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Gap Profit Jumps 61%; Boosts Dividend 20%

Gap Profit Jumps 61%; Boosts Dividend 20%
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2/28/2013 5:28 PM ET

Fashion retailer Gap Inc. (GPS: Quote) said Thursday after the markets closed that its fourth quarter profit jumped 61% from last year, helped by higher sales and improved margins.

The company's quarterly earnings per share also came in above analysts' expectations as did its quarterly revenue. However, the company gave a down-beat earnings forecast for the current fiscal year.

The company also said that its Board of Directors approved a plan to increase the company's annual dividend per share by 20% from $0.50 in fiscal year 2012 to $0.60 per share for fiscal year 2013.

The first quarterly dividend of $0.15 per share was declared for payment on or after May 1 to shareholders of record on April 10. Additional quarterly dividends are expected to be paid in July, October, and January. This is the fourth consecutive year Gap has increased its dividend.

Gap shares are currently gaining 2.37% in after hours trading after closing the day's regular trading session at $32.92, up 41 cents or 1.26%. The shares trade in a 52-week range of $24.17 to $37.85.

Gap offers apparel, accessories, and personal care products for men, women, children, and babies under its namesake, Old Navy, Banana Republic, Piperlime, and Athleta brand names. Its products include assortments, such as denim, khakis, outerwear, tees, and accessories; maternity apparel; women?s loungewear, sleepwear, intimates, and sports and active apparel; and handbags, shoes, jewelry, personal care products, and eyewear.

Same-store sales for the fourth quarter increased 5%. Same-store sales rose 4% for Gap stores in North America and 3% for Banana Republic's North America fleet, while it grew 8% for Old Navy's North America stores. This is the fourth consecutive quarter that Gap, Banana Republic, and Old Navy each delivered positive same-store sales in North America. International same-store sales for the fourth quarter fell 2%.

For the fourth quarter ended February 2, 2013, the San Francisco-based reported net income for the fourth quarter of $351 million or $0.73 per share, compared to $218 million or $0.44 per share for the year-ago quarter.

On average, 24 analysts polled by Thomson Reuters expected the company to earn $0.71 per share for the fourth quarter.

Gross margin for the quarter improved to 37.6% from 32.8% a year earlier, while operating margin for the quarter rose to 12.7% from 8.7% last year.

As previously announced, net sales for the fourth quarter rose 10.5% to $4.73 billion from $4.28 billion in the same quarter last year. Twenty-three analysts had a consensus revenue estimate of $4.63 billion for the fourth quarter.

During the fourth quarter, the company repurchased about 18 million shares for $563 million, taking the full year total to about 34 million shares purchased for a total of $1 billion. In January, the company said it has completed its previous $1 billion authorization and announced a new $1 billion share repurchase authorization.

Looking forward, the company forecast fiscal year 2013 earnings of $2.52 to $2.60 per share. Analysts currently expect the company to earn $2.59 per share for the fiscal year 2013.

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by RTT Staff Writer

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