The Gap, Inc.

Good afternoon, ladies and gentlemen. My name is Austin and I shall be your conference operator today. I would like to welcome everyone to the GAP Inc. second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. For those analysts who wish to participate in the question and answer session after the presentation, you may now press star 1 to enter the Q&A queue. As a reminder, please limit your questions to one per participant. If anyone should require assistance during the call, please press the star key followed by the zero key on your touch-tone phone. I would now like to introduce your host, Cameron McLaughlin, Head of Investor Relations. Cameron, you may proceed. Good afternoon, everyone.

Welcome to GapBank's second quarter fiscal 2022 earnings conference call. Before we begin, I'd like to remind you that the information made available on this webcast and conference call contains forward-looking statements that are subject to risks that could cause our actual results to be materially different. For information on factors that could cause our actual results to differ materially from any forward-looking statements, as well as a description and reconciliation of any financial measures not consistent with generally accepted accounting principles, please refer to the cautionary statements contained in our latest earnings release. The information included on page two of the slides shown on the investor section of our website, gapinc.com, would supplement today's remarks and the risk factors described in the company's annual report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2022, and any subsequent filing for the Securities and Exchange Commission, all of which are available on gapinc.com. These forward-looking statements are based on information as of today, August 25, 2022, and we assume no obligation to publicly update or revise our forward-looking statements. Joining me on the call today are Interim Chief Executive Officer Bobby Martin and Chief Financial Officer Katrina O'Connell. With that, I'll turn the call over to Bobby.

Thank you, Cameron, and good afternoon, everyone. It's a pleasure to speak with you all. I want to provide some brief remarks before turning it over to Katrina to cover our second quarter results and outlook. While we search for a new leader, I'm taking on the role as interim president and chief executive officer of Gap Inc. with a deep commitment to the company's success and an impatience for change. Having navigated the global retail industry, serving millions of customers across brands and markets, I'm not approaching this work from the sidelines. To change the trajectory of our business, we need to take action. There are brands in our portfolio that are underperforming today. And like many other companies, the macro environment is testing us with simultaneous shifts in consumer behavior and increased cost pressures. While our elevated inventory and pressured margins are certainly current realities against unsellable market conditions, they do not define Gap Inc.' 's ability to capitalize on its strength to win. We can and we should win in any environment. That is the goal, our goal, and the management team and I are holding the company accountable for that. We are taking several immediate actions, including reductions in operating costs and the impairment of unproductive inventory, to better optimize profitability and cash flow in the near term, which Katrina will share in detail in a moment. While these measures will help us in the short term, ultimately they represent a down payment towards a larger pursuit. We must demand both a selling and a cost-conscious culture with a focus on the core levers that truly drive our business. Let me take a moment and comment on our brand. We remain bullish on Old Navy's potential for growth by delivering the democracy of style and service to a wide range of consumers. Old Navy is the number two brand in apparel market share, according to NPD research. and that remains our foothold for acceleration and expansion. As you know, Iowa Barbaco joined us at the beginning of August, bringing an authentic leadership style backed by a strong track record of delivering growth through challenging times. Old Navy is working diligently to recover from recent missteps, and I'm confident Iowa is the right leader to bring the brand back to winning again. Gap Brand. is continuing to shift its core business model by right-sizing its fleet, increasing online penetration, and partnering for capital-efficient growth in North America as well as around the world. During the quarter, Gap announced its partnership with Reliance Retail to bring Gap's modern American optimism to Indian consumers through a mix of storage expressions and digital commerce platforms. On Banana Republic, Banana Republic is maintaining its focus on two simple ingredients, beautiful, high-quality products and an elevated customer experience both online and in-store. During the second quarter, Banana Republic launched a redesigned product-led web experience which supports its elevated brand positioning, further creating a differentiated and immersive experience for digital shoppers and, again, showcasing its product focus. The early results have been favorable with strong consumer feedback as well as conversion metrics. We believe Athleta has tremendous growth potential as it continues to drive brand awareness and establish authority in the active market. However, we are experiencing softness in the near term. We are quickly pivoting and reacting to meet her needs with performance lifestyle products while remaining true to our DNA. That said, we continue to see a path toward delivering a mid-teens revenue taker over the long term as we capitalize on the continued secular shift and growth in the health and wellness categories broadly. I'm realistic about the hard work laid ahead. We know what we need to deliver to our customers, and we know that it has to fully measure up. It has to be compelling. It has to be worth the trip every time. I'm confident that our team has the capabilities needed to deliver what our customers and shareholders expect and what is needed for long-term profitable growth. And it will take an aligned focus on adopting organizational behaviors that will enable change and unleash our potential. Lastly, I'm sure that many of you have questions about our search for a permanent CEO, so I will briefly address them now. The board is actively evaluating potential candidates, working swiftly and thoughtfully to ensure that we find the most qualified person for this role. We are focused on someone who can lead GAPI from defense to offense, vitalize our creators while returning us to a position where we are gaining market share across our brand. A leader who can build upon the company's strong foundation, powerful assets, well-established values to further scale our Omni platform and market leadership. Ultimately, a leader focused on delighting our customers with every experience and driving the change and momentum necessary to deliver value creation for our people and our shareholders over the long term. And with that, I will turn the call over to Katrina.