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Gap (GPS) Q4 Earnings and Sales Beat Estimates, Rise Y/Y
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The Gap Inc. (GPS - Free Report) reported fourth-quarter fiscal 2023 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and grew year over year. GPS posted adjusted earnings of 49 cents per share in the fiscal fourth quarter, surpassing the Zacks Consensus Estimate of 20 cents. The company had reported a loss of 75 cents a share in fourth-quarter fiscal 2022.
Net sales inched up 1% year over year to $4,298 million and beat the Zacks Consensus Estimate of $4,213 million. This includes the adverse impacts of 2 percentage points from the sale of Gap China and the contribution of 4 percentage points from the 53rd week. The company completed the sale of Gap China at the beginning of the first quarter of fiscal 2023. Comparable sales (comps) were flat year over year.
Digital sales dipped 2% year over year, accounting for 40% of the total sales for the reported quarter. Store sales jumped 4% year over year.
In the past three months, shares of this current Zacks Rank #3 (Hold) company have risen 9.2% compared with the industry’s 4% growth.
Old Navy: Net sales at Old Navy Global increased 5.6% year over year to $2,288 million due to continued softness in apparel. Comps also increased 2% in the fiscal fourth quarter, delivering second consecutive quarterly growth. Sales for Old Navy Global beat our model’s estimate of $2,201.6 million.
Gap Global: For the fourth quarter of fiscal 2023, net sales declined 5.1% year over year to $1 billion due to the unfavorable impacts of the sale of Gap China and the shutdown of Yeezy Gap. Comps increased 4% in the reported quarter. Sales for Gap Global surpassed our model’s estimate of $984.4 million.
Banana Republic: Net sales edged down 1.9% year over year to $567 million whereas comps fell 4%. Sales lagged our estimate of $590 million.
Athleta: Net sales edged down 3.9% year over year to $419 million for the Athleta brand whereas comps declined 10%. Net sales missed our estimate of $429.5 million.
Margins & Costs
The gross margin of 38.9% expanded 530 basis points (bps) from the prior-year period’s reported figure. Meanwhile, we estimated the adjusted gross margin to be 38.7%. The merchandise margin grew 500 bps, benefiting from lower commodity costs and better promotional activity. Rent, occupancy and depreciation, as a rate of sales, leveraged 30 bps year over year.
Other Financials
Gap ended the fiscal fourth quarter with cash and cash equivalents of $1.9 billion, up 54% from the year-ago period. As of Feb 3, 2024, it had total stockholders’ equity of $2.6 billion and a long-term debt of $1.5 billion.
As of Feb 3, the company generated $1.5 billion in cash from operating activities. It paid cash dividends of $0.2 million in the fiscal year. Capital expenditure was $420 million during fiscal 2023. For fiscal 2024, capital expenditure is expected to be $500 million.
As of Jan 28, 2023, Gap had 3,352 stores in more than 40 countries, of which 2,685 were company-operated and 667 were franchise outlets. As of fiscal 2024, it expects to have 3,560 stores, including 2,562 company-operated and 998 franchise outlets.
Guidance
Management provided first-quarter and fiscal 2024 outlook. For the first quarter, it projects flat net sales year over year. The company expects gross margin expansion of at least 1000 bps and operating expenses of about $1.2 billion.
For fiscal 2024, it projects flat net sales year over year on a 52-week basis. The company expects gross margin expansion of at least 50 bps and operating income to grow in the low to mid-teens for the fiscal year. Operating expenses are likely to be around $5.1 billion and the effective tax rate is forecast to be 28%.
Abercrombie, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 715.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales suggests growth of 3.2%, from the year-ago reported figure.
American Eagle, a leading apparel retailer, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 23% in each of the trailing four quarters.
The Zacks Consensus Estimate for American Eagle’s current financial-year sales suggests growth of 5% from the year-ago reported figure.
Hibbett, a key sporting goods retailer, currently carries a Zacks Rank #2 (Buy). HIBB delivered an earnings surprise of 24.2% in each of the trailing four quarters.
The Zacks Consensus Estimate for Hibbett’s current financial-year sales suggests growth of 1.8% from the year-ago reported figure.
