ and shares in millions except per share amounts)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Net sales
|
$
|
3,851
|
|
|
$
|
3,898
|
|
|
$
|
7,289
|
|
|
$
|
7,555
|
|
Cost of goods sold and occupancy expenses
|
2,414
|
|
|
2,440
|
|
|
4,643
|
|
|
4,715
|
|
||||
Gross profit
|
1,437
|
|
|
1,458
|
|
|
2,646
|
|
|
2,840
|
|
||||
Operating expenses
|
1,158
|
|
|
1,089
|
|
|
2,145
|
|
|
2,085
|
|
||||
Operating income
|
279
|
|
|
369
|
|
|
501
|
|
|
755
|
|
||||
Interest expense
|
18
|
|
|
17
|
|
|
37
|
|
|
22
|
|
||||
Interest income
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
||||
Income before income taxes
|
263
|
|
|
353
|
|
|
467
|
|
|
735
|
|
||||
Income taxes
|
138
|
|
|
134
|
|
|
215
|
|
|
277
|
|
||||
Net income
|
$
|
125
|
|
|
$
|
219
|
|
|
$
|
252
|
|
|
$
|
458
|
|
Weighted-average number of shares - basic
|
398
|
|
|
417
|
|
|
398
|
|
|
419
|
|
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Weighted-average number of shares - diluted
|
399
|
|
|
418
|
|
|
399
|
|
|
421
|
|
||||
Earnings per share - basic
|
$
|
0.31
|
|
|
$
|
0.53
|
|
|
$
|
0.63
|
|
|
$
|
1.09
|
|
Earnings per share - diluted
|
$
|
0.31
|
|
|
$
|
0.52
|
|
|
$
|
0.63
|
|
|
$
|
1.09
|
|
Cash dividends declared and paid per share
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.46
|
|
|
$
|
0.46
|
|
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13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Net income
|
$
|
125
|
|
|
$
|
219
|
|
|
$
|
252
|
|
|
$
|
458
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
(22
|
)
|
|
(13
|
)
|
|
9
|
|
|
(7
|
)
|
||||
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $27, $17 , $(9) and $13
|
(7
|
)
|
|
36
|
|
|
(96
|
)
|
|
26
|
|
||||
Reclassification adjustment for (gains) losses on derivative financial instruments, net of tax of $(2), $(8), $(6) and $(17)
|
8
|
|
|
(19
|
)
|
|
1
|
|
|
(40
|
)
|
||||
Other comprehensive income (loss), net of tax
|
(21
|
)
|
|
4
|
|
|
(86
|
)
|
|
(21
|
)
|
||||
Comprehensive income
|
$
|
104
|
|
|
$
|
223
|
|
|
$
|
166
|
|
|
$
|
437
|
|
|
26 Weeks Ended
|
||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
252
|
|
|
$
|
458
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
303
|
|
|
294
|
|
||
Amortization of lease incentives
|
(31
|
)
|
|
(31
|
)
|
||
Share-based compensation
|
36
|
|
|
43
|
|
||
Tax benefit from exercise of stock options and vesting of stock units
|
(3
|
)
|
|
23
|
|
||
Excess tax benefit from exercise of stock options and vesting of stock units
|
(1
|
)
|
|
(24
|
)
|
||
Non-cash and other items
|
62
|
|
|
(12
|
)
|
||
Deferred income taxes
|
(14
|
)
|
|
2
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Merchandise inventory
|
(52
|
)
|
|
(124
|
)
|
||
Other current assets and other long-term assets
|
31
|
|
|
36
|
|
||
Accounts payable
|
102
|
|
|
36
|
|
||
Accrued expenses and other current liabilities
|
(20
|
)
|
|
(56
|
)
|
||
Income taxes payable, net of prepaid and other tax-related items
|
92
|
|
|
(16
|
)
|
||
Lease incentives and other long-term liabilities
|
(23
|
)
|
|
13
|
|
||
Net cash provided by operating activities
|
734
|
|
|
642
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(270
|
)
|
|
(301
|
)
|
||
Other
|
(1
|
)
|
|
(1
|
)
|
||
Net cash used for investing activities
|
(271
|
)
|
|
(302
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuances under share-based compensation plans
|
16
|
|
|
53
|
|
||
Withholding tax payments related to vesting of stock units
|
(17
|
)
|
|
(68
|
)
|
||
Repurchases of common stock
|
—
|
|
|
(622
|
)
|
||
Excess tax benefit from exercise of stock options and vesting of stock units
|
1
|
|
|
24
|
|
||
Cash dividends paid
|
(183
|
)
|
|
(192
|
)
|
||
Other
|
23
|
|
|
(1
|
)
|
||
Net cash used for financing activities
|
(160
|
)
|
|
(806
|
)
|
||
Effect of foreign exchange rate fluctuations on cash and cash equivalents
|
8
|
|
|
(6
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
311
|
|
|
(472
|
)
|
||
Cash and cash equivalents at beginning of period
|
1,370
|
|
|
1,515
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,681
|
|
|
$
|
1,043
|
|
Non-cash investing activities:
|
|
|
|
||||
Purchases of property and equipment not yet paid at end of period
|
$
|
46
|
|
|
$
|
70
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest during the period
|
$
|
41
|
|
|
$
|
39
|
|
Cash paid for income taxes during the period, net of refunds
|
$
|
143
|
|
|
$
|
266
|
|
|
Costs Incurred
|
|
Estimated Costs to be Incurred
|
||||||
($ in millions)
|
13 Weeks Ended July 30, 2016
|
|
Remainder of Fiscal 2016
|
|
Total
|
||||
Costs recorded in cost of goods sold and occupancy expenses:
|
|
|
|
|
|
||||
Accelerated depreciation
|
$
|
4
|
|
|
$ 10 - 15
|
|
|
$ 15 - 20
|
|
Employee related costs
|
11
|
|
|
Less than 5
|
|
|
10 - 15
|
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
Total costs recorded in cost of goods sold and occupancy expenses
|
15
|
|
|
10 - 20
|
|
|
25 - 35
|
|
|
|
|
|
|
|
|
||||
Costs recorded in operating expenses:
|
|
|
|
|
|
||||
Lease termination fees and lease losses
|
34
|
|
|
50 - 65
|
|
|
85 - 100
|
|
|
Employee related costs
|
30
|
|
|
15 - 20
|
|
|
45 - 50
|
|
|
Store asset impairment
|
52
|
|
|
Less than 5
|
|
|
50 - 55
|
|
|
Other
|
19
|
|
|
5 - 10
|
|
|
25 - 30
|
|
|
Total costs recorded in operating expenses
|
135
|
|
|
70 - 100
|
|
|
205 - 235
|
|
|
Total restructuring costs
|
$
|
150
|
|
|
$ 80 - 120
|
|
|
$ 230 - 270
|
|
($ in millions)
|
Lease Termination Fees and Lease Losses
|
|
Employee Related Costs
|
|
Other
|
|
Total
|
||||||||
Balance at April 30, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Provision
|
34
|
|
|
41
|
|
|
12
|
|
|
87
|
|
||||
Cash payments
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||
Balance at July 30, 2016
|
$
|
34
|
|
|
$
|
41
|
|
|
$
|
6
|
|
|
$
|
81
|
|
($ in millions)
|
July 30,
2016 |
|
January 30,
2016 |
|
August 1,
2015 |
||||||
Notes
|
$
|
1,248
|
|
|
$
|
1,248
|
|
|
$
|
1,248
|
|
Japan Term Loan
|
97
|
|
|
83
|
|
|
100
|
|
|||
Total long-term debt
|
1,345
|
|
|
1,331
|
|
|
1,348
|
|
|||
Less: Current portion
|
(24
|
)
|
|
(21
|
)
|
|
(20
|
)
|
|||
Total long-term debt, less current portion
|
$
|
1,321
|
|
|
$
|
1,310
|
|
|
$
|
1,328
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
($ in millions)
|
July 30, 2016
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
756
|
|
|
$
|
169
|
|
|
$
|
587
|
|
|
$
|
—
|
|
Derivative financial instruments
|
52
|
|
|
—
|
|
|
52
|
|
|
—
|
|
||||
Deferred compensation plan assets
|
41
|
|
|
41
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
849
|
|
|
$
|
210
|
|
|
$
|
639
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative financial instruments
|
$
|
83
|
|
|
$
|
—
|
|
|
