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A buyer carries its early purchases of Black Friday on Thanksgiving, on November 28, 2024, at the Citadel Outlet Shopping Center in Los Angeles.
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Gap On Thursday, he published another quarter that eliminated expectations, indicating that his change under the CEO Richard Dickson is working better, and faster, than Wall Street anticipated.
The shares increased 17% in the negotiation extended on Thursday.
The clothing retailer behind Old Navy, Banana Republic, athlete and his homonym banner exceeded expectations in the upper and lower results during the important vacation quarter and saw that comparable sales grew by 3%, ahead of the expectations of 1%more, according to Streetacount.
This is how GAP did in his fourth fiscal quarter compared to what Wall Street was anticipating, based on a LSEG analysts survey:
- Profit per action: 54 cents vs. 37 expected cents
- Revenue: $ 4.15 billion compared to $ 4.07 billion expected
The company’s net income for the company for the three -month period that ended on February 1 was $ 206 million, or 54 cents per share, compared to $ 185 million, or 49 cents per share, a year earlier.
Sales fell to $ 4.15 billion, approximately 3% of $ 4.30 billion the previous year. Like other retailers, GAP benefited from an additional sales week in the period of the previous year, which negatively promoted comparisons.
In next year, GAP expects sales to grow between 1%and 2%, in line with the expectations of a 1.7%increase, according to LSEG. For the current quarter, his guide was a bit weaker than expected. Sales are expected to be “slightly flat”, compared to Wall Street estimates of a 1.5%increase, according to LSE.
“We have been operating in a highly dynamic backdrop during the last years, and we expect the same for fiscal year 2025,” said Gap Finance, Katrina O’Connell, in a call with analysts. “As a result, we have had a balanced vision with our guide and we continue to control the controllable.”
Like other retailed retailers in the middle of President Donald Trump’s Commercial War With China, Canada and Mexico, GAP has been working to discover the impact that new tasks on the company will have. In an interview with CNBC, Dickson said that less than 1% of its product comes from Canada and Mexico, combined, and less than 10% comes from China.
When asked if the company will increase prices, Dickson said that “the goal is to minimize the impact for the consumer.”
“We are going to work with our suppliers. We are seeing our cost base and we will have to balance that with the protection of the structural economy of the business,” Dickson said.
O’Connell added tariffs, since they stood on Thursday, they were integrated into the company’s guide and said that any impact on the margin is expected to be “relatively minimal.”
He has spent about a year and a half since Dickson assumed the position of CEO of GAP. Under its direction, the company has returned to growth and repaired its brand image, and in fiscal year 2024, it delivered its highest gross margin in more than 20 years with 41.3%.
The former Mattel executive, accredited with reviving The Barbie Empire, has brought that same skill to revitalize GAP brands. After a fourth consecutive trimester of strong results, it seems that the strategy has power of permanence.
Zac Posen’s clothing, GAP creative designer, has been used recently by celebrities such as Timothee Chalamet, and even the company’s republic banana brand has returned to growth. Its Athleisure Athlete brand is still accelerating, but the company has stabilized bleeding and is no longer reducing.
Here is a closer look at how each brand performed during the quarter.
Old Marina
The largest GAP brand for revenue saw sales of $ 2.2 billion, with comparable sales by 3%, which increased expectations of up to 0.7%, according to Streetacount. The brand saw strength in denim and active clothing.
Gap
Comparable sales of the homonymous Banner grew by 7%, far ahead of estimates of up to 0.8%, according to Streetacount.
“GAP has returned to cultural conversation,” Dickson said in the call. “This brand was based on strong products of products with a brilliant marketing expressed through great ideas, and during the past year, each of them was revived.”
The brand director, Chris Govern, left GAP in October for Dickie’s, but the company occupied internally after it left. Dickson told CNBC in an interview that the brand has “great leadership” and is “extraordinary talent staff.”
Banana republic
The Safari Chic brand, Officewear, comparable sales grew by 4%, when analysts expected them to shrink by 1.5%, according to Streetacount. He continued to develop strength in men’s clothes, but he still doesn’t have a CEO. Dickson expects the company to have an update on the “short” paper.
In next year, GAP will close 35 stores on a net base, most of which will be bananas stores, the company said.
Athlete
Comparable sales of the Athleisure brand fell 2% during the quarter after it could not offer the correct types of products necessary for its central consumer, Dickson explained. Analysts had no expectations for comparable athlete sales.
“We have certainly entered the cultural conversation again, and reinforces that we do believe in this brand. We have long -term opportunities, but we have work to do to restore the brand,” Dickson said. “In the fourth quarter, very specifically, you know, we needed to do more to excite our central consumer during the holiday period, we did a good job attracting new consumers. We did a great job reactivating customers, but we lacked the depth of interest of the products for our central client at that time of vacation.”
Dickson warned that the brand’s performance is likely to remain “broken” in the rooms ahead as its restart continues.
