A man walks past a store on January 12, 2021 in New York.
Angela Weiss | AFP | Getty Images
Gap Inc. on Thursday predicted a setback in sales growth in 2021, hoping that customers would soon return to their stores and spend more money on clothing because they want to resume social activities.
Its shares rose more than 3% in after-hours trading.
The clothing manufacturer reported sales in the fourth quarter, which did not come according to estimates, as the ongoing coronavirus pandemic forced temporary store closures in Europe, parts of Asia and Canada. But it has made a profit, thanks to the efforts to sell more goods at the full price and the progress that is causing the closure of stores to perform less well.
It has shown sustained strength at its Old Navy and Athleta brands, which focus on basics and workouts. But namesake Gap and the Banana Republic label reported another quarter of the decline in sales.
For the quarter ended January 30, Gap had a net income of $ 234 million, or 61 cents per share, compared to a loss of $ 184 million, or 49 cents per share, a year earlier.
Earnings in the most recent period included a tax gain of approximately 45 cents per share and an impairment charge of approximately 12 cents per share related to Gap’s Intermix business. According to a survey by Refinitiv, analysts asked for earnings of 18 cents per share. It was not immediately clear whether analysts had considered the impact of these items.
Net sales fell 5% to $ 4.42 billion, from $ 4.67 billion a year earlier. That was less than analysts’ estimates for $ 4.66 billion.
Sales of the same store for Gap’s athletic brand Athleta increased by 26% year-on-year, up 7% at Old Navy. However, Gap’s namesake recorded a 6% drop in the same store, and Banana Republic said the key benchmark dropped by 22%.
According to Gap, total online sales increased by 49%, representing 46% of net sales during the quarter.
For fiscal 2021, the company is asking for net sales to increase a percentage from middle to high teens compared to 2020. It is assumed that the Covid-related impact will continue in the first half of 2021, and that the retailer will return to a more normalized, ahead of the pandemic level of sales in the second half of the year, the company said.
According to Refinitiv, analysts have asked for a revenue growth of 14.1% on an annualized basis.
Earnings are forecast to be between $ 1.20 and $ 1.35 per share. Analysts had expected earnings of $ 1.28 per share.
Gap said he plans to open 30 to 40 Old Navy stores, along with 20 to 30 Athleta stores this year. And it will close about 100 Gap and Banana Republic stores worldwide.
Gap shares have risen about 75% over the past 12 months. The company has a market capitalization of $ 9.46 billion.
Find the full press release of Gap here.
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