By Anna Prior
Gap Inc.'s (GPS) fiscal fourth-quarter earnings outlook topped
consensus estimates as the retailer reported January same-store
sales that also beat expectations.
The company said it expects to report fiscal fourth-quarter
earnings of 65 cents to 66 cents a share, while sales slipped 3.2%
to $4.58 billion. Analysts polled by Thomson Reuters expected
per-share earnings of 60 cents and revenue of $4.6 billion.
Gap's results have been a relative bright spot in the retail
industry as a slew of retailers recently lowered outlooks, citing a
heavy promotional environment and weak traffic during the critical
holiday season.
The company last month said it expected to report full-year
earnings near the high end of its outlook amid a rise in sales for
the holiday season.
On Thursday, Gap reported January same-store sales rose 1%,
topping market expectations for a 1.3% drop.
By brand, Gap stores reported 1% growth in same-store sales for
the month, versus an expected 1% drop, while Old Navy recorded a 4%
increase compared with expectations for a 1.8% decline. Banana
Republic, however, posted a 10% drop, significantly wider than the
expected 4.2% decline.
Gap has reported improving same-store sales in recent quarters,
bolstered by an improving product line that has tapped some hot
fashion trends, including a line of colored jeans in recent years
that were well received. But Gap, like other specialty retailers,
is facing competition from fast-fashion players such as Forever 21
Inc. and Inditex Group Inc.'s Zara.
Gap in November reported fiscal third-quarter profit grew 9.4%
as the company reported particularly strong sales in markets abroad
and higher online sales.
Shares rose 4.4% to $41.44 in recent after-hours trading.
Through Thursday's close the stock has risen 20% in the last 12
months.
Write to Anna Prior at anna.prior@wsj.com
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