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.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye