The Gap 3Q14 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. Full transcripts can be found at Seeking Alpha

Not pleased with our 3Q performance

“While we’re not proud of our third quarter sales performance, driven by a particularly tough result at Gap brand, we are pleased that the team has demonstrated strong discipline on both expense and inventory”

Sales flat, comps down

“Regarding sales for the third quarter, total net sales were flat at $4 billion and comp sales were down 2%.”

Art Peck will be new CEO

“Art Peck, our new CEO, who will be taking over from me on February 1st can put the team he wants to put together going forward that gives Gap Inc. the best chance to have innovation to win more customers, to grow internationally and to be a top global retail apparel company around the world.”

He’s been with the co for 10 years

“Being at the company for the last 10 years and having multiple roles around the company has really given me very broad and oftentimes very deep exposure to the executives in our senior roles.”

Currency is an important headwind to consider

“in Q4 we really expect more foreign exchange headwinds than we did in Q3 as well. If you think about the yen alone, the average rate was about 105 in Q3. And as of today, it’s about 118, which is a 12% depreciation. So that’s an importance piece to keep in mind as well.”

foreign exchange does help SG&A

“just as foreign exchange hurts your sales and hurts your earnings, when you translate the SG&A dollars, it helps your SG&A.”

Digital gift guide actually costs slightly more money

“We have a new gift guide out, which is doing really well and we feel very good about that. But it’s electronic, so those are trade-offs we do. We could have gift guide distributed to our best customers, call it 3 million, 4 million people and that would have cost x per copy.

So thoughtfully we actually put a little bit more money into the digital side of it. It’s so far so good. The money we put into it when you have the digital gift guide, which changes every day on Gap, you can actually click on to something you love that’ll take you right to our site. So we felt it was more prudent to put a little bit of money behind that choice as opposed to mailing out 4 million copies.”