The Gap’s (GPS) stock is up 8% after the clothing retailer reported strong year-end holiday sales and announced that its Old Navy brand has returned to growth.
The Gap reported fourth quarter 2023 earnings per share (EPS) of $0.49 U.S. versus $0.23 U.S. that was forecast on Wall Street.
Revenue in the quarter totaled $4.30 billion U.S. versus $4.22 billion U.S. that had been expected among analysts. Sales were up 1% from a year earlier.
The company’s earnings got a lift from sales at Old Navy, which grew 6% to $2.29 billion U.S. It was the first growth registered at Old Navy in more than a year.
The Gap’s gross margin rose 5.3 percentage points to 38.9% due to fewer markdowns and lower input costs. Analysts had forecast a gross margin of 36% for the company.
The retailer also noted that it successfully decreased its inventory by 16% during all of last year and is now focused on selling items in its stores at full price.
In terms of forward guidance, the Gap said it expects sales to be roughly flat compared to forecasts of down 0.2%.
For all of this year, the Gap said that it expects sales to also be roughly flat. That compares to Wall Street estimates of up 0.5%, according to data compiled by LSEG.
Prior to today (March 8), the Gap’s stock had gained 62% in the last 12 months and was trading at $19.33 U.S. per share.
