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Gap Beats Analysts’ Estimates in Q4; Full Year Results Could Point to Turnaround

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Gap

Gap Inc. was pleased with its fourth quarter performance despite dips in sales across the board as numbers beat what analysts expected, and its improved full year guidance may be a sign of better days ahead.

Net sales for the retailer’s fourth quarter were down nearly 7 percent to $4.39 billion and comparable sales were also down 7 percent versus a 2 percent increase in the previous year’s quarter.

Things were worst at Banana Republic where sales were down 14 percent versus 1 percent growth in the prior year, considering the near-constant 40 percent-off promos the retailer ran for the better part of the period. Sales at Old Navy were down 8 percent, a far fall from the 11 percent growth of one year ago. Gap’s sales loss was the least bad, down 3 percent, and an improvement on last year’s 6 percent decline.

Because the numbers were less bleak than previous guidance predicted, they rang in as positive for the retailer. Analysts thought earnings per share would come in around $0.53 but Gap adjusted its expectation for the fourth quarter to $0.56 to $0.57.

“We are pleased to guide to the high end of our previously announced full-year earnings per share range,” Gap Inc. chief financial officer Sabrina Simmons said. “As we kick-off fiscal year 2016, our brands look forward to introducing their new spring collections to customers.”

The company’s shares were up more than 3 percent in after-hours trading Monday following the announcement, but at publication time shares were down 3 percent to $23.27.

For the full year, Gap narrowed its guidance range to $2.41 to $2.42, an uptick from analysts’ $2.37 estimate, and a possible sign that the troubled retailer could be on the verge of a turnaround, according to Nasdaq.

Gap will report its full fourth-quarter earnings on Feb. 25.

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