$
|
83
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
($ in millions)
|
January 30, 2016
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
517
|
|
|
$
|
204
|
|
|
$
|
313
|
|
|
$
|
—
|
|
Derivative financial instruments
|
93
|
|
|
—
|
|
|
93
|
|
|
—
|
|
||||
Deferred compensation plan assets
|
37
|
|
|
37
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
647
|
|
|
$
|
241
|
|
|
$
|
406
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative financial instruments
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
($ in millions)
|
August 1, 2015
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
239
|
|
|
$
|
96
|
|
|
$
|
143
|
|
|
$
|
—
|
|
Derivative financial instruments
|
141
|
|
|
—
|
|
|
141
|
|
|
—
|
|
||||
Deferred compensation plan assets
|
46
|
|
|
46
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
426
|
|
|
$
|
142
|
|
|
$
|
284
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative financial instruments
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
($ in millions)
|
July 30,
2016 |
|
January 30,
2016 |
|
August 1,
2015 |
||||||
Derivatives designated as cash flow hedges
|
$
|
1,449
|
|
|
$
|
1,220
|
|
|
$
|
1,468
|
|
Derivatives designated as net investment hedges
|
32
|
|
|
30
|
|
|
31
|
|
|||
Derivatives not designated as hedging instruments
|
625
|
|
|
324
|
|
|
313
|
|
|||
Total
|
$
|
2,106
|
|
|
$
|
1,574
|
|
|
$
|
1,812
|
|
($ in millions)
|
July 30,
2016 |
|
January 30,
2016 |
|
August 1,
2015 |
||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
30
|
|
|
$
|
71
|
|
|
$
|
95
|
|
Other long-term assets
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
29
|
|
Accrued expenses and other current liabilities
|
$
|
38
|
|
|
$
|
1
|
|
|
$
|
3
|
|
Lease incentives and other long-term liabilities
|
$
|
23
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
|
|
|
|
|
||||||
Derivatives designated as net investment hedges:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Other long-term assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued expenses and other current liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Lease incentives and other long-term liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
12
|
|
|
$
|
13
|
|
|
$
|
17
|
|
Other long-term assets
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued expenses and other current liabilities
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Lease incentives and other long-term liabilities
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Total derivatives in an asset position
|
$
|
52
|
|
|
$
|
93
|
|
|
$
|
141
|
|
Total derivatives in a liability position
|
$
|
83
|
|
|
$
|
3
|
|
|
$
|
8
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in other comprehensive income
|
$
|
20
|
|
|
$
|
53
|
|
|
$
|
(105
|
)
|
|
$
|
39
|
|
Gain reclassified into cost of goods sold and occupancy expenses
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
13
|
|
|
$
|
54
|
|
Gain (loss) reclassified into operating expenses
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(8
|
)
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives in net investment hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in other comprehensive income
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Gain (loss) recognized in operating expenses
