Gap (GPS) 2020 Q4 Earnings Results

Gap Inc. (NYSE:GPS) traces its roots back to 1969 when Donald and Doris Fisher open their first Gap store in San Francisco to sell Levi’s jeans. It gained popularity in a short span of time and its store count crossed 2 hundred by 1976. The company continued its expansion over the years and evolved into America’s biggest apparel retailer. It comprises several brands such as its namesake Gap brand, Old Navy, and Banana Republic.

Unlike most clothing retailers, Gap performed well in 2020 despite the difficult operating environment post Covid-19 pandemic. The strong online presence helped the company to steer through the peak of the health crisis. Gap stock’s value has surged more than 100 percent during the past 12 months.

Gap recently announced mixed financial results for the fourth quarter. It reported earnings of 61 cents per share for the three months ended January 30, as compared to a loss of 49 cents per share in the comparable period of 2019. The company said its Q4 profit included a tax gain of 45 cents per share. Analysts on average were looking for adjusted earnings of 19 cents per share.

Revenue for the quarter slipped 5 percent on a year-over-year basis to $4.42 billion, behind the consensus forecast of $4.66 billion. Online sales in the quarter jumped 49 percent and accounted for 46 percent of the total sales.

If we look at the performance of key segments, sales at Banana Republic and Gap declined 27 percent and 19 percent, respectively. On the bright side, sales at Athleta jumped 29 percent, while sales at Old Navy rose 5 percent in the quarter.

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Commenting on the quarter, CEO Sonia Syngal said, “We faced one of the most difficult years in our company’s history and, throughout, our teams showed resilience and determination as we navigated unprecedented disruption in our industry to set a course for long-term growth.”

Looking forward, Gap expects to report earnings in the range of $1.20 per share to $1.35 per share for FY 2021, in line with analysts’ average estimate of $1.28 per share.

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