thanks joining us you, this for everyone Thank afternoon. Bobby and
expenses, better improve fiscal we positioned. and us further to taking enter to inventory, operating sheet excess and actions significantly transform balance, are operating reduce structure assortment allowed fortifying while have XXXX The our reduce significantly and category balance our optimize
over Athleta; our sales Old of adjusted only with at nearly first Navy, promotional category driven improved ended the XX% margin drove last XXX billion. most over by and down Gap inventory cash as the adjusted points at year in Navy we During continued which excessive basis up the and at expectations quarter, versus XXXX; X% expansion to operating and significantly equivalents, expense delivered up the air women’s line from weaker activity despite we net down strength sales leveraged first SG&A; and and with notably delivered quarter quarter year-over-year, reduced XX% was Old $X.X freight
to focused to deliver shareholders. progress We planning are opportunities better While prudent our and long-term, of continues to our on environment. behalf remain the deliver continue in an a control managing and making approach our to employees, levers business we our uncertain we in model customers, of be the in for consumer light to and macro believe and what take position on we
now quarter results. me Let with first our start
$X.X net our sales and first to year be sales quarter expectations for billion down First decreased last quarter mid-single-digits. versus with X% of consistent were
China there to at beginning a exchange headwind. the Gap quarter negative growth had point was impact As also X first sales point a the sale and reminder, a of X the of foreign net
represented and from year, Online down Excluding sales versus year. Gap and sales last from foreign company X% pre-pandemic total headwind, were X% net exchange of in in up to the the prior year in XX%, Stores $XX sales sales Online X%. sales decreased would first XX% decreased levels quarter. compared of have million the Comparable quarter. sales first China approximately down total QX XXXX. were been the last X%
the were Navy XXXX, in X% X% Turning $X.X to Navy, were billion compared sales quarter. last quarter year, down sales brand. by to of sales Starting with in up Old Old the from first
continued quarter continued strength continues to a pleased Old lower which a from softness deliver consumers, improvement income fiscal believe by and first we modest Navy we kids. down by its from experience and X%, active in are in Although offset sales softness in women’s demand improvement XXXX, to comparable baby driven was
share in women’s baby gain category. kids to continued in the the share gains Navy quarter, Old market by driven and largely and
positioned believe marketplace. remains that Navy the Old positioning value in well to continue given its We
$XXX million, negative to last the in point foreign total X Brand headwinds, negative sales due Gap a point X the store were driven China, sales America. X point the the versus YZY sale Gap Gap, related were of impact excluding and North to negative largely from impact by year of exchange impact closures down X% shutdown
were X% comparable in baby, share continued up resonating reinvented gain women’s, sales consumers. are a its brand improvement kids. Gap with Brand by modest by to strength active Gap continued offset icons weakness as market driven in and continued in women’s in
down with comp sales first positive last the Republic were X% top Banana XX% comparable year. quarter sales, on a $XXX of million in
last hold and in by growth year the the preferences, consumer of While is an post-COVID shift impacting is BR year-over-year outsized lifestyle which growth. elevated, driven take into to the lapping resonate, brand continues transformation brand
$XXX down prior XXXX year, levels. XX%. to were, were an from XX% of sales the increase XX%, Athleta million Comparable of down sales compared pre-pandemic or
you As had quarter, told challenges, we which we impacting last results. believe Athleta product are acceptance has
While to at changes for. product has to an assortments, meaningful presentation will known the team creative quarters work the on take to at DNA with least improve and performance it we emphasis Athleta a make know that is few been the
peak year’s last first drove XXX down; by points to due and margin deleverage, to XXX lapped was gross margin XX.X%. points basis XX.X%. approximately inflationary adjusted increased basis normalized Now the of points. Adjusted an freight we basis product as margin points to last as locked in on margin cost our air gross year’s basis of Reported XXX we headwinds cotton quarter. expense increased Merchandise driven gross selling elevated air This leverage approximately now basis in prices. are at was XXX
XXX are to stemming improved percentage versus better points from relative XX slightly from beginning at sales to point Navy. benefit promotional activity primarily year. XXX we ocean net a ROD and remaining points as anticipated basis was headwind we freight of This rates; leverage better last the basis than basis deleveraged as the year, last primarily Old of
to Reported including by SG&A and optimize X,XXX quarter to to related of restructuring roles. the operating Now sale actions was upper a $X.X billion, related first Harrison the reduction charges $XX building let me $XX offset the turn to structure, our our in SG&A. corporate in office gain field approximately one million million including of
discussed result model we we annualized the XXXX of fiscal and XXXX. structure second-half SG&A actions last are the we As the in optimize of which benefit the of taking estimate million, fiscal to quarter, of in our and operating are remainder to first-half will half $XXX expected in savings
last $X.X from of SG&A down Adjusted year. X% billion was
cost driven As advertising a year. and leveraged points, investments sales, last total lower expense percentage SG&A of lower XX adjusted basis technology from resulting our actions by late saving
million $XX of loss was a gain $XX Adjusted the the in was excludes and income sale, operating charges on million. quarter. restructuring income, operating Reported which first
the improvement basis margin driven XXX points SG&A adjusted year margin basis from gross in points the improved basis in by operating to X.X% and last point of quarter, XX XXX adjusted Adjusted leverage.
