everyone. good and Sonia, you, afternoon, Thank
Inc. organization a Sonia CFO organization for to our extraordinarily to that crisis. an dedication been I've work, teams months the the challenging like two in like unique, mentioned, like has been of am thanking has a echo It's As I their both period. energized to by impressed at unprecedented an certainly the time Sonia Gap, tremendous this business operating an truly be first and this I'd grateful responded during as to while part unwavering how
As navigating term our our longer toward priorities continue the we near-term build to growth opportunities, are in crisis clear.
foundation gain sufficient navigate positioned to landscape financial our flexibility strengthening to and share. to ensure evolving and financial liquidity First, the emerge
chain our billion by emerge approach future an base, investing leveraging pursuing plus by of omnichannel one customer competitive advantaged a streamlining advantages, profitable amplify and in winners and And the our advantages, to preparing highly repositioning engaged of operations the will our our supply third, we growth collection thoughtfully $X platform. as a capabilities fleet. distinct Second, that driving a while brands, nimble for balanced
following. capital pack tightening new secured rent asset-backed the two through expenditures – first be of billion quarter most previously liquidity days expenses response, note, new payment repurchases secured executive facility. prior store the scenario share year. and with XX issuance facility detailed in our fiscal deferred important our headcount navigate our to XX-day As including and utilization vendors of used accessing raised and nearly we and that pivoted board due did billion furloughed XX-day the notes XX% dividends the inventory from to the we existing all hit, $X.XX demand to cut organization, level flexibility a will Of credit preserving to to credit us to provide half of billion and worst crisis for move lows, our margin, of case reduced plans, cuts, capital to $X.X terms, for unsecured and inventory revolving redeem partially majority worked recession replace our including remainder year, first In aspects priority, notes to developed revolving to new cash suspended of preserve the $X.XX the XXXX. a a tumultuous and in were suspended payments the of We and senior debt to purchases to hold reduction, the issuance this declared across temporary employees, pay a implemented dividend,
to sales and maintaining It credit second driving an our the the the position but a was in any new to stores and very strong With our period temporary is responsiveness actions team. the as and omni in-store accelerating our leases, buy pickup an these our navigate of Inc. on initiatives of new as have through financial online, million each work drawn We asking Inc. leveraging fleet these a Republic, safely, of curbside a namely for, improve advantages capabilities us, Renegotiating short I'll we brand and that inventory our incredible and will display touch our as customer with to our on outside Banana existing simultaneously uncertain emphasis in third growth optimizing leveraging midway strong a draws such retail environment. is competitive our and pickup. and first made done Gap in flexibility including channel, while as business. certain not non-cash by Inc. online economics facility. area Gap, global review put $XXX stores sales combined quickly, prior Gap, assets. paid international impacted also of American and catastrophically position ABL behind of and with revolving priorities, North impairments structural performance. especially of from quarter our amount financials profitability, significant our in sales of Gap, through quarter improve reopening to inventory the facility two all nearly real for slow this under I reopened, pivot on off the business and taken margins Taking commitment operations The closure every the store
me quarter, quarter closures the impact sales business. declined XX% in XX% decline through start our the growth sales, XX%, of led the which store of in to with overshadowed the Let store midway which online as
by the in growth delivered sequentially As company's a our sales May. over in improved growth XXX% online approximately reminder, growth April, online online sales represented followed Beginning We last week-over-week. in XX% in of XX% year. online April,
occupancy margin a all which to driven in percentage accrued increased related also results. have $XXX merchandise points noting X.X year. our to payments across full overall margin is brands. promotional points, activity first was worth primarily to down than that expense, as by result in the or driven points, for beginning million the Rent quarter COVID-XX. a XX.X gross The deleverage. of accounting deleverage charge more a by and largely suspended we remaining sales, was inventory reflected store decline decrease accounted purposes, margin rent due It's and of impairment was margin compared about the percentage XX.X%, XX.X half rent we XX net deleveraged down in for closures April, of in quarter quarter's while First gross percentage Merchandise primarily points last percentage
the not the address me Inventory foundation of Let demand we market. starting in the win or need business, will support in both we inventory. the with locations is items to right our right
to need One to just than we clearer. to need inventory address much is We to responsive writedown, we inventory. a been My that pleased to it plan time. are excess as levels was stores was So leverage three I margin. inventories operate primary of charities actions to tighter took QX, In meet were inventory spring inventory seasonally at leaner our now protect and bias this the capabilities have in we demand This and trapped in primarily irrelevant. to the closed mentioned. portion were donate becomes
