By Maria Armental
Gap Inc. offered a muted earnings forecast for the year, blaming
the impact of the stronger dollar and delayed shippings at West
Coast ports.
A protracted labor dispute brought ports on the West Coat to
near paralysis, sending ripple effects through the economy. The
International Longshore and Warehouse Union, which represents union
workers, and the Pacific Maritime Association, which represents
port employers, reached a tentative five-year agreement last week,
but the effects of the slowdown are expected to carry on for
months.
The San Francisco retailer said Thursday that it expects to make
$2.75 to $2.80 a share this year, compared with the consensus of
$3.01 a share, according to analysts surveyed by Thomson Reuters.
Capital spending is expected to increase to about $800 million from
$714 million in the past year.
Separately, Gap said it is increasing its annual dividend by
4.5% to 92 cents a share and that it is setting aside $1 billion to
buy back shares, adding to the $500 million approved in
October.
Gap shares, down 8% over the past year, rose 3.2% in after-hours
trading to $41.65.
For the 13 weeks ended Jan. 31, which include the critical
holiday period, Gap's profit rose nearly 4% to $319 million, or 75
cents a share, while sales increased nearly 3% to $4.71 billion.
Sales at established stores rose 2%, compared with a 1% increase a
year earlier.
Earlier this month, Gap had projected per-share earnings of 73
cents to 74 cents, topping analysts estimates at the time.
Gap has been trying to reinvigorate its namesake brand. In
September, it launched a merchandise and marketing effort, but the
sales declines persisted. In the latest quarter, sales at its
namesake stores fell 6% for the quarter, while sales rose 12% at
Old Navy and 2% at Banana Republic.
Inventory fell 5.5% from the year-ago period, below the
company's projection.
Write to Maria Armental at maria.armental@wsj.com
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