Leading apparel retail chain,
) posted strong December comparable-store sales (comps) that
surpassed analyst expectations, as the company successfully lured
customers to its stores during the holiday season via its product
offerings and promotional activities. Comps were also driven by
sustained strength in its North American brands portfolio.
December (five-week period ended December 29, 2012) comps at
Gap rose 5% versus a 4% decline in the comparable prior-year
period. Moreover, net sales in the month summed to $2.08 billion,
up 5% compared with the year-ago period sales of $1.98
Comps at Gap North America increased 2% against a 4% decline
recorded in the prior-year period. Banana Republic North
America's same-store sales inched up 1% versus 2% decline in
December last year. Results at its Old Navy North America segment
reflected a whopping 13% rise in comps compared with a 4% fall in
the comparable prior-year period. However, comps at the
International business fell 6% for the month compared with an
equivalent decline recorded in the prior-year period.
Year-to-date through December 29, 2012, the company's net
sales climbed 6% to $14.52 billion compared with $13.72 billion
in the year-ago period. Improvements in net sales were primarily
driven by 4% growth in the company's comps.
Concurrently, two of the company's competitors -
Ross Stores Inc.
) - reported same-store sales for the month of December. Ross
Stores recorded 6% growth in December comps, while comps at
Nordstrom climbed 8.6%.
Gap is scheduled to release its January sales results on
February 7, 2013.
New $1.0 Billion Share Repurchase Authorization
Concurrently, Gap's board of directors approved a new $1.0
billion share repurchase program, which replaces its previous
$1.0 billion authorization that was completed in the fourth
quarter of fiscal 2012. Since the beginning of fourth-quarter of
fiscal 2012 till January 3, 2013, the company has repurchased
nearly 17 million shares for $539 million.
The company has always been committed to create value for its
shareholders by returning capital in the form of dividends and
share repurchases. This is evident from the company's
year-to-date cash disbursements totaling about $1.2 billion via
dividend payments and share buybacks. The new program reflects
the company's sound financial position and its strength in
generating healthy free cash flow, which allows the company to
initiate growth initiatives and maximize shareholders'
We believe that the company's relentless focus on turnaround
strategies for improvising the top line are paying off, which is
reflected in its solid comps and sales performance in the recent
months. The company has now posted positive comps for six
consecutive months (July-December 2012).
Further, Gap's long-term strategic moves, along with
disciplined cost management measures will not only furnish it
with financial flexibility, but will also help it reduce the
operating expenses. Moreover, Gap's globally recognized brands
complement one another, enabling it to leverage its position in
Currently, Gap's shares carry a Zacks #3 Rank (Hold) as we
remain slightly cautious over the stock due to intense
competition and risk of operating in overseas market.
GAP INC (GPS): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis
ROSS STORES (ROST): Free Stock Analysis
To read this article on Zacks.com click here.