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Gap (GPS) Q4 Earnings and Sales Beat Estimates, Rise Y/Y
The Gap Inc. (GPS - Free Report) reported fourth-quarter fiscal 2023 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and grew year over year. GPS posted adjusted earnings of 49 cents per share in the fiscal fourth quarter, surpassing the Zacks Consensus Estimate of 20 cents. The company had reported a loss of 75 cents a share in fourth-quarter fiscal 2022.
Net sales inched up 1% year over year to $4,298 million and beat the Zacks Consensus Estimate of $4,213 million. This includes the adverse impacts of 2 percentage points from the sale of Gap China and the contribution of 4 percentage points from the 53rd week. The company completed the sale of Gap China at the beginning of the first quarter of fiscal 2023. Comparable sales (comps) were flat year over year.
Digital sales dipped 2% year over year, accounting for 40% of the total sales for the reported quarter. Store sales jumped 4% year over year.
In the past three months, shares of this current Zacks Rank #3 (Hold) company have risen 9.2% compared with the industry’s 4% growth.
The Gap, Inc. Price and Consensus
The Gap, Inc. price-consensus-chart | The Gap, Inc. Quote
Brand-Wise Sales & Comps
Old Navy: Net sales at Old Navy Global increased 5.6% year over year to $2,288 million due to continued softness in apparel. Comps also increased 2% in the fiscal fourth quarter, delivering second consecutive quarterly growth. Sales for Old Navy Global beat our model’s estimate of $2,201.6 million.
Gap Global: For the fourth quarter of fiscal 2023, net sales declined 5.1% year over year to $1 billion due to the unfavorable impacts of the sale of Gap China and the shutdown of Yeezy Gap. Comps increased 4% in the reported quarter. Sales for Gap Global surpassed our model’s estimate of $984.4 million.
Banana Republic: Net sales edged down 1.9% year over year to $567 million whereas comps fell 4%. Sales lagged our estimate of $590 million.
Athleta: Net sales edged down 3.9% year over year to $419 million for the Athleta brand whereas comps declined 10%. Net sales missed our estimate of $429.5 million.
Margins & Costs
The gross margin of 38.9% expanded 530 basis points (bps) from the prior-year period’s reported figure. Meanwhile, we estimated the adjusted gross margin to be 38.7%. The merchandise margin grew 500 bps, benefiting from lower commodity costs and better promotional activity. Rent, occupancy and depreciation, as a rate of sales, leveraged 30 bps year over year.
Other Financials
Gap ended the fiscal fourth quarter with cash and cash equivalents of $1.9 billion, up 54% from the year-ago period. As of Feb 3, 2024, it had total stockholders’ equity of $2.6 billion and a long-term debt of $1.5 billion.
As of Feb 3, the company generated $1.5 billion in cash from operating activities. It paid cash dividends of $0.2 million in the fiscal year. Capital expenditure was $420 million during fiscal 2023. For fiscal 2024, capital expenditure is expected to be $500 million.
As of Jan 28, 2023, Gap had 3,352 stores in more than 40 countries, of which 2,685 were company-operated and 667 were franchise outlets. As of fiscal 2024, it expects to have 3,560 stores, including 2,562 company-operated and 998 franchise outlets.
Guidance
Management provided first-quarter and fiscal 2024 outlook. For the first quarter, it projects flat net sales year over year. The company expects gross margin expansion of at least 1000 bps and operating expenses of about $1.2 billion.
For fiscal 2024, it projects flat net sales year over year on a 52-week basis. The company expects gross margin expansion of at least 50 bps and operating income to grow in the low to mid-teens for the fiscal year. Operating expenses are likely to be around $5.1 billion and the effective tax rate is forecast to be 28%.
Eye These Solid Picks
We have highlighted three better-ranked stocks, namely Abercrombie (ANF - Free Report) , American Eagle (AEO - Free Report) and Hibbett (HIBB - Free Report) .
Abercrombie, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 715.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales suggests growth of 3.2%, from the year-ago reported figure.
American Eagle, a leading apparel retailer, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 23% in each of the trailing four quarters.
The Zacks Consensus Estimate for American Eagle’s current financial-year sales suggests growth of 5% from the year-ago reported figure.
Hibbett, a key sporting goods retailer, currently carries a Zacks Rank #2 (Buy). HIBB delivered an earnings surprise of 24.2% in each of the trailing four quarters.
The Zacks Consensus Estimate for Hibbett’s current financial-year sales suggests growth of 1.8% from the year-ago reported figure.