Gap's 4th-quarter net income rises 61 percent
NEW YORK (AP) — Gap Inc. reported a 61 percent increase in fourth-quarter profits on Thursday, capping a strong year that saw the company's turnaround take hold.
The San Francisco-based company, which operates stores under its namesake, Banana Republic and Old Navy brands, also said that it's raising its annual dividend to 60 cents from 50 cents per share for the current year. The company offered a muted profit outlook. Shares rose in after-hours trading.
The company's latest performance, which includes the critical holiday period, shows how the company's efforts to push brightly colored fashions, new designer collaborations and lively marketing campaigns are helping to invigorate sales after struggling for years to reclaim its fashion status.
"At the end of the day, we are looking at the consumer and saying we have to continue to give her reasons to buy," Gap CEO Glenn Murphy told investors during a conference call. "If you're going to win in this environment, doing the same thing all over again is not a winning strategy. We have to bring more and more uniqueness, differentiation and excitement to the business."
Among the recent standouts, says Murphy, were what Old Navy marketed as "rock star jeans", denim leggings.
Gap earned $351 million, or 73 cents per share, in the quarter ended Feb. 2. That compares with $218 million, or 44 cents per share, a year earlier.
Revenue rose 10 percent to $4.73 billion in the period.
Analysts expected 71 cents per share on revenue of $4.69 billion, on average.
Revenue at stores opened at least a year rose 5 percent. The measure is a key indicator of a retailer's health. By division the metric at Gap's North America division rose 4 percent, Banana Republic's North America division was up 3 percent, while Old Navy's North America division rose 8 percent. The company's international division's business fell 2 percent.
For the year net income rose 36 percent to $1.1 billion, up from $833 million. Revenue rose 7.6 percent to $15.6 billion.
Companywide, revenue at stores opened at least a year rose 5 percent, with every division except its international business posting increases.
It's been a long climb back up. After turning basics like T-shirts and khakis into must-have fashions in the 1990s, the company fell out of favor starting in the early 2000s. Under Murphy, the chain closed or shrank stores and cut inventory to boost its profits over the past several years. But a revolving door of executives hadn't been able to solve the biggest problem: shoppers weren't buying its clothes unless they came with a fat discount.
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