For the year, net income dropped 17 percent to $833 million versus net income of $1.2 billion in 2010. Net sales totaled $14.5 billion, representing a decrease of 1 percent from net sales of $14.7 billion the year before. Comp-store sales in 2011 were down 4 percent. The San Francisco-based specialty retailer is projecting 2012 earnings per share in the range of $1.75 to $1.80, compared with $1.56 a share on a diluted basis for 2011.
Gap’s problems last year were compounded by higher product costs, though a decline in the price of cotton is expected in the second half of this year; Old Navy’s price structure being too weighted to the “best” zone, and not enough value being offered at outlets.
On the positive side, the company delivered a higher average unit retail price, continued to tightly manage expenses, generated $800 million in free cash flow, and repurchased 111 million shares at an average price of $18.11. Also, Gap further reduced dependency on its brick-and-mortar business in North America, where 1.3 million square feet of retail space was eliminated. In addition, progress was seen on the international front, with Gap now operating in 39 countries compared with 31 at the beginning of 2011. RELATED STORY: Gap Makes Two Key Appointments >>
Another big change was the creation of the Gap Global Creative Center in New York. It’s the hub of creativity for Gap stores around the world, bringing domestic and international designers under one roof to align the Gap aesthetic and serve as a bridge between the design and merchandising teams to better coordinate their efforts.
“In spite of 2011 earnings being below last year, we’re pleased with the progress we made against our long-term strategic plan, including growing our online business and expanding internationally,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “There’s no doubt that improving our performance, especially in our base businesses, is the top priority in 2012, and we’re confident this is the right time to invest wisely to win back customers.”
Later, in a conference call, Murphy said the company will continue the investment in international expansion, but the difference this year will be increased but “focused” investments on product, marketing and e-commerce in the domestic businesses.
In spite of the 2011 results, “We actually did make quite a bit of progress on our strategic plan,” Murphy said, though he stressed, “We need to have consistent product execution every quarter, every year, across all of our brands.”
Regarding last year’s international performance, Murphy said it was “a bit of a mixed bag,” with the women’s business not registering with customers in Europe. However, he said he’s feeling “very good” about China, where stores currently operate in five cities but will be in 10 by the end of 2012. He also said the first outlets will open in China in the fall and that Banana Republic will be expanding in France.
“We still believe in Europe, but we’re very cautious,” Murphy said. Brazil and India will be targeted for expansion “down the road.”
In other news, Gap’s board approved a new $1 billion share repurchase authorization and said it will increase the annual dividend per share by 11 percent, from $0.45 in fiscal year 2011 to $0.50 for fiscal year 2012.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)