Gap Conference Call Highlights

Gap

reported its second quarter earnings on Friday. Shares of the company are up five percent. • We opened up three stores in China for Old Navy. • But that's a big milestone move for us as we look at the China market, as everybody knows, critical to the future growth for Gap, Inc. • We'll end this year with 110 Gap stores still on plan, up to six Old Navy stores. • Tsxhe team feels a lot better about our inventory position . • Just a quick update on our franchise business because the company operates in about 50 countries. • In Q2, we made progress against several of our financial priorities. Specifically, we grew net sales by 3% • We delivered earnings of $332 million and earnings per share of $0.75 versus $0.64 last year. • Year-to-date, we've generated free cash flow of $668 million and we distributed $802 million through share repurchases and dividends. • Regarding sales for the second quarter, total net sales were $4 billion and comp sales were flat for the quarter, following last year's 5% comp. Guidance: • Our full-year operating outlook remains unchanged. • However, we are updating our full-year guidance to reflect the gain on sale worth $0.05. • Therefore, our full-year guidance range has increased from $2.90 to $2.95, to $2.95 to $3.00. • At its midpoint, including the gain, this represents growth of approximately 9%. • Regarding expenses, it's important to note that there is no change to our full-year goal of achieving leverage.