Gap Inc. exceeded Wall Street’s expectations for sales and profits in the fourth quarter, reporting strong performance driven by CEO Richard Dickson’s turnaround strategy. The company’s apparel brands, including Old Navy and Banana Republic, saw a surge in customer demand during the key holiday shopping season, pushing its stock up by approximately 15% in after-hours trading.
For the quarter ending February 1, Gap posted net sales of $4.15 billion, surpassing the average analyst estimate of $4.07 billion, according to data compiled by LSEG. The company’s largest revenue contributor, Old Navy, saw a 3% increase in comparable sales, bouncing back from flat performance in the third quarter.
Gap also reported quarterly earnings of 54 cents per share, well above the consensus estimate of 37 cents per share. “Our brands are resonating, and we continue to gain relevance and market share, which we believe gives us pricing power in the market,” said Katrina O’Connell, Gap’s Chief Financial Officer, during a post-earnings call.
Looking ahead, Gap projected a modest sales growth of 1% to 2% for fiscal 2025, slightly below analyst expectations. The company’s forecast reflects the challenging macroeconomic environment, including inflationary pressures, supply chain disruptions, and currency fluctuations.
Despite the hurdles, Gap’s optimistic outlook suggests continued momentum from its ongoing turnaround efforts. eMarketer analyst Rachel Wolff noted that the company’s relatively low exposure to Chinese imports—accounting for less than 10% of its inventory—could help mitigate some risks from tariffs, although it remains vulnerable to potential trade disputes.
While some apparel companies, including Abercrombie & Fitch, have issued more cautious forecasts due to inflationary concerns and rising tariffs, Gap’s results signal that its brand strategy is resonating with consumers, particularly as they capitalized on the opportunity to splurge during the holiday season.
As the company navigates a difficult retail landscape, its ability to attract shoppers with trendy styles and maintain a solid market share could continue to drive its performance in the coming quarters.
