The Gap 2010 Annual Report Download - page 30

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• For the Direct reportable segment, our net sales for fiscal 2010 increased $181 million, or 16 percent, compared
with fiscal 2009. The increase was due to the growth in our online business across all brands, primarily Old Navy,
Piperlime, and Athleta, and due to the introduction of international online sales in fiscal 2010.
Our net sales for fiscal 2009 decreased $329 million, or 2 percent, compared with fiscal 2008 due to a decrease in
net sales of $417 million related to our Stores reportable segment, partially offset by an increase in net sales of
$88 million related to our Direct reportable segment.
• For the Stores reportable segment, our net sales for fiscal 2009 decreased $417 million, or 3 percent, compared
with fiscal 2008. The decrease was primarily due to a decline in net sales at Gap and Banana Republic and the
$32 million unfavorable impact of foreign exchange, partially offset by an increase in net sales at Old Navy. The
foreign exchange impact is the translation impact if net sales for fiscal 2008 were translated at fiscal 2009
exchange rates. Comparable store sales for fiscal 2009 decreased 3 percent compared with fiscal 2008. The
decrease was primarily due to the continued difficult retail environment.
• For the Direct reportable segment, our net sales for fiscal 2009 increased $88 million, or 9 percent, compared
with fiscal 2008. The increase was primarily due to incremental sales related to Athleta, which was acquired in
September 2008.
Cost of Goods Sold and Occupancy Expenses
($ in millions)
Fiscal Year
2010 2009 2008
Costofgoodssoldandoccupancyexpenses ....................................... $8,775 $8,473 $9,079
Grossprofit .................................................................... $5,889 $5,724 $5,447
Cost of goods sold and occupancy expenses as a percentage of net sales ............. 59.8% 59.7% 62.5%
Grossmargin ................................................................... 40.2% 40.3% 37.5%
Cost of goods sold and occupancy expenses as a percentage of net sales increased 0.1 percentage points in fiscal
2010 compared with fiscal 2009.
• Cost of goods sold increased 0.7 percentage points as a percentage of net sales, in fiscal 2010 compared with
fiscal 2009. The increase as a percentage of net sales was primarily driven by lower margins for both regular
price and marked down merchandise.
• Occupancy expenses decreased 0.6 percentage points as a percentage of net sales, in fiscal 2010 compared with
fiscal 2009. The decrease in occupancy expenses was primarily driven by reduced expenses due to store closures
and fully depreciated assets, partially offset by higher expenses due to store remodels and international store
openings and the unfavorable impact of foreign exchange of $22 million.
Cost of goods sold and occupancy expenses as a percentage of net sales decreased 2.8 percentage points in fiscal
2009 compared with fiscal 2008.
• Cost of goods sold decreased 2.9 percentage points as a percentage of net sales, in fiscal 2009 compared with
fiscal 2008. The decrease was primarily driven by reduced cost of merchandise from our cost management
efforts and a decrease in selling at markdown.
• Occupancy expenses increased 0.1 percentage points as a percentage of net sales, in fiscal 2009 compared with
fiscal 2008. The increase as a percentage of net sales was primarily driven by higher depreciation expense for
new information technology systems and applications and incremental expenses related to the integration of
Athleta, which was acquired in September 2008.
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