A man walks past a store in New York City on January 12, 2021.
Angela Weiss | AFP | Getty images
Gap Inc. Thursday predicted a rebound in sales growth in 2021, hoping that customers will soon return to its stores and spend more on clothing as they try to resume some social activity.
Its shares were up more than 3% in out-of-hours trading.
The apparel manufacturer reported that fourth-quarter sales fell short of estimates as the ongoing coronavirus pandemic forced temporary store closings in Europe, parts of Asia and Canada. But it made a profit, thanks to its efforts to sell more merchandise at full price and the progress it made in underperforming stores.
It showed continued strength with its Old Navy and Athleta brands, which focus on basics and training gear. But the eponymous brand Gap and the Banana Republic label reported another quarter of the sales declines.
For the quarter ended January 30, Gap reported net income of $ 234 million, or 61 cents a share, compared to a loss of $ 184 million, or 49 cents a share, a year earlier.
Last period earnings included a tax benefit of approximately 45 cents per share and an impairment charge of approximately 12 cents per share related to Gap’s Intermix business. Analysts were asking for a profit of 18 cents a share, according to a study by Refinitiv. It was not immediately clear whether analysts had taken into account the impact of these items.
Net sales fell approximately 5% to $ 4.42 billion from $ 4.67 billion a year earlier. That was less than analyst estimates of $ 4.66 billion.
Same-store sales for Gap’s athletic apparel brand Athleta grew 26% year over year and at Old Navy 7%. However, Gap’s eponymous brand posted a 6% drop in sales in the same store, and Banana Republic said the key metric was down 22%.
Gap said total online sales were up 49%, representing 46% of net sales during the quarter.
For fiscal 2021, the company is arguing that net sales have an average to high teen rate compared to 2020. That assumes the Covid-related impact will continue into the first half of 2021, and the retailer will return to a more normalized, pre- pandemic sales level in the second half of the year, the company said.
Analysts asked for revenue growth of 14.1% year-on-year, according to Refinitiv.
It predicts earnings will be between $ 1.20 and $ 1.35 per share. Analysts had expected a profit of $ 1.28 per share.
Gap said it plans to open 30 to 40 Old Navy stores this year, along with 20 to 30 Athleta stores. And it will close approximately 100 Gap and Banana Republic stores worldwide.
Gap shares are up about 75% in the last 12 months. The company has a market capitalization of $ 9.46 billion.
Find the full Gap press release here.
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