Gap's upbeat quarterly results show improving demand for Old Navy apparel
Reuters
Published Mar 07, 2024 21:19
Updated Mar 07, 2024 23:25
By Ananya Mariam Rajesh and Katherine Masters
(Reuters) -Gap beat Wall Street expectations for fourth-quarter results on Thursday, buoyed by strong demand on improved product offerings at its Old Navy and namesake brands during the holiday season and lower markdowns.
The company's shares rose 4% to $20.05 in extended trading.
CEO Richard Dickson's plans to push ahead with reinventing Gap's brands, mainly Old Navy, have helped drive consumer interest in its apparel and accessories.
The Banana Republic parent had seen sales slump in the past several quarters as customers moved to competitors such as Amazon.com (NASDAQ:AMZN) and Shein that offer compelling product assortments.
Fourth-quarter comparable sales at the Gap brand rose 4% and Old Navy saw a 2% increase, while Athleta and Banana Republic sales slumped 10% and 4%, respectively.
Lower supply-chain costs related to freight and manufacturing coupled with controlled promotions and price increases on some products such as leggings and skinny jeans helped the company's gross margin jump 38.9%, an increase of 530 basis points.
"This is still not a company that's generating much in the way of sales growth but ... (margins) are showing signs of getting better," Morningstar analyst David Swartz said.
However, Gap expects fiscal 2024 net sales to be flat compared with $14.89 billion in 2023. Analysts had expected a 0.48% rise, according to LSEG data.
Gap's forecast signals that improving its product assortments mainly at Athleta and Banana Republic could take longer than expected.
"Regarding Banana Republic, we are focused on re-establishing this brand to thrive in the premium lifestyle space," Dickson said on a post earnings call.
"As I've dug in with the Banana Republic team, I've realized that we are behind on the fundamentals, having the right product in the right place with the right price."
Gap's fourth-quarter net sales rose 1.3% to $4.30 billion, beating estimates of $4.22 billion.
The company reported a profit of 49 cents per share, beating estimates of 23 cents.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.