Gap Inc. (GPS) missed revenue estimates for the fourth quarter as same-store sales fell sharply at its Gap and Banana Republic stores, but posted better-than-expected earnings after the bell Thursday.
The retailer reported diluted earnings of 61 cents a share on revenue of $4.4 billion for the quarter. The results included 45 cents a share for non-recurring tax benefits and 12 cents a share in impairment charges related to its Intermix business, which is under strategic review.
Gap had been expected to report net income of $67.8 million, or 19 cents a share, on sales of $4.7 billion based on a FactSet survey of 20 analysts.
In the same period a year ago, the company posted earnings of 58 cents a share on sales of $4.7 billion. It reported net income of $140 million.
Gap said comparable sales at its namesake stores fell 6%. “Gap Brand’s global footprint was meaningfully impacted by COVID-mandated store closures and restrictions in Canada, China, Europe and Japan. Importantly, North America comparable sales were positive,” the company said in a statement. Banana Republic Global comparable sales were down 22%.
Online sales rose 49%, the company said. Its Athleta stores saw comparable sales gains of 26%. Old Navy stores comparable sales rose 6%.
“Our powerful brands moved to offense with purpose-led marketing and strength in relevant categories, like active and fleece, allowing us to gain meaningful market share quarter-over-quarter in a fragmented environment,” said Sonia Syngal, CEO, in the statement.
The company said its board of directors authorized the payment of its previously approved but deferred first-quarter fiscal year 2020 dividend of 24.25 cents per share.
The company also intends to initiate a quarterly dividend in the second quarter of fiscal year 2021 “at a level that balances return of capital to shareholders while maintaining the financial flexibility to monitor the ongoing pandemic impacts and invest in growth initiatives.” Gap doesn’t plan any share repurchases in fiscal 2021.
Gap forecast full-year diluted earnings per share of $1.20 to $1.35. It said the forecast “does not incorporate potential unknown and future [COVID] impacts, including possible further spread in other regions, meaningful deterioration from current trends, and potential disruption from any supply-chain impacts.”