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Key Takeaways
- Gap reported fiscal fourth-quarter net income and earnings per share that surpassed estimates, driving its shares higher.
- Comparable sales at Gap and Old Navy in the fourth quarter rose year-on-year, but Banana Republic and Athleta both posted declines.
- CEO Richard Dickson attributed the strong profits to Gap’s “operational and financial rigor.”
Gap ( GPS ) shares gained over 4% in intraday trading Friday, after the apparel company posted higher-than-expected earnings during the holiday quarter, boosted by sales at its namesake brand and Old Navy.
Gap beat analyst estimates compiled by Visible Alpha for its top and bottom line. For the period that ended on Feb. 3, Gap posted net income of $185 million, or 49 cents per share, above forecasts. Revenue for the three months rose around 1% from a year earlier to $4.3 billion, also beating projections.
Gap President and CEO Richard Dickson credited the company’s “operational and financial rigor” for the strong earnings.
The company said its board has approved a dividend of 15 cents per share for the first quarter of 2024, and that fiscal 2024 sales would be “roughly flat,” noting the retail industry is still operating in an “uncertain consumer and macro environment.”
Comparable sales at Gap rose 4% over the same period a year earlier, while Old Navy’s climbed 2%. Other brands didn’t perform as well, as comparable sales dropped 4% for Banana Republic and 10% for Athleta.
The company said it knows “re-establishing” Banana Republic will take time as it works to “elevate” the brand’s aesthetic, while noting that sales at Athleta continue to be “challenged.”
Gap also surpassed full fiscal year 2023 estimates with $14.9 billion in total sales, though sales declined from fiscal 2022, in part because of the sale of its China unit.
Gap shares were up about 4.4% at $20.14 as of 2 p.m. ET Friday. However, shares were still lower for the year so far and have lost about 3.4% year to date.