Gap Inc gave investors plenty to smile about, with shares jumping 12.4% in after-hours trading after the retailer posted stronger-than-expected results for its fourth quarter. And if that wasn’t enough, the company also announced a 10% increase to its quarterly dividend – a solid win for shareholders.
The high-street fashion giant outperformed Wall Street’s forecasts, reporting adjusted earnings per share of $0.54, well above analysts’ predictions of $0.36. Revenue also came in slightly higher than expected, hitting $4.1 billion compared to the anticipated $4.07 billion. Comparable sales saw a 3% year-on-year increase, showing the brand is still drawing in shoppers.
Gap’s President and CEO, Richard Dickson, was pleased with the results, saying: “We ended the year delivering another successful quarter, exceeding financial expectations and gaining market share for the 8th consecutive quarter.” That’s a pretty big statement for a company that has faced its fair share of retail challenges over the years.
Looking at the bigger picture, Gap wrapped up its full fiscal year 2024 with net sales of $15.1 billion, reflecting a modest 1% rise from the previous year. However, comparable sales were up a healthier 3%, and operating income shot up by over 80% to reach $1.1 billion – a significant boost in profitability.
So, what’s next? Gap is staying optimistic, forecasting net sales growth of 1% to 2% for fiscal 2025, with operating income expected to climb by 8% to 10%. For the first quarter of the new fiscal year, the company is expecting sales to remain steady or rise slightly compared to the same period last year.
Another major win for investors: Gap’s board approved a dividend of $0.165 per share for the first quarter of fiscal 2025, marking a 10% increase from the last payout. That’s more cash in shareholders’ pockets, reinforcing confidence in the company’s financial health.
Gap is also in a strong cash position, finishing the year with a hefty $2.6 billion in cash and equivalents – a 38% jump from the previous year. The company didn’t hold back on share buybacks either, repurchasing 3 million shares for around $75 million during Q4.
With a solid earnings beat, growing sales, and a cash-rich balance sheet, it’s clear why investors are piling into Gap’s stock. Now, all eyes are on whether the retailer can keep this momentum going in 2025.
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