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Gap Profit Falls 40%

Gap Profit Falls 40%
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2/23/2012 5:25 PM ET

Apparel retailer Gap Inc. (GPS: Quote) said Thursday after the markets closed that its fourth quarter profit fell 40% from last year, hurt by rising costs and lower sales at its namesake and Old Navy stores.

However, the company's quarterly earnings per share came in above analysts' expectations and its quarterly sales met analysts' forecast.

At the same time, the San Francisco-based company gave a fiscal 2012 earnings outlook range, the mid-point of which is below analysts' current consensus estimate.

Gap shares are currently losing 0.94% in after hours trading after closing the day's regular trading session at $23.52, up 54 cents or 2.35%. The shares trade in a 52-week range of $15.08 to $23.73.

Comparable sales, which includes associated comparable online sales, decreased 4% in the fourth quarter. Comparable sales fell 3% for Gap stores in North America and 6% for Old Navy's, but was flat for Banana Republic's North America fleet. International comparable sales fell 8%.

Gross margin for the quarter fell to 32.8% from 38.2% a year earlier.

During the fourth quarter, the company repurchased about 4.5 million shares for $83 million, taking the full year total to about 111 million shares purchased for $2.1 billion.

Separately, Gap said Thursday that its board has approved a new $1 billion share repurchase authorization, which replaces the previously announced authorization, which had $441 million remaining as of today. The company also said its board has approved a plan to increase the annual dividend per share by 11%, from $0.45 in fiscal year 2011 to $0.50 for fiscal year 2012.

The first quarterly dividend of $0.125 per share was declared for payment on or after April 27 to shareholders of record on April 5. Additional quarterly dividends are expected to be paid in July, October and January. For the fourth quarter, Gap reported net income of $218 million or $0.44 per share, compared to $365 million or $0.60 per share for the year-ago quarter.

On average, 31 analysts polled by Thomson Reuters expected the company to earn $0.42 per share for the fourth quarter.

Net sales for the fourth quarter declined 2% to $4.28 billion from $4.36 billion in the same quarter last year. Twenty-eight analysts had a consensus revenue estimate of $4.28 billion for the fourth quarter.

Looking forward, the company forecast fiscal year 2012 earnings of $1.75 to $1.80 share. Analysts currently expect the company to earn $1.79 per share for the fiscal year 2012.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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