Gap Inc (NYSE: GPS) stock fell 2% in the pre market session on November 21st, 2018. The translation of foreign currencies into U.S. dollars negatively impacted the company’s net sales for the third quarter of fiscal year 2018 by about $20 million. Due to the 53rd week in fiscal 2017, comparable sales for the third quarter of fiscal year 2018 are compared with the 13-week period ended November 4, 2017. On this basis, the company’s third quarter comparable sales were flat compared with a 3% increase last year.
The company ended the third quarter of fiscal year 2018 with $1.3 billion in cash, cash equivalents, and short-term investments. Year-to-date free cash flow, defined as net cash from operating activities less purchases of property and equipment, was $57 million, compared to third quarter 2017 year-to-date free cash flow of $197 million, which included $60 million in insurance proceeds related to loss on property and equipment due to the Fishkill fire.
GPS in the third quarter of FY 18 has reported the adjusted earnings per share of 69 cents while adjusted earnings per share of 68 cents. The company had reported the adjusted revenue growth of 7 percent to $4.09 billion in the third quarter of FY 18. Excluding the presentation changes from the adoption of the new revenue recognition standard, net sales increased 2% compared with last year.
Gross profit was $1.62 billion, an increase of 6% compared with last year. Excluding the impact of presentation changes from the adoption of the new revenue recognition standard, gross profit decreased about 2% compared with last year. Gross margin was 39.7%, flat compared with last year. Excluding the impact of presentation changes from the adoption of the new revenue recognition standard, gross margin was 38.1%, a decrease of 160 basis points compared with last year, largely driven by an increase in shipping expenses and elevated promotional activity at Gap brand. Operating margin was 8.9%, a decrease of 90 basis points compared with operating margin of 9.8% last year. Excluding the impact of presentation changes from the adoption of the new revenue recognition standard, operating margin was 9.3%, a decrease of 50 basis points compared with last year.
During the quarter, the company repurchased 3.6 million shares for $100 million and ended the third quarter of fiscal 2018 with 382 million shares outstanding.
The company paid a dividend of $0.2425 per share during the third quarter of fiscal year 2018, an increase of over 5% compared with last year. In addition, on November 15, 2018, the company announced that its Board of Directors authorized a fourth quarter dividend of $0.2425 per share.