US speciality clothing retailer Gap Inc booked a mixed fourth-quarter as earnings slipped and sales rose but reported more positive full-year figures with a double-digit hike in profit.
For the 14 weeks ended 3 February, net income slipped 6.8% to US$205m, compared to $220m in the 13-week fourth-quarter last year.
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Net sales for the period were up 8% to $4.78bn, compared to $4.43bn last year, while total company comparable sales jumped 5%, versus a 2% increase in the year-ago quarter.
Comparable sales increased at both the Banana Republic and the Old Navy brands, with Banana Republic sales up 1% compared to a decline of 3% last year, while Old Navy comp sales rose by 9% versus a 5% rise last year. At Gap, sales were flat both this year and last.
Meanwhile, sales in the US were up by 9.9% to $3.79bn in the fourth quarter compared to last year, while Europe sales fell 2.1% to $195m. Asia sales dropped by 16% to $380m.
For the 53 weeks ended 3 February, net income climbed 25.4% to US$848m, compared to $676m in the 52-week period last year. The company’s operating margin widened to 9.3% from 7.7% last year.
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By GlobalDataNet sales for the year were $15.9bn, compared to $15.5bn last year, while total company comparable sales increased 3%, versus a 2% decline last year.
Comparable sales declined at both the Banana Republic and the Gap brands, with Banana Republic sales down 2% compared to a decline of 7% last year, while Gap comp sales fell 1% versus a 3% fall last year. At Old Navy, sales were up 6% versus a 1% rise last year.
Meanwhile, sales in the US were up by 5% to $12.6bn in the 53 weeks, compared to last year, while Europe sales fell 7% to $641m. Asia sales dropped by 13% to $1.26bn.
“Our strong positive comp and margin expansion during the critical holiday quarter affirms our balanced growth strategy,” said CEO Art Peck. “Our outlook for 2018 demonstrates confidence in our strategy and a meaningful step up in earnings capacity for the company.”
For fiscal year 2018, the company expects diluted earnings per share to be in the range of $2.55 to $2.70 and comparable sales to be flat to up slightly.
CFO Teri List-Stoll added: “We are positioning the company for long-term growth. In addition to leveraging productivity initiatives to fund investments in the business, recent tax reform changes provide a meaningful increase in future earnings.”
