Gap Inc. Provides Update in Response to COVID-19 Outbreak

Gap Inc. (NYSE: GPS) today announced a number of precautionary actions to strengthen financial flexibility in response to the rapidly evolving impact of the COVID-19 pandemic.

“We entered 2020 in a strong financial position. However, in this time of unprecedented disruption to the retail sector, we are proactively taking the prudent actions to further strengthen our financial liquidity and flexibility,” said Gap Inc. President and CEO, Sonia Syngal. “We are fortunate to have a senior team of deeply experienced retail leaders who are fully dedicated to managing our response through this challenging moment in time, while continuing to build toward the future.”

To strengthen the balance sheet the company is taking the following actions:

• drawing down the entire $500 million on its revolving credit facility;
• deferring the record and payment dates for the company’s previously announced first quarter fiscal year 2020 dividend, and suspending the company’s regular quarterly cash dividend for the remainder of fiscal year 2020;
• reducing capital expenditures by approximately $300 million in fiscal 2020; and
• reviewing all operating expenses for opportunities to reduce spending along with realigning inventory to expected sales trends.

The company’s previously declared first quarter fiscal year 2020 dividend, of $0.2425 per share, will now be payable on or after April 28, 2021 to shareholders of record at the close of business on April 7, 2021, subject to the right of the company to further defer the record and payment dates, depending upon, among other factors, the progression of the COVID-19 outbreak, business performance and the macroeconomic environment. The company determined that taking these actions was in the best interests of the company in order to preserve liquidity in the context of the impact of COVID-19 on its operations. The company intends to review its quarterly cash dividend policy as developments warrant.

Full Year Fiscal 2020 Earnings Outlook Update

On March 17, 2020 the company announced the temporary closure of all of its North American stores to assist the vast local, state and federal efforts underway to slow the spread of COVID-19. Pursuant to a strict safety protocol at its distribution centers, all of the Gap Inc. brands continue to be available for customers through the company’s online business, which generated over $4 billion in net sales in fiscal 2019.