$X.XX. a which was of restructuring and was at count excludes EPS $XXX on EPS, charges million. Share Reported the gain sale, loss ended $X.XX. Adjusted
related X Turning to the inventory. points we fashion and is seasonal Ending the includes The benefit a a lapped year’s quarter point inventories to as decrease supply with by driven and related and in last decline in chain balance to percentage first versus inventory. prior XX challenges inventory. remaining hold cash pack percentage and primarily basics decline of declined flow. sheet year. transit This Starting XX% in
in We we further in leaning we and in on future integrate levers, remain XXXX into exited buys, continuing focused pack responsive placed right our as significant was know, moderating inventories sizing you hold fiscal progress XXXX As XXXX. that to the into fiscal made assortments. inventory fiscal and
XXXX. a inventory more are be to than fiscal as for down we As planning result, to compared significantly sales
$X.X expenditures buys. prior nearly million. was billion, of and and cash quarter cash inventory improved quarter Net million cash first from outflow leaner approximately increase equivalents seasonality, $XXX $XX XX% driven the Capital were operating an in million. activities flow of was with free quarter levels typical from $XXX primarily end Consistent Quarter by were year. an the in the
will fiscal We normalize trends to that flow remain throughout cash continue confident XXXX.
down last positioned expect told quarter, $XXX asset-backed this pay million our year. As we you to we the be draw to on of credit line
$XXX year. remainder In the fact, last of down million we and paid balance week down the to remaining the pay million throughout $XXX intend
We an total remain delivering dividend core component to shareholder attractive as quarterly committed returns. a of
of quarter per approved we quarter dividend $X.XX board second for the maintaining May During $X.XX XXXX. our a that and Xth share on dividend paid fiscal the
Now outlook. our turning to
$XX take factors of to approach with prudent and the continued of Starting quarter. continue QX, an in first quarter. point an let the light sales million provide second Gap China a approximately X macro Gap the year for percentage overview in comparisons to to to year-over-year me consumer approximate headwind Inc. impacting in point percentage represented last to environment. We X planning is of QX, expected be uncertain sales
assuming exchange X headwind are point second estimated the foreign quarter. in an We
on We to in total a range are be year-over-year outcomes what down be to based macro of and environment. reflecting uncertain mid estimating an net consumer quarter second the continues to high-single-digits sales
of headwinds inflationary an and primarily lower QX. estimated continue gross second gross year. expect the leverage points of versus basis to expense; to XXX cost last basis XX% Compared an quarter headwinds, lap normalized the in estimated XXX we drive cotton we points to margin anticipate to We deleverage as air margin similar second quarter cost adjusted last year’s last elevated improvement air in freight the due year,
offset improved headwind tailwind as back lower the improved point basis benefit approximately inflationary prices these year we basis improved from commodity expected as XXX to activity is headwinds become XX to freight last the points ROD rates. in a expected be half a delever is to of result as relative last inflationary This positions year; of to well as ocean expect by We and fully promotional year. to inventory by and compared moderate
SG&A We compensation. $X.X billion actions largely last higher for second are of benefit approximately of offset year’s savings continued adjusted planning in incentive by the the quarter reflecting
our structure expect related As the year savings annualized month. operating to in the implementing actions benefit discussed last model optimize of taking back and we are from previously, the to $XXX began in to million we the half to that we begin
XXXX. Now turning to full-year
year-over-year Gap growth. net to represented year, million China a add X As last or $XXX the to Inc a impacting approximately XXrd point sales, million estimated $XXX approximately XXXX. factors week, an comparisons, of on to point fiscal approximately representing Gap will reminder in have Fiscal XXXX in sales approximately headwind net X
we remainder we of the could be As look in to sales mid-single-digit to XXXX, to continue range believe net fiscal the for down the low year.
adjusted XX gross to XXX XX% improvement margin we elevated XXXX, points XXX expense, point expected gross to from cost headwind lap points to our year in down as drive earlier normalized improvement leverage by, from rates margin approximately as are of basis experiencing is freight a basis fiscal freight be ocean is gross an freight air air than inflationary an deleverage of Compared previously continue planned. versus expectations stemming in the This prior XXXX we in headwinds. last last margin. air basis Turning driven and fiscal to estimated year’s adjusted of an
year basis freight to shifting and XXX leverage tailwind points approximately the from we XXX first-half ocean basis of a back improved inflationary rates. anticipate of as benefit deleverage points the of of approximately the costs in commodity We half in
expected benefit basis of of to We more fiscal as of result planned ROD flat compared position down improved and is a basis be to inventory last than year, XX XXXX continue our XXX last better compared promotional a to to activity, points as to expect percentage margin year. and roughly sales points in approximately
or XXXX $X.X low prior adjusted We be billion. approximately down mid-single-digits the target from continue fiscal to to year, to SG&A
implemented incentive to in fiscal expected million XXXX cost quarter, higher XXXX. last by approximately savings is and for fully we planned of the compensation As offset wage the communicated be inflation fiscal $XXX
roughly half our of savings to annualized In addition, elimination we optimization related upper structure, million roles. approximately $XXX field earlier, discussed to the and corporate the as including expect X,XXX of in operating the realize of
of capital investments, previously expect largely openings in down of now from as to range planned. well as prior range than the We million, $XXX reflecting expenditures million, $XXX store million our project $XXX fewer million lower to $XXX capital
We and now Old to net XX in stores. one-third to XX two-thirds plan Athleta open stores Navy Athleta roughly total, stores a and Navy Old
to than stores net close Republic half continue which more We are a to of America, North Banana Gap and total XX approximately XX the Gap in stores to Republic of and Banana plan remaining stores.
of near-term, change not for better more fiscal the positioned in but result up taking are to long-term. are even our XXXX We the actions as trajectory the entering we company business of importantly a setting the the only
right are in its for confident actions value and position growth we are believe long-term. the on profitable taking Gap, the We and steps delivering to our are path shareholders we the sustainable, towards over taking Inc. back
open questions. for Operator? With that, the we’ll line
