Gap Reports Gains
Gap Inc. reported gains after posting sales results for its fourth quarter for the 2016 fiscal year and in January.
For its fourth quarter, it posted a 2 percent gain in same-store sales, its first quarterly increase in same-store sales in more than a year. Gap Inc.’s net sales increased 1 percent to $4.43 billion for its fourth quarter. For January, it reported a 1 percent gain, missing the Retail Metrics consensus of 2.1 percent forecast by market-research group Retail Metrics.
But the gains were still considered very good news. Wall Street analyst Adrienne Yih of Wolfe Research reported that after-hours trading of Gap Inc. stock increased 3 percent after the announcement. She reiterated her “outperform” recommendation for Gap stock in a Feb. 7 research note.
With the report, Art Peck, Gap’s chief executive officer, gave a bullish statement that the San Francisco–headquartered company was prepared to play offense.
“Against a challenging retail backdrop, we’re pleased to report growth in our top-line and comp sales during the critical holiday quarter,” Peck said. “We remain focused on actions that will strengthen our brands and recapture market share.”
The quarter included good business from the crucial holiday season. Same-store sales were up 2 percent for the holiday months of November and December. Comp sales for its Old Navy Global division increased 12 percent during the holidays. Same-store sales for its Gap Global division experienced an uptick of 1 percent. The Banana Republic Global division reported a decline of 7 percent. On Jan. 24, Gap Inc. announced that Andi Owen, global brand president of Banana Republic, would leave the company and a search for a replacement was underway.
Gap Inc.’s recent sales increases might be the result of steps taken last year to turn around the company’s business. In May, it announced that it closed around 75 locations to make its store fleet more nimble.
Gap’s success comes at a tough time for retail. On Feb. 2, retail analyst Marshal Cohen wrote much of the 2016 holiday season showed no sizzle. “Consumers appeared to have grown numb to the early and constant promotions,” Cohen wrote in a blog titled “An Urgent Message for Retail.”
“Promotions aren’t dead, but they aren’t in the commanding position they once were. Retailers are now tasked to find a way to break through the noise with powerful products and experiences that make the consumer want to act, and act now!” Cohen is chief industry analyst for The NPD Group, a market-research company.