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ and shares in millions except average per share cost)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Number of shares repurchased
|
—
|
|
|
10.0
|
|
|
—
|
|
|
15.6
|
|
||||
Total cost
|
$
|
—
|
|
|
$
|
377
|
|
|
$
|
—
|
|
|
$
|
607
|
|
Average per share cost including commissions
|
$
|
—
|
|
|
$
|
37.60
|
|
|
$
|
—
|
|
|
$
|
38.82
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Stock units
|
$
|
17
|
|
|
$
|
16
|
|
|
$
|
29
|
|
|
$
|
34
|
|
Stock options
|
3
|
|
|
3
|
|
|
5
|
|
|
6
|
|
||||
Employee stock purchase plan
|
1
|
|
|
2
|
|
|
2
|
|
|
3
|
|
||||
Share-based compensation expense
|
21
|
|
|
21
|
|
|
36
|
|
|
43
|
|
||||
Less: Income tax benefit
|
(11
|
)
|
|
(8
|
)
|
|
(17
|
)
|
|
(16
|
)
|
||||
Share-based compensation expense, net of tax
|
$
|
10
|
|
|
$
|
13
|
|
|
$
|
19
|
|
|
$
|
27
|
|
($ in millions)
|
Foreign Currency Translation
|
|
Cash Flow Hedges
|
|
Total
|
||||||
Balance at January 30, 2016
|
$
|
22
|
|
|
$
|
63
|
|
|
$
|
85
|
|
13 Weeks Ended April 30, 2016:
|
|
|
|
|
|
||||||
Foreign currency translation
|
31
|
|
|
—
|
|
|
31
|
|
|||
Change in fair value of derivative financial instruments
|
—
|
|
|
(89
|
)
|
|
(89
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||
Other comprehensive income (loss), net
|
31
|
|
|
(96
|
)
|
|
(65
|
)
|
|||
Balance at April 30, 2016
|
53
|
|
|
(33
|
)
|
|
20
|
|
|||
13 Weeks Ended July 30, 2016:
|
|
|
|
|
|
||||||
Foreign currency translation
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
|||
Change in fair value of derivative financial instruments
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
8
|
|
|
8
|
|
|||
Other comprehensive income (loss), net
|
(22
|
)
|
|
1
|
|
|
(21
|
)
|
|||
Balance at July 30, 2016
|
$
|
31
|
|
|
$
|
(32
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
||||||
($ in millions)
|
Foreign Currency Translation
|
|
Cash Flow Hedges
|
|
Total
|
||||||
Balance at January 31, 2015
|
$
|
60
|
|
|
$
|
105
|
|
|
$
|
165
|
|
13 Weeks Ended May 2, 2015:
|
|
|
|
|
|
||||||
Foreign currency translation
|
6
|
|
|
—
|
|
|
6
|
|
|||
Change in fair value of derivative financial instruments
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
(21
|
)
|
|
(21
|
)
|
|||
Other comprehensive income (loss), net
|
6
|
|
|
(31
|
)
|
|
(25
|
)
|
|||
Balance at May 2, 2015
|
66
|
|
|
74
|
|
|
140
|
|
|||
13 Weeks Ended August 1, 2015:
|
|
|
|
|
|
||||||
Foreign currency translation
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|||
Change in fair value of derivative financial instruments
|
—
|
|
|
36
|
|
|
36
|
|
|||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|||
Other comprehensive income (loss), net
|
(13
|
)
|
|
17
|
|
|
4
|
|
|||
Balance at August 1, 2015
|
$
|
53
|
|
|
$
|
91
|
|
|
$
|
144
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||
(shares in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||
Weighted-average number of shares - basic
|
398
|
|
|
417
|
|
|
398
|
|
|
419
|
|
Common stock equivalents
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
|
Weighted-average number of shares - diluted
|
399
|
|
|
418
|
|
|
399
|
|
|
421
|
|
(1)
|
U.S. includes the United States, Puerto Rico, and Guam.
|
(2)
|
Includes Athleta and Intermix.
|
(3)
|
Includes Athleta, Intermix, and Piperlime, which was discontinued as of the first quarter of fiscal 2015.
