Gap (GPS) Q1 2024 Earnings | Wilnesh News

gap All four of its brands posted positive comparable sales on Thursday, and the apparel giant raised its full-year guidance as Chief Executive Richard Dickson’s turnaround strategy begins to take effect. .

The retailer behind Gap, Banana Republic, Athleta and Old Navy all beat profit expectations and topped revenue estimates.

Here’s how Gap performed compared to Wall Street expectations, according to an LSEG survey of analysts:

• Earnings per share: 41 cents vs. 14 cents expected
• income: US$3.39 billion, expected US$3.29 billion

Gap shares soared more than 20% in after-hours trading Thursday.

The company reported fiscal first-quarter net income of $158 million, or 41 cents a share, compared with a loss of $18 million, or 5 cents a share, a year earlier.

Sales for the period ended May 4 grew about 3% to $3.39 billion from $3.28 billion a year earlier.

CEO Richard Dickson told CNBC, “This is the first time in many years that all four brands have shown positive performance. In fact, we have been looking for when they show positive performance. performance, but hard to find.

“We feel very confident about the quarter, which gives us the confidence to raise our full-year 2024 guidance, including the outlook for revenue and operating margin. … It continues to really demonstrate, if you will, the confidence that we have in our priorities indeed. It’s taking shape,” he added. “The culture is energizing and we are delivering on the promises we said we were going to deliver to our shareholders.”

Gap now expects net sales to grow “modestly,” compared with its previous forecast of flat sales. The company expects gross margin to grow by at least 1.5 percentage points, compared with previous guidance of at least 0.5%.

The biggest change to Gap’s forecast is its operating income outlook. Operating income is now expected to be in the mid-40% growth range, compared with previous guidance of mid-teens growth.

Dixon, who took the helm at Gap in late August, is a marketing guru who has been working to reinvigorate the company’s brand portfolio. His focus is telling brand stories and repositioning brands like Gap and Old Navy into cultural centers.

Some of this is already starting to show.

Earlier this month, actress Da’Vine Joy Randolph attended the Met Gala in Manhattan wearing a denim ball gown designed by Gap’s new creative director Zac Posen. A few weeks later, actress Anne Hathaway attended a Bulgari party wearing a white Gap shirtdress, also designed by Posen.

“We’re excited to see (Hathaway’s dress) on the market and get it to consumers so they have the opportunity to purchase it,” Dixon said. “We continue to believe that through marketing and innovative media, it’s better to Telling stories resonates.”

The quarter’s success was driven by “consistency, financial and operational rigor,” he told CNBC, adding that the company’s average selling prices were back to pre-pandemic levels due to reduced inventory levels and higher sales. But with better design and marketing, consumers will buy more.

Here’s a detailed breakdown of how each of Gap’s brands performed during the quarter, compared to Wall Street estimates compiled by FactSet, which revised its estimates after Gap’s report:

• Old Navy: Net sales were $1.9 billion, up 5% from last year, and comparable sales were up 3%, above the revised FactSet forecast of 2.3%. Dixon said the brand had its “best quarterly results in three years,” a major win for Gap’s most important brand by revenue. He noted that the women’s business is strong and “aggressively delivering positive results” – a “key category” for the company.

• Banana Republic: Sales were US$440 million, an increase of 2% over last year. Comparable sales rose 1%, according to revised FactSet estimates, well above expectations for a 4% decline. This increase follows an 8% decline in the same period last year.

• athlete: Sales were $329 million, up 2% from last year. Comparable sales grew 5% after falling sharply 13% in the same period last year. Analysts had no expectations for Athleta’s comparable sales.

• gap: Sales were $689 million, unchanged from last year. Comparable sales rose 3%, according to revised FactSet estimates, beating estimates of 2%. “Gap’s performance was primarily driven by strong marketing and product execution centered on the Linen Moves campaign,” the company said.