On Nov. 16, broad-line clothier The Gap
- Oh my. Already-thin profit margins are thinning out even further on top of flat sales. This looks like a deeply troubled business, especially against the background of whiz-bang reports from rivals like Charlotte Russe
(NASDAQ:CHIC) , Abercrombie & Fitch(NYSE:ANF) , and American Eagle Outfitters(NASDAQ:AEOS) , proving that the sector as a whole is healthy. - Every segment except Banana Republic saw negative comps, and both of the flagship brands -- Gap and Old Navy -- had flat or lower net sales.
- If you're looking for a bright spot, the company is delaying its bill payments at a rate higher than inventory growth, so the cash conversion metric is looking better than the year-ago comparison.
- The Gap is a one-star stock in our Motley Fool CAPS community, with nearly as many bears as bulls offering opinions on the company. Add your own insights here -- we'll all be smarter for it.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q3 2006 |
Q3 2005 |
Change |
|
|---|---|---|---|
|
Sales |
$3,856.0 |
$3,860.0 |
(0.1%) |
|
Net Profit |
$189.0 |
$212.0 |
(10.8%) |
|
EPS |
$0.23 |
$0.24 |
(4.2%) |
|
Diluted Shares |
832.4 |
881.7 |
(5.6%) |
Get back to basics with a look at the income statement.
Margin Checkup
|
Q3 2006 |
Q3 2005 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
37.4% |
35.3% |
2.1 |
|
Operating Margin |
7.0% |
8.8% |
(1.8) |
|
Net Margin |
4.9% |
5.5% |
(0.6) |
Margins are the earnings engine. See how they work.
Balance Sheet Highlights
|
Assets |
Q3 2006 |
Q3 2005 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$2,426 |
$2,287 |
6.1% |
|
Accounts Rec.* |
$0 |
$0 |
N/A |
|
Inventory |
$2,617 |
$2,546 |
2.8% |
|
Liabilities |
Q3 2006 |
Q3 2005 |
Change |
|---|---|---|---|
|
Accounts Payable |
$1,613 |
$1,373 |
17.5% |
|
Long-Term Debt |
$513* |
$513 |
0.0% |
Learn the ways of the balance sheet.
Cash Flow Highlights
YTD 2006 | YTD 2005 | Change | |
|---|---|---|---|
Cash From Ops. | $620 | $328 | 89.0% |
Capital Expenditures | $406 | $448 | (9.3%) |
Free Cash Flow | $216 | ($120) | N/A |
$584 | $726 | (19.6%) |
Find out why Fools always follow the money.
Retail Checkup
Q3 2006 | Q3 2005 | Change | |
|---|---|---|---|
Days in Inventory | 86.3 | 83.3 | 3.0 |
Days Payables Outstanding | 56.4 | 46.8 | 9.6 |
Cash Conversion Cycle | 29.9 | 36.5 | (6.6) |
Read up on cash conversion metrics.
Related Companies:
- Charlotte Russe
- American Eagle Outfitters
- Abercrombie & Fitch
- Aeropostale
(NYSE:ARO) - JC Penney
(NYSE:JCP) - Polo Ralph Lauren
(NYSE:RL)
Related Foolishness:
- Abercrombie's Owie
- Getting to Know Charlotte Russe
- Sandbagger of the Day: American Eagle
- Foolish Fundamentals: GAAP
- Foolish Fundamentals: Inventory
Gap has been recommended by bothMotley Fool Stock AdvisorandMotley Fool Inside Value. American Eagle is a Stock Advisor selection. Try either newsletter free for 30 days, no strings attached -- just click the appropriate link.
Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so checkFool.com for more of our in-depth discussion of what the numbers mean.
At the time of publication,Anders Bylund had no position in any company mentioned. He's currently ranked No. 12,526 out of 13,401 CAPS players. Fool rules are here.
