Gap (GPS)

Earnings

The company reaffirmed that it expects fiscal year diluted earnings per share on a GAAP basis to be $1.30 to $1.35.

Earnings

The company is reaffirming that it expects fiscal year 2008 diluted earnings per share on a GAAP basis to be $1.20 to $1.27.

Earnings

The company’s third quarter of fiscal year 2007 diluted earnings per share of $0.30 benefited from lower marketing expenses compared with the prior year. As the company had previously stated, it did not intend to make the incremental marketing investments that it had made in the second half of fiscal year 2006. The incremental marketing expenses in the second half of fiscal year 2006 amounted to about $80 million.

The company realized substantially all of these savings – about $75 million—in the third quarter of fiscal year 2007. The company does not anticipate further significant reductions in marketing expenses in the fourth quarter of fiscal year 2007 as compared with the fourth quarter of last year.

As a result of the improvement in the third quarter, Gap Inc. is increasing its fiscal year 2007 guidance of GAAP diluted earnings per share to $0.92 to $0.98 from its prior guidance of $0.83 to $0.88 per diluted share.

The company continues to expect expenses related to its cost reduction initiatives to be about $35 million for the full year. There were approximately $6 million of related expenses in the third quarter, bringing the year-to-date expenses to about $32 million.

Excluding about $0.07 per diluted share of expenses associated with the cost reduction initiatives and the discontinued operation of Forth & Towne, the company is revising its fiscal year 2007 guidance upwards to $0.99 to $1.05 from its prior guidance of $0.90 to $0.95 diluted earnings per share. Please see the reconciliation of expected diluted earnings per share excluding these costs, a non-GAAP financial measure, to a GAAP financial measure in the table at the end of this release.

Earnings

The company revised its guidance for fiscal year 2007 diluted earnings per share on a GAAP basis to $0.83 to $0.88 from its previous guidance of $0.76 to $0.86. The company also revised its guidance for fiscal year 2007 diluted earnings per share, excluding expenses associated with the discontinued operation of Forth & Towne and the company’s cost reduction initiatives, to $0.90 to $0.95, compared to its previous guidance of $0.80 to $0.90.

Please see the reconciliation of expected diluted earnings per share excluding these costs, a non-GAAP financial measure, to a GAAP financial measure in the table at the end of this release.

The company expects the loss from the discontinued operation of Forth & Towne to be approximately $55 million for the full year. The company expects that expenses related to its cost reduction initiatives will be approximately $35 million for the full year, which includes $10 million of pre-tax charges in the second half of the year.

The impact of the loss from the discontinued operation of Forth & Towne, combined with expenses associated with the cost reduction initiatives, is expected to be about $0.07 per diluted share for fiscal year 2007.

Earnings

The company reaffirmed that it expects fiscal year 2007 diluted earnings per share on a GAAP basis to be $0.76 to $0.86. The company also continues to expect diluted earnings per share, excluding Forth & Towne’s expected net loss of $0.04, to be $0.80 to $0.90. Please see the reconciliation of expected diluted earnings per share excluding Forth & Towne’s net loss, a non-GAAP financial measure, to a GAAP financial measure in the table at the end of this release.

Earnings

The company had expected fiscal year earnings per share of $1.08 to $1.12. Based primarily on the deceleration of momentum at Old Navy in October, which has continued into November, and coupled with a slower turnaround pace at Gap brand, the company is revising its guidance for fiscal year earnings per share to $1.01 to $1.06.

Earnings

The company had expected fiscal year earnings per share of $1.23 to $1.27. This previous guidance was predicated on the belief that the company’s efforts to improve performance would begin to gain traction during the second quarter and build momentum with the fall product flows. Gap Inc.’s overall performance month-to-date is below the company’s expectations, driven by Gap and Old Navy. Due to the disappointing second quarter results coupled with month-to-date results, the company is revising its guidance for fiscal year earnings per share to $1.08 to $1.12.

Earnings

The company reiterated its guidance for fiscal year 2006 earnings per share of $1.23 to $1.27, which reflects pre-tax expenses of about $25 million related to the adoption of SFAS 123R.

Earnings

The company’s fiscal year 2005 earnings per share of $1.24 includes a $0.03 net benefit from a combination of four factors: (1) a $0.04 benefit from the company’s decision to occupy its leased office space in the Mission Bay area of San Francisco; (2) a $0.01 benefit from a non-recurring final adjustment to lease accounting; and (3) a benefit of $0.01 from a lower effective tax rate driven primarily by a non-recurring tax benefit realized in the fourth quarter. (4) These benefits were partially offset by $0.03 of amortization related to lease rights for stores in France.

Due to the uncertainty regarding the timing of its turnaround, the fact that month-to-date traffic is down 13 percent in February, and the company’s expectation that total comparable store sales will remain negative in the first half of fiscal year 2006 and turn modestly positive in the second half of fiscal year 2006, the company is guiding to a modest fiscal year 2006 earnings per share of $1.23 to $1.27. This outlook includes expenses related to the adoption of Statement of Financial Accounting Standards No. (SFAS) 123R, “Share-Based Payment” in fiscal year 2006, which the company estimates to be about $45 million of pre-tax expense, or approximately $0.03 per share in 2006.

Earnings

Month-to-date traffic trends have continued to deteriorate beyond anticipated levels. As a result, the performance of the first holiday flows is below expectations. Therefore, the company revised its guidance for fiscal year 2005 earnings per share to $1.12 to $1.17, down from $1.30 to $1.34.

Earnings

The company had expected fiscal year 2005 earnings per share of $1.44 to $1.48. This previous guidance was predicated in part on the belief that the company’s efforts to improve performance would begin to gain momentum by fall. In part due to August month-to-date results, which are significantly below expectations, and concerns about the macro-economic climate, the company has revised its estimate for fiscal year 2005 earnings per share to $1.30 to $1.34.

Earnings

The company is revising its earnings per share guidance for 2005 and 2006. The revisions are based solely on the real estate decision, discussed above. The company now expects to report earnings per share of $1.44 to $1.48 for fiscal year 2005. Previous earnings per share guidance was $1.41 to $1.45. The company expects earnings per share for 2006 to be $1.58 to $1.62. This guidance does not reflect the new accounting requirement to expense stock options beginning in the first quarter of 2006.

Earnings

The company reiterated its 2005 EPS guidance of $1.41-$1.45. In addition, the company announced that it expects to grow annual EPS in 2006 by about 12%.

Earnings

The company stated that it expects earnings per share to be $1.41 to $1.45 per share for fiscal year 2005. This estimate does not reflect expenses related to stock option expensing, which are expected to begin in the third quarter. This estimate reflects the proper accounting for leases.