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Gap Inc GPS
Q1 2013 Earnings Call Transcript

Transcript Call Date 05/23/2013

Operator: Good afternoon, ladies and gentlemen. My name is Amber, and I will be your conference operator today. At this time, I would like to welcome everyone to The Gap Inc.'s First Quarter 2013 Conference Call. All participants are in a listen-only mode. As a reminder, please limit your questions to one per participant.

I would now like to introduce your host, Katrina O'Connell, Vice President of Investor Relations.

Katrina O'Connell - VP of Corporate Finance and IR: Good afternoon, everyone. Welcome to Gap Inc.'s first quarter 2013 earnings conference call. For those of you participating in the webcast, please turn to Slides 2 and 3.

I'd like to remind you that the information made available on this webcast and conference call contains forward-looking statements. For information on factors that could cause our actual results to differ materially from the forward-looking statements as well as reconciliations of measures we are required to reconcile to GAAP financial measures, please refer to today's press release as well as our most recent Annual Report on Form 10-K which is available on gapinc.com. These forward-looking statements are based on information as of May 23, 2013, and we assume no obligation to publicly update or revise our forward-looking statements.

Joining us on the call today are Chairman and CEO, Glenn Murphy and Executive Vice President and CFO, Sabrina Simmons.

Now, I'd like to turn the call over to Glenn.

Glenn K. Murphy - Chairman and CEO: Thank you, Katrina, and good afternoon everybody. Before I hand the call over to Sabrina, who will take you through the Q1 financial highlights, I want to take you through how we as a business are looking at the first quarter and also I want to give you an update on our key initiatives for 2013.

The one thing that comes to mind when I think about Q1 was the consumer; that we've been operating pretty much for the last five plus years in a very challenging environment, and this is the first quarter in a long time that I think the consumer to us felt like they were moving in a positive direction. Things are still challenging, but they're starting to feel a little bit better for a lot of reasons that I'm sure we've all read about or know about. So, I'd like to think that, that's a good sign as we look forward to the rest of the year.

Obviously the new story is that we were able to get a two comp in Q1 2013, on top of the four comp we had in 2012, also known as comp the comp. Last year was obviously a good performance for the business, to have applied the investments we made in product and in marketing. There was a little bit of weather help in 2012 and there was a color trend, but I think our teams came out very strongly in this first quarter, and I think it's nice to see across all of our businesses good two year comp performance in our three key brands.

Now, to me the big driver of that continues to be our product. We continue to have good product momentum. Now, comp is an outcome, and all our merchants and designers and marketers and our brand presidents know it takes good strategic thinking on where we're going to dominate and where we're going to differentiate in each one of our categories that builds up to a comp. So when I look at the quarter and I look at the categories that Banana Republic and Gap, and Old Navy the ones that drove over and above performance were the categories that were putting a lot of time, effort and money behind. Because we think we can get market share gains. We can get an edge. We can get more customers to engage with our brands by showing that these are the categories whether it is suiting, whether it is bottoms, whether it is dresses, these are the categories are going to differentiate ourselves against our competitors.

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