Gap Reports Upbeat Quarterly Sales on Improving Demand for Old Navy Apparel

Gap beat Wall Street expectations for fourth-quarter sales on Thursday, buoyed by strong demand on improved product offerings at its Old Navy and namesake brands during the holiday season.

The company’s shares rose 4 percent after the bell.

CEO Richard Dickson’s plans to push ahead with reinventing Gap’s brands, mainly Old Navy, have helped drive consumer interest in its clothing and accessories.

The Banana Republic parent had seen sales slump in the past several quarters as customers moved to competitors such as Amazon.com and Shein that offer compelling product assortments.

Fourth-quarter comparable sales at the Gap brand rose 4 percent and Old Navy saw a 2 percent increase, while Athleta and Banana Republic sales slumped 10 percent and 4 percent, respectively.

However, Gap expects fiscal 2024 net sales to be flat compared with $14.89 billion in 2023. Analysts had expected a 0.48 percent rise, according to LSEG data.

Gap’s forecast signals that improving its product assortments mainly at Athleta and Banana Republic could take longer than expected.

“Re-establishing Banana Republic will take time and there is work to be done to better execute many of the fundamentals,” the company said on Thursday.

“They can edit and curate better, and can work colour and colour combinations better,” Leslie Ghize, executive vice president of Coller Davis & Co, a division of retail consultancy Doneger Tobe said.

Gap’s fourth-quarter net sales rose 1.3 percent to $4.30 billion, beating estimates of $4.22 billion.

The company posted a net income of $185 million, or 49 cents per share, in the quarter, compared to a loss of $273 million, or 75 cents per share, a year earlier.

By Ananya Mariam Rajesh and Kate Masters; Editing by Shounak Dasgupta

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