By Maria Armental
Gap Inc. announced plans Thursday to bring back a company
veteran to help revive its struggling namesake stores, where sales
at its established stores declined during the holiday quarter.
Wendi Goldman will rejoin the San Francisco retailer on March 16
as executive vice president for Gap product design. Ms. Goldman,
who once worked for Banana Republic, had served as co-president of
the former Limited Brands Inc., where she led Victoria's Secret
Pink line and expanded the Express brand, Gap said.
The move comes after Gap offered a muted earnings forecast for
the year, blaming the impact of the stronger dollar and delayed
shippings at West Coast ports. The retailer also announced plans
Thursday to increase its dividend and stock repurchases.
A protracted labor dispute brought ports on the West Coat to
near paralysis, sending ripple effects through the economy. The two
sides reached a tentative five-year agreement last week, but the
effects of the slowdown are expected to carry on for months.
Gap 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. The company expects its
capital spending to increase to about $800 million from $714
million in the past year.
Separately, Gap said it is raising 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 2.8% in after-hours
trading to $41.50.
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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