The Gap 3Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

“there’s been a lot of conversation about late Thanksgiving and all the holiday shifts. Our view is there’s always been this many holidays within the larger context of the quarter. You’ve got this run-up before Thanksgiving, which is — again, this is true of the U.S. marketplace. You have the actual event of Black Friday and the 2 days that follow it. You have these 2 or 3 weeks after Thanksgiving. Then you have the week of Christmas, and then what’s become really important is the week after Christmas. So we, more than any year, have really planned and said, “Well, look, there’s really 5 holidays inside the holiday.”

“my view is there’s a little bit of fatigue out there when it comes to consumers. So the question is, are we disappointed in the consumer sentiment? Or as we, I’m just being honest, as an industry, have we really not been that innovative in order to give the consumers a value proposition that doesn’t look like wallpaper day in day out?”

“f the definition of winning is having a similar promotion on a similar category week in, week out, I think people are going to do that. I think they’re going to struggle going forward to the point where the consumer is looking for an event, they’re looking for something exciting. At the end of the day, we’re in the fashion business. ”

“Maybe in my past life, just purely playing a discount or price card might have been effective, but not in this business”

“is there deflation in the apparel business? Well, if you look at NPD, they’d say no. But is it a business that has heavy inflation? The answer is also no. ”

“traffic improved in October, but traffic was also negative for the quarter. So the 2 levers that supported our positive comp were conversion and unit per transaction”

“as I’m sure people have figured out maybe a long time ago, maybe people spoke a lot less strategically about retail in general and maybe fashion apparel, but anybody else you’re talking to in the last couple of years, you really got to be thoughtful and strategic when it comes to your gross margin management and traffic management. Here we are the weekend before Thanksgiving, that’s a very important time to think through this first weekend. Then you have a run from Monday to Wednesday. It’s a season within a season. Thursday now is its own day, Friday is its own day. Saturday and Sunday is a unique pairing. Then you have this run of 2 or 3 weeks before the weekend before Christmas. It’s its own unique time of year. Then you have December 26. So say that we don’t spend I would probably say maybe too much time overthinking and doing our analysis and talking to customers and trying to figure out trends is what we’re spending more time than — 5 years ago, we never spent this kind of time trying to really figure out day by day and weekend by weekend. And if we figure it out right and make the right decisions, then I think Sabrina is right. Then we’ll probably have a quarter that has less pressure on AUR.”

“it’s a little early to tell about one of the larger components of our costing, which is the raw materials. So far, cotton and oil are behaving decently well, so I think — we feel good about that and the team that’s working upstream.”