Holding Steady Over at Gap

In 2009 GAP Inc. (which includes Gap, Old Navy, Banana Republic, Piperlime and Athleta brands) brought in $14.2 billion, that’s a 3% decrease from 2008 sales and 11.4% decrease in sales since 2005. The brand had a higher gross margin (40.3%) in 2009 compared to 2008’s 37.5%. Part of the decrease in sales from 2005-2009 can be attributed to the discontinuation of the Forth & Towne stores in 2007 in addition to.

Gap Inc. attributes it’s 3% decrease ($417 million) in net sales from 2008-2009 to an unfavorable retail market and the decline in net sales at its Gap and Banana Republic stores. Additionally, they say the $32 million dollar unfavorable exchange rate in 2008 was also to blame. Operating expenses also went up for the 2009 year—while the company made a $68 million dollar cut in payroll, benefits, bonuses and store-related expenses (things like packaging, store remodels and rent) it was offset by the $78 million dollar increase of marketing expenses for the Gap and Banana Republic stores, which puts the total operations cost at a $10 million dollar increase from to 2008.

After volunteering to decrease his salary by 15% in 2009 (1,275,000 instead of 1,500,000), Glenn Murphy who is the chairman and CEO of Gap Inc. walked away with a total of $5,037,290 in 2009. This is a significant decrease from the $37,418,725 million he made in 2007. Part of the difference can be attributed to the 1 million dollar one-time-sign-on bonus he made when he started working for the company in 2007, along with the other $21,872,956 million dollars in bonuses he made that year.

Overall Gap seems to be weathering what it described as an “unfavorable retail market.” The company has 2010 plans to expand its presence in Europe and China with additional Banana Republic stores in both areas.