Gap Inc (NYSE:GAP