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Gap Inc registers satisfactory Q4 performance

"Gap Inc’s fourth quarter profits increased 3 per cent to $220 million, or 55 cents a share, and sales rose 1 per cent to $4.43 billion. Its fourth quarter same-store sales were up 2 per cent, compared with a decline of 7 per cent in the same period last year, and same-store sales for the year fell 2 per cent, compared with a decline of 4 per cent last year. The company’s flagship Gap brand showed signs of life for the first time in many quarters: Q4 same-store sales fell 3 per cent globally compared to last year’s 6 per cent decline. Old Navy same-store sales rose 1 per cent compared to flat numbers last year, and fell 7 per cent at Banana Republic, compared to a 10 per cent decline last year."

 

 

Gap Inc registers satisfactory Q4

 

Gap Inc’s fourth quarter profits increased 3 per cent to $220 million, or 55 cents a share, and sales rose 1 per cent to $4.43 billion. Its fourth quarter same-store sales were up 2 per cent, compared with a decline of 7 per cent in the same period last year, and same-store sales for the year fell 2 per cent, compared with a decline of 4 per cent last year. The company’s flagship Gap brand showed signs of life for the first time in many quarters: Q4 same-store sales fell 3 per cent globally compared to last year’s 6 per cent decline. Old Navy same-store sales rose 1 per cent compared to flat numbers last year, and fell 7 per cent at Banana Republic, compared to a 10 per cent decline last year. The recent bankruptcies and store closures of rival apparel retailers like The Limited, American Apparel and Wet Seal present Gap with market share opportunity.

Growth drivers

Gap Inc registers satisfactory Q4 performance

 

This is an era in apparel retail when modest increases, flat sales or even ebbing declines might be seen as a comeback story. Talking about the reinvention strategy, CEO Art Peck said recently the company has worked thoroughly on getting a handle on fit style and quality; speeding up clothing manufacture to more efficiently respond to demand; transforming inventory systems to de-silo merchandise, inventory management and sourcing systems; and leveraging its warehouse network to accommodate both e-commerce and brick-and-mortar fulfillment needs. Having said that he feels that there is more work to do.

About Gap's other brands’ performance, Peck explained issues at Old Navy (which hampered the brand’s consistent strength for a time last year) were swiftly corrected and Athleta athleisure brand (for which the company doesn’t provide sales figures) is strong. But Banana Republic continues to be a drag. While Gap is right to dial back on the Banana brand across the UK and European markets, it must decide as to how it will revive its fortunes in the US. While the company is on the road to recovery, analysts feel that it will be interesting to see as to how the company sustains and speed up its growth momentum.

 
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