Gap Soars on Positive Holiday Results - Analyst Blog

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Shares of leading apparel retailer for men, women, children and babies, The Gap Inc. ( GPS ), soared 2.3% in the afterhours trading session yesterday as the company sweetened its profit outlook following an encouraging holiday sales season.

Though the company reaffirmed its fiscal 2013 earnings per share guidance of $2.57 to $2.65 per share, it now expects earnings per share for the year to come in at the higher end of its guidance driven by the encouraging holiday sales results.

Yesterday, Gap reported impressive comparable-store sales (comps) and sales numbers for the holiday sales season, comprising the months of November and December (nine-weeks ended Jan 4, 2014). Comps increased 1% for the holiday season this year compared to last year. Comps figures for the prior year included an additional 53rd week. As a result, this year's holiday comps are compared to the nine-week period ended Jan 5, 2013

Net sales for the nine-weeks ended Jan 4, 2014 came at $3.68 billion, up 2% from $3.59 billion during the nine-weeks ended Dec 29, 2012.

The company's holiday season sales mainly benefited from improved sales in November, characterized by strong promotions and trendy merchandise sold that boosted sales over the Thanksgiving and Black Friday weekend. This was partly offset by soft sales over the year-end holiday period.

In Nov 2013, Gap posted an increase of 2% in comps compared to last year, while it registered 8% growth in net sales that came in at $1.63 billion.

However, the company posted flat comps for Dec 2013 compared with a 5% increase for the 5 weeks ended Jan 5, 2013. Brand-wise, the company registered improved comps performance at Gap, while comps remained flat at Banana Republic and were negative at Old Navy.

Comps at Gap Global rose 1% compared with flat results in the prior-year period. Banana Republic Global's comps remained flat compared with a 1% rise registered last year. However, comps at Old Navy Global were down 2%, as against a 13% rise recorded last year.

Net sales for the 5-weeks ended Jan 4, 2014 came in at $2.05 billion, down 1.4% from $2.08 billion during the 5-weeks ended Dec 29, 2013.

Most retailers reported lackluster results for the holiday shopping period this year, followed by lowered forecasts, as retailers suffered from lower traffic, an intensified promotional environment, lesser shopping days between Thanksgiving and Christmas, numerous icy storms and sluggish consumer spending. Retailers that lowered their guidance battered by the holiday results include Family Dollar Stores Inc. ( FDO ), American Eagle Outfitters Inc. ( AEO ) and L Brands Inc. ( LB ).

Gap currently carries a Zacks Rank #3 (Hold) and is scheduled to release its January sales results on Feb 6, 2014.



AMER EAGLE OUTF (AEO): Free Stock Analysis Report

FAMILY DOLLAR (FDO): Free Stock Analysis Report

GAP INC (GPS): Free Stock Analysis Report

L BRANDS INC (LB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AEO , FDO , GPS , LB

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