The Gap, Inc. (NYSE:GPS) Q3 2017 Earnings Conference Call Transcript

Nov 16, 2017 • 05:00 pm ET


The Gap, Inc. (NYSE:GPS) Q3 2017 Earnings Conference Call Transcript


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Good afternoon, ladies and gentlemen. My name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to The Gap Inc. Third Quarter 2017 Conference Call. This call is being recorded.

(Operator Instructions) I would now like to introduce your host, Jen Fall, SVP of Corporate Finance and IR.

Jen Fall

Good afternoon, everyone. Welcome to Gap Inc.'s Third Quarter 2017 Earnings Conference Call. (Forward-Looking Cautionary Statements)

Joining me on the call today are President and CEO, Art Peck; and EVP and CFO, Teri List-Stoll. As mentioned, we will be using slides to supplement our remarks, which you can view by going to the Investors section at As always, the IR teams will be available after the call for further questions.

With that, I'd like to turn the call over to Art.

Art Peck

Good afternoon, everyone, and thanks for joining us as always. Teri and I are very happy to share with you today our Q3 results. We had another strong quarter, delivering our fourth consecutive quarter of positive comps, along with our fifth consecutive quarter of gross margin rate expansion. The momentum we're seeing in the business does give us the confidence to again increase our full year guidance.

Before I dive into the business, however, I do want to acknowledge that this quarter has had significant challenges, ranging from unseasonably warm weather and unprecedented impact of natural disasters and horrific events that have impacted our employees and our business. I want to take this opportunity to recognize and thank all 135,000 of my coworkers who have been there for our customers while, at the same time, contributing tirelessly to their communities. Our hearts and our resources are with those in the communities, which have still not fully recovered. I'm also pleased to share that we protected all of our impacted employees with pay continuity. This is a critical investment in our most important asset, our people.

In a moment, I'll turn it over to Teri, who will share more details on our Q3 results. But before I do, I would like to reiterate our balanced growth strategy, how it differentiates us from the industry and how we're continuing to strengthen and sustain that differentiation, and I want to talk about some of the key components of it.

Balanced growth is made up of four pillars: number one, investing in growth in value and active, and importantly in active, that extends into the performance lifestyle space; number two, accelerating a large, fast-growing, highly profitable and accretive online and mobile business. As we spoke to you in September, we indicated that we're on the path towards that being a $3 billion business, and we are very pleased with the results in terms of continuing to accelerate its growth rate. I'll talk more about that in a moment. Three, continuing to reduce our exposure as a company to traffic challenged real estate through specialty store rationalization, largely in Gap and Banana Republic brands; and number