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
Net sales for the
second quarter of fiscal 2016
decreased 1 percent compared with the
second quarter of fiscal 2015
.
|
•
|
Comparable sales for the
second quarter of fiscal 2016
decreased 2 percent compared with a 2 percent decrease for the
second quarter of fiscal 2015
.
|
•
|
Net income for the
second quarter of fiscal 2016
was
$125 million
compared with
$219 million
for the
second quarter of fiscal 2015
, and diluted earnings per share was
$0.31
for the
second quarter of fiscal 2016
compared with
$0.52
for the
second quarter of fiscal 2015
. Diluted earnings per share for the
second quarter of fiscal 2016
included about $0.29 impact of restructuring costs incurred in the
second quarter of fiscal 2016
.
|
•
|
During the
first half of fiscal 2016
, we distributed
$183 million
to shareholders through dividends.
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||
Gap Global
|
(3
|
)%
|
|
(6
|
)%
|
|
(3
|
)%
|
|
(8
|
)%
|
Old Navy Global
|
—
|
%
|
|
3
|
%
|
|
(3
|
)%
|
|
3
|
%
|
Banana Republic Global
|
(9
|
)%
|
|
(4
|
)%
|
|
(10
|
)%
|
|
(6
|
)%
|
The Gap, Inc.
|
(2
|
)%
|
|
(2
|
)%
|
|
(4
|
)%
|
|
(3
|
)%
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
|||||||||||
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
|||||||
Net sales per average square foot (1)
|
$
|
85
|
|
|
$
|
86
|
|
|
159
|
|
|
$
|
164
|
|
(1)
|
Excludes net sales associated with our online and franchise businesses.
|
|
January 30, 2016
|
|
26 Weeks Ended July 30, 2016
|
|
July 30, 2016
|
|||||||||
|
Number of
Store Locations
|
|
Number of
Stores Opened
|
|
Number of
Stores Closed
|
|
Number of
Store Locations
|
|
Square Footage
(in millions)
|
|||||
Gap North America
|
866
|
|
|
5
|
|
|
15
|
|
|
856
|
|
|
8.9
|
|
Gap Asia
|
305
|
|
|
11
|
|
|
2
|
|
|
314
|
|
|
3.1
|
|
Gap Europe
|
175
|
|
|
1
|
|
|
9
|
|
|
167
|
|
|
1.4
|
|
Old Navy North America
|
1,030
|
|
|
8
|
|
|
6
|
|
|
1,032
|
|
|
17.4
|
|
Old Navy Asia
|
65
|
|
|
4
|
|
|
—
|
|
|
69
|
|
|
1.0
|
|
Banana Republic North America
|
612
|
|
|
2
|
|
|
5
|
|
|
609
|
|
|
5.1
|
|
Banana Republic Asia
|
51
|
|
|
—
|
|
|
1
|
|
|
50
|
|
|
0.2
|
|
Banana Republic Europe
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
0.1
|
|
Athleta North America
|
120
|
|
|
6
|
|
|
—
|
|
|
126
|
|
|
0.5
|
|
Intermix North America
|
41
|
|
|
—
|
|
|
1
|
|
|
40
|
|
|
0.1
|
|
Company-operated stores total
|
3,275
|
|
|
37
|
|
|
39
|
|
|
3,273
|
|
|
37.8
|
|
Franchise
|
446
|
|
|
35
|
|
|
24
|
|
|
457
|
|
|
N/A
|
|
Total
|
3,721
|
|
|
72
|
|
|
63
|
|
|
3,730
|
|
|
37.8
|
|
Decrease over prior year
|
|
|
|
|
|
|
(0.6
|
)%
|
|
(1.0
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|||||
|
January 31, 2015
|
|
26 Weeks Ended August 1, 2015
|
|
August 1, 2015
|
|||||||||
|
Number of
Store Locations
|
|
Number of
Stores Opened
|
|
Number of
Stores Closed
|
|
Number of
Store Locations
|
|
Square Footage
(in millions)
|
|||||
Gap North America
|
960
|
|
|
16
|
|
|
33
|
|
|
943
|
|
|
9.9
|
|
Gap Asia
|
266
|
|
|
21
|
|
|
1
|
|
|
286
|
|
|
2.8
|
|
Gap Europe
|
189
|
|
|
4
|
|
|
4
|
|
|
189
|
|
|
1.6
|
|
Old Navy North America
|
1,013
|
|
|
11
|
|
|
11
|
|
|
1,013
|
|
|
17.1
|
|
Old Navy Asia
|
43
|
|
|
8
|
|
|
—
|
|
|
51
|
|
|
0.8
|
|
Banana Republic North America
|
610
|
|
|
10
|
|
|
6
|
|
|
614
|
|
|
5.1
|
|
Banana Republic Asia
|
44
