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.