Gap tops analysts estimates for earnings and sales in the fourth quarter

Gap tops analysts estimates for earnings and sales in the fourth quarter
  • Gap tops analysts estimates for earnings and sales in the fourth quarter.
  • Gap posts $4.67 billion in revenue in the fourth quarter versus $4.55 billion expected.
  • Gap makes 58 cents of earnings per share in the fourth quarter versus 41 cents expected.

Gap Inc. (NYSE: GPS) announced its financial results for the fourth quarter on Thursday that beat analysts’ forecast for earnings and sales. Gap also revealed a leadership change in its statement yesterday as it named Old Navy CEO, Sonia Syngal, as the new chief executive officer of GAP.

As an initial response, the stock climbed over 5% in extended trading on Thursday. Much of the gain, however, was lost later with GAP last seen trading 1% higher.

In its guidance for the first quarter, the company highlighted that it is next to impossible at the moment to accurately predict the extent to which the Coronavirus emergency will hit its financial performance. As a rough estimate, however, the company said that a $100 million hit to its Q1 sales is expected in Asia that translates to a decline of 10 cents per share on the earnings front.

The virus, according to GAP, also pushed the company into suspending its share repurchase program for this year.

Gap’s Q4 Financial Results Versus Analysts’ Estimates

According to Refinitiv, analysts were expecting Gap to print $4.55 billion in revenue in the fourth quarter. In terms of earnings, their estimate was capped at 41 cents per share in the recent quarter. Experts also forecast a 3.8% drop in Gap’s same-store sales in Q4.

In its financial results on Thursday, the company reported a much higher $4.67 billion in revenue in the recent quarter. It also claimed to have made 58 cents of earnings per share in the fourth quarter. While the same-store sales did go down for Gap in Q1, the drop was confined at a much lower than expected 1%.

At $184 million, Gap’s quarterly net loss came out sharply lower than $276 million that was printed in the same quarter last year. Thursday’s earnings report also accentuated $296 million in impairment charge for Gap in the recent quarter.

Gap’s Performance In The Stock Market

Net sales saw a 1% increase in the fourth quarter with Banana Republic same-store sales keeping flat but Athleta sales posting a 2% increase in Q4. Old Navy sales, on the other hand, also remained flat in the recent quarter.

At the time of writing, Gap is exchanging hands at $10.20 per share in the stock market that marks an around 40% decline in 2020 so far. Its performance in 2019 also remained largely downbeat with an annual loss of around 30%. Gap currently has a market cap of $3.76 billion with a price to earnings ratio of 4.71.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.
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