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Gap Inc. Experiences Weak Earnings in Q4

Gap Inc., once a powerhouse behind casual American sportswear, has recently struggled with competition from fast fashion brands and keeping up with e-commerce.

The company’s revealed Thursday that fourth quarter fiscal year 2015 comparable sales were down 7 percent. Banana Republic was negative 10 percent, while Old Navy, previously the strongest segment, was flat. The company’s adjusted diluted earnings per share were $0.57 for the fourth quarter of fiscal year 2015 and $2.43 for fiscal year 2015. Net sales were $16.2 billion for fiscal year 2015 on a constant currency basis.

As store sales falter, an omnichannel strategy has become essential for the company’s future. Gap Factory and Banana Republic Factory launched e-commerce platforms at the end of fiscal year 2015.

Gap Inc.’s performance brand Athleta was a bright spot. The brand grew its footprint to 120 U.S. store locations by the end of 2015 and is scheduled to open an additional 15 U.S. stores in 2016. The brand is also launching Athleta Girl in summer 2016 to bring performance based clothing to girls 6-14.

For 2016, Gap Inc. expects earnings per share to be in the range of $2.20 to $2.25, a number which includes the negative impact of foreign currency fluctuations. In 2016, the company expects to open 40 company-operated stores, net of closures and repositions. The store openings will be focused on greater China, global outlet stores and Athleta.

Art Peck, chief executive officer at Gap Inc., said, “With a year of transition behind us, I’m confident that we have the right strategies in place to fuel our long-term growth.” He added, “We made significant progress is 2015 transforming our product operating model, enabling us to be more responsive to trends and market conditions, and consistently deliver on-brand product collections.”