Gap Keeps Hot Streak Going

Michael Teague |

Gap Keeps Hot Streak GoingComing off its strongest holiday season in six years, on Thursday Gap Inc.'s (GPS) fourth quarter earnings bested analyst estimates.

The specialty clothing retailer’s sales were up 11 percent in Q4 to $4.73 billion, while revenue increased 7.6 percent to $15.7 billion.

While analysts had forecast $4.69 billion in revenue for earnings of $0.71 per share, the company’s actual numbers were higher with earnings of $0.73 cents on $4.73 billion, also beating the prior year quarter by 66 percent.

The success is attributed to a strong holiday season at the end of 2012, but also to structural changes the company has made, with CEO Glenn Murphy last year reorganizing management in October. He appointed one executive to manage Gap and its two other ubiquitous brands Banana Republic and Old Navy, bringing the company’s online, franchise, international and outlet all under the same leadership.

Other reasons for Gap’s continued turnaround are its improvements in managing inventory and cost-cutting, as well as new marketing strategies. The company also hired Stef Larsson, former head of sales for H&M, as president of its Old Navy brand, while bringing in designer Narciso Rodrigues as an adviser to its Banana Republic brand.

At Thursday’s closing, the company’s stock price was $32.92 per share. The release of its earnings report caused a gain of 2.8 percent to $33.85 per share in after hours trading.

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Companies

Symbol Name Price Change % Volume
WFTBF West Fraser Timber Co. Ltd. 39.36 0.00 0.00 0
GPS Gap Inc. (The) 25.96 -0.52 -1.96 2,915,850

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