|
|
|
4
|
|
|
—
|
|
|
48
|
|
|
0.2
|
|
Banana Republic Europe
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
0.1
|
|
Athleta North America
|
101
|
|
|
10
|
|
|
—
|
|
|
111
|
|
|
0.5
|
|
Intermix North America
|
42
|
|
|
1
|
|
|
—
|
|
|
43
|
|
|
0.1
|
|
Piperlime North America
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Company-operated stores total
|
3,280
|
|
|
85
|
|
|
56
|
|
|
3,309
|
|
|
38.2
|
|
Franchise
|
429
|
|
|
21
|
|
|
8
|
|
|
442
|
|
|
N/A
|
|
Total
|
3,709
|
|
|
106
|
|
|
64
|
|
|
3,751
|
|
|
38.2
|
|
Increase over prior year
|
|
|
|
|
|
|
4.4
|
%
|
|
2.1
|
%
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Cost of goods sold and occupancy expenses
|
$
|
2,414
|
|
|
$
|
2,440
|
|
|
$
|
4,643
|
|
|
$
|
4,715
|
|
Gross profit
|
$
|
1,437
|
|
|
$
|
1,458
|
|
|
$
|
2,646
|
|
|
$
|
2,840
|
|
Cost of goods sold and occupancy expenses as a percentage of net sales
|
62.7
|
%
|
|
62.6
|
%
|
|
63.7
|
%
|
|
62.4
|
%
|
||||
Gross margin
|
37.3
|
%
|
|
37.4
|
%
|
|
36.3
|
%
|
|
37.6
|
%
|
•
|
Cost of goods sold decreased 0.2 percent as a percentage of net sales in the
second quarter of fiscal 2016
compared with the
second quarter of fiscal 2015
primarily driven by improved performance at Old Navy.
|
•
|
Occupancy expenses increased 0.3 percentage points in the
second quarter of fiscal 2016
compared with the
second quarter of fiscal 2015
, primarily driven by the decrease in net sales without a corresponding decrease in occupancy expenses.
|
•
|
Cost of goods sold increased 0.7 percent as a percentage of net sales in the
first half of fiscal 2016
compared with the
first half of fiscal 2015
primarily driven by lower markdown margins at Banana Republic and Old Navy.
|
•
|
Occupancy expenses increased 0.6 percentage points in the
first half of fiscal 2016
compared with the
first half of fiscal 2015
, primarily driven by the decrease in net sales without a corresponding decrease in occupancy expenses.
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Operating expenses
|
$
|
1,158
|
|
|
$
|
1,089
|
|
|
$
|
2,145
|
|
|
$
|
2,085
|
|
Operating expenses as a percentage of net sales
|
30.1
|
%
|
|
27.9
|
%
|
|
29.4
|
%
|
|
27.6
|
%
|
||||
Operating margin
|
7.2
|
%
|
|
9.5
|
%
|
|
6.9
|
%
|
|
10.0
|
%
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Interest expense
|
$
|
18
|
|
|
$
|
17
|
|
|
$
|
37
|
|
|
$
|
22
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
|
July 30,
2016 |
|
August 1,
2015 |
||||||||
Income taxes
|
$
|
138
|
|
|
$
|
134
|
|
|
$
|
215
|
|
|
$
|
277
|
|
Effective tax rate
|
52.5
|
%
|
|
38.0
|
%
|
|
46.0
|
%
|
|
37.7
|
%
|
•
|
an increase of $108 million in income taxes payable, net of prepaid and other tax-related items, primarily due to lower estimated earnings for fiscal 2016;
|
•
|
an increase of $74 million in non cash and other items, primarily due to the reclassification of gain related to our derivative financial instruments in the first half of fiscal 2015 and an increase in store asset impairment in the first half of fiscal 2016 compared with the first half of fiscal 2015;
|
•
|
an increase of $72 million in merchandise inventory, primarily due to the volume and timing of receipts; and
|
•
|
an increase of $66 million in accounts payable, primarily due to the timing of payments; partially offset by
|
•
|
a decrease of $206 million in net income.
|
•
|
no repurchases of common stock in the
first half of fiscal 2016
compared with $622 million cash outflows related to repurchases of common stock in the
first half of fiscal 2015
.
|
|
26 Weeks Ended
|
||||||
($ in millions)
|
July 30,
2016 |
|
August 1,
2015 |
||||
Net cash provided by operating activities
|
$
|
734
|
|
|
$
|
642
|
|
Less: Purchases of property and equipment
|
(270
|
)
|
|
(301
|
)
|
||
Free cash flow
|
$
|
464
|
|
|
$
|
341
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
Total
Number of
Shares
Purchased
|
|
Average
Price Paid
Per Share
Including
Commissions
|
|
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
|
|
Maximum
Number (or
approximate
dollar amount) of
Shares that May
Yet be Purchased
Under the Plans
or Programs (1)
|
||||||
Month #1 (May 1 - May 28)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,000
|
million
|
Month #2 (May 29 - July 2)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,000
|
million
|
Month #3 (July 3 - July 30)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,000
|
million
|
Total
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
(1)
|
On February 26, 2015, we announced that the Board of Directors approved a $1 billion share repurchase authorization. On February 25, 2016, we announced that the Board of Directors approved a new $1 billion share repurchase authorization. The February 2015 repurchase program, which had $302 million remaining, was superseded and replaced by the February 2016 repurchase program, which has no expiration date.
|
Item 6.
|
Exhibits.
|
10.1
|
|
Agreement with Sebastian DiGrande dated April 22, 2016 and confirmed on April 22, 2016. (1)
|
10.2
|
|
Letter Amendment No. 1 to the Amended and Restated Revolving Credit Agreement dated August 31, 2016. (1)
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1)
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1)
|
32.1
|
|
Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
|
32.2
|
|
Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
|
101
|
|
The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements. (1)
|
(1)
|
Filed herewith.
|
(2)
|
Furnished herewith.
|
|
|
THE GAP, INC.
|
|
|
|
|
|
Date:
|
September 2, 2016
|
By
|
/s/ Arthur Peck
|
|
|
|
Arthur Peck
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date:
|
September 2, 2016
|
By
|
/s/ Sabrina L. Simmons
|
|
|
|
Sabrina L. Simmons
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
10.1
|
|
Agreement with Sebastian DiGrande dated April 22, 2016 and confirmed on April 22, 2016. (1)
|
10.2
|
|
Letter Amendment No. 1 to the Amended and Restated Revolving Credit Agreement dated August 31, 2016. (1)
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1)
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1)
|
32.1
|
|
Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
|
32.2
|
|
Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
|
101
|
|
The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements. (1)
|
(1)
|
Filed herewith.
|
(2)
|
Furnished herewith.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Gap, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
September 2, 2016
|
|
|
|
|
/s/ Arthur Peck
|
|
|
Arthur Peck
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Gap, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
September 2, 2016
|
|
|
|
|
/s/ Sabrina L. Simmons
|
|
|
Sabrina L. Simmons
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
September 2, 2016
|
|
|
|
|
/s/ Arthur Peck
|
|
|
Arthur Peck
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
September 2, 2016
|
|
|
|
|
/s/ Sabrina L. Simmons
|
|
|
Sabrina L. Simmons
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|