The Gap 2011 Annual Report Download - page 37

Net Sales Discussion
Our net sales for fiscal 2011 decreased $115 million, or 1 percent, compared with fiscal 2010 due to a decrease in net
sales of $376 million related to our Stores reportable segment, partially offset by an increase in net sales of $261
million related to our Direct reportable segment.
• For the Stores reportable segment, our net sales for fiscal 2011 decreased $376 million, or 3 percent, compared
with fiscal 2010. The decrease was primarily due to a decrease in Comp store sales, excluding the associated
comparable online sales, of 6 percent for fiscal 2011 compared with fiscal 2010, partially offset by the favorable
impact of foreign exchange of $156 million and an increase in franchise sales. The foreign exchange impact is the
translation impact if net sales for fiscal 2010 were translated at fiscal 2011 exchange rates.
• For the Direct reportable segment, our net sales for fiscal 2011 increased $261 million, or 20 percent, compared
with fiscal 2010. The increase was due to the growth in our online business across all brands and the incremental
sales related to the introduction of international online sales in fiscal 2010.
In fiscal 2011, our net sales, including Direct, for the U.S. and Canada were $12.4 billion, a decrease of $353 million or
3 percent compared with $12.7 billion for fiscal 2010. In fiscal 2011, our net sales, including Direct, outside of the U.S.
and Canada were $2.2 billion, an increase of $238 million or 12 percent compared with $1.9 billion for fiscal 2010.
Our net sales for fiscal 2010 increased $467 million, or 3 percent, compared with fiscal 2009 due to an increase in
net sales of $286 million related to our Stores reportable segment and an increase in net sales of $181 million
related to our Direct reportable segment.
• For the Stores reportable segment, our net sales for fiscal 2010 increased $286 million, or 2 percent, compared
with fiscal 2009. The increase was primarily due to an increase in net sales at our new international stores, an
increase in Comp store sales, excluding the associated comparable online sales, of 1 percent, and the favorable
impact of foreign exchange of $116 million. The foreign exchange impact is the translation impact if net sales for
fiscal 2009 were translated at fiscal 2010 exchange rates.
• 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 the incremental sales related to the introduction of international online sales in fiscal
2010.
In fiscal 2010, our net sales, including Direct, for the U.S. and Canada were $12.7 billion, an increase of $259 million or 2
percent compared with $12.5 billion for fiscal 2009. In fiscal 2010, our net sales, including Direct, outside of the U.S.
and Canada were $1.9 billion, an increase of $208 million or 12 percent compared with $1.7 billion for fiscal 2009.
Cost of Goods Sold and Occupancy Expenses
($ in millions)
Fiscal Year
2011 2010 2009
Costofgoodssoldandoccupancyexpenses ....................................... $9,275 $8,775 $8,473
Grossprofit .................................................................... $5,274 $5,889 $5,724
Cost of goods sold and occupancy expenses as a percentage of net sales ............. 63.8% 59.8% 59.7%
Grossmargin ................................................................... 36.2% 40.2% 40.3%
Cost of goods sold and occupancy expenses as a percentage of net sales increased 4.0 percent in fiscal 2011
compared with fiscal 2010.
• Cost of goods sold increased 3.7 percent as a percentage of net sales in fiscal 2011 compared with fiscal 2010. The
increase in cost of goods sold as a percentage of net sales was primarily driven by increased cost of merchandise
primarily due to higher cotton prices.
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