Gap Showing Signs Of Recovery

Gap Inc.’s holiday shopping successes led the company to post earnings for Q4 that hit above analyst expectations, indicating that perhaps the apparel retailer could be headed toward recovery after a significant period of decline.

The apparel retail giant reported net income of $220.0 million for Q4, or $0.55 per share, up from $214.0 million in the same period last year. Sales beat analyst expectations for the quarter, totaling some $4.43 billion in Q4, up from $4.39 billion in the same period last year. Likewise, same-store sales rose 2 percent in the quarter, a vast improvement over last year’s 7 percent decline.

“We’re pleased to finish the year strong, with positive comp and sales growth during the critical holiday quarter,” said Gap CEO Art Peck in the earnings release. “Going forward, we will maintain our focus on improving the quality and relevance of our products, increasing our responsiveness to trends and demand, and creating more synergy across channels to deliver the experiences our customers want and expect, however they choose to shop.”

For the full year, Gap Inc.’s same-store sales were down 2 percent, an improvement over 2015’s 4 percent decline. By store, Old Navy saw same-store sales grow by 1 percent in 2016, while Gap and Banana Republic saw declines of 3 and 7 percent, respectively.

For the coming year, Gap expects that store sales will land somewhere in the realm between flat and slightly up, with an anticipated rise in earnings up to between $1.95 to $2.05 per share, slightly below the $2.07 that analysts were looking for. Still, it would be an improvement over previous years for Gap Inc., all things considered.


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