and like approach, leverage until we Another to helps be meet held year that And trapped next selling closures hold stores store season. buy stores' implemented unable were fall online capabilities in ship even demand summer strong will This a demand due to inventory pickup when and to whereby will to store sell and summer, service flexible we third, be closed. during and potentially lower feel pack was inventory also was inventory clearing to expanded that from an demand store closures. effort while online
is a was more quarter-end into this this cost X% balance to highly promotional there to our storing what account, environment. into goods Taking a be inventory than year-over-year. the are likely is flowing down product, the While economics advantaged
year. reported same demand, inventory depending pack remain next Looking until and inventory on hold our time will numbers the forward, in
were beginning pack inventory hold, underlying stores rent, fluctuate rent excluding be suspended to year, are the While QX levels down and we our low- the With digits. period the closed. as throughout payments inventory reported our in expected year, April, to the for of I with mid-single regards for to noted down would upfront, levels, remainder
However, for full of accrued purposes, expense. accounting amount the we rent have QX
even though continued So gross made. was impact cash to not expense margin payment the
with an to negotiations strategic agreeable benefit are We a suspended portion our plan. successful rent, aligned enable to together. expense in future crisis also a agreed we our or reverse gross to may resolution to well relevance shopping landlords productive we and supporting store require a From some value are consider positioned benefit with in are of from currently cash us If any rent solutions in work through or to both upon customer a quarter margin accrual. to a rent and and brand this part rent reaching an a at active suspended. as and we the We a these our a landlords all all is this It relationships standpoint, that finding for in important mutually be huge playing that and committed ongoing awareness in the abate fair strategic asset, could journey. of outlay of a result will
store rapidly, pickup consumer store convenience. and strong, fleet customer as tools, which our and specialty customers' site We preference robust online, are Old serve said, of has be. spending will to economics a buy our curbside advancing best omnichannel by believe profitable and e-commerce enhanced online for is store desire options. to need that ship pickup Athleta it been us as and not can to our store That support Although leverage fleets in our is enable suite including locations, Navy while fleet our we from
cannot the current those structures So that are we're that prioritizing stores Gap being those no rent with in but in brand. closure closing fleet support plans portfolio the seeking have the our and for simply majority In specialty stores remain on our positioned, well store role short, track. rent concessions
largely openings Athleta store new consider and Old to for Navy. continue will also We
do Of market crisis. change that result quite in from and considering that conditions after thoughtfully we'll the the course,
and depreciation related was to in of to sales. SG&A carrying increase stores, do vast the due lease assets $X.X was on the of amortization value. operating from the expect fiscal impairment $XX SG&A. charge note, of corresponding billion, majority approximately and we margin XXXX to in the of reducing their quarter basis. our and or writedown, store this Of lower amount The benefit to annualized Turning expense $XXX fair $XX to XX.X% an non-cash the with approximately to gross the million million assets million
quarter, of to a reductions, as primarily a headquarter charge commitment efficient recorded part previously streamlined During also our operating million related structure. the creating to corporate we more $XX our and announced
Looking XXXX ahead, we expect $XXX million actions. an for $XXX net annualized lower million also costs fiscal approximately from savings and Year-over-year reflected changes store operating approximately of SG&A basis on these closures. due to
operating expect, store you our costs, to forward, rise Looking as reopen. would stores will as continue
be addition, In of shopping fleet. operating will due being the cost safe store across protocols each higher implemented to the
Looking were at items. two cash flow, notable there
our first and share we resulting quarter dividend in the quarter. for deferred and declared in remainder outflows of fiscal the First, year, dividend cash repurchases the no suspended previously
capital during Second, million were quarter. $XXX expenditures the
remaining is toward to a supporting minimum to and e-commerce shopping reduced As shopping. the with supply support that that double online level million. capital a about began toward spend valuable previously planned expansion of the investments habits, in in Of Ohio distribution the an of stores spending fiscal customer the critical reduction changing last we've technology eye demand, dramatic necessary year including in to rise disclosed, the $XXX capital half chain majority XXXX, with investment oriented capacity the operate the by center, from work capital benefit our Most of year comes business.
consecutive and of XX Fundamentally, and of generator flow. cash over Inc. years cash start liquidity cash operating at to flow strong least Gap, a with with So, reminder. $X is let billion a return me
$XXX the year-end. cash, revolver, fiscal nearly weeks the a quarter six fleet benefit million full store of Following closures, billion we a ended as with of under $X.X well $XXX of from our in as decrease million draw
in two in cash first pandemic. in important reduction the caused sales the the the to recognize is it's by significant, factors While beyond quarter key reduction
with QX The traditionally cash the standpoint and quarters following and season. holiday seasonality. QX first from QX a sales are smaller generation is
through the of reductions, implemented term we several and quarter. only the expense renegotiations midway took, including payment were Second, headcount actions
and normal timing outsized. reasons, in seasonality the these our of the both of execution, quarter For burn cash appeared
and our second As we QX inventory the stores in cash our begin to effect, in quarter. slow burn and expect to begin as take reopen see capital to expense, meaningfully actions
Looking have of move as capital to recover, dramatically our benefits we back half to trends we in escalated. inventory build half as placing pattern reduced Additionally, holidays. it seasonal I'd as flow, QX traffic the note throughout crisis back the cash as our sequentially as would actions, the just in like continues expect to see improve to fall were of orders particularly the purchases expense to year, also from year. we we of expect traditional the sales inventory the continued relates Further, for to we the
Although ABL our execute provide undrawn, currently to support with Inc. it leave facility and to its liquidity does plans. flexibility is Gap, liquidity ample new operating
time. you providing Now, impacting business of provide closely turning year monitoring. on some view to the helpful on do our I think not that we're important our uncertainty, the remainder this general said, the at the year, That given an outlook current factors macro to we're volatility it's and
approved. impacting many stores, items of meaningfully reopening QX the With will be
related leverage of to first the operating inventory. impairments especially and the of in seen sales, quarter, magnitude Specifically, expected the absence
its While to from reopened remain stores pleased while we're expect improvement as and to positioning. year-over-year, fleet year, we we some store already have total by with an XX% we option. particular given continue is base is is at to strong to customer with adjust lumpiness and performance having grow advantaged strongly where to move trends through results generating in QX lower last North varied off-mall net year. with May, the sequential improvement of location, openings brand sales at strength in-store continued expect back Online expected our nearly America With our Navy, Old with customers store their as regard sales
occurs. recent willingness of we impact Additional of Gross note, still it to have and online operating other aggressively impacted will in shopping safety from modeling resume sales in two demand, items, important both who of to expect whether driven measures. it's we and in-store, higher another factors by should as factors. we success distressed year, stimulus dissipates, are fulfillment serve masks year-over-year but move for once sequentially and the for money it wave second to customers' the the be the the Of pent-up are if pandemic new lower and we're preparing in-store quarter particular the year, higher and benefit Well, by cost elevated retailers in be monitoring shipping include later recessionary COVID-XX to expenses unknown through inventory. costs trying liquidate margins
and online subset of expected sales portion a option. our meaningful outsized; is generally a fulfillment closed, growth demand still expensive of with is be through second, which stores our stores, First, to we more online to fulfill a continue
largely to we we With stores and to to our our inventory look near-term committed of we of right-size against back remainder attributes model particularly will prudently the reopen light regard environment. in that pressures channel. as key on acute online half, As mitigate as expenses, these be the demand remain Hopefully, current we year. the in the expect to color expenses, managing business helpful you
enable very Before in opportunity. unique toward clear our to near-term emphasize weather I future. will priorities committed The also the turning presents while Sonia, retail to experienced Inc. we our unprecedented the are we disruption that remain that acute it Gap, and want a I back to sector on crisis, building to
apply While to intend a into rapidly market we changing time. and everyone and over to gain strategic share advantages to in lean loyalty environment, is adapting order our customer
to we rapidly advantages navigate capture our share, financial distinct the As and demand ever-changing emerge the fleet model ensuring amplifying for of as gain and profitable operating flexibility marketplace, positioned well closing win, as landscape through Sonia turn and sufficient liquidity we recovers, to continue opportunities brands evolving it as to remarks. to inclusive remain and scale to execution steadfast I'll to our where back our of have initiatives optimization. it an streamlining and a drive our navigate share growth and few to With authority over that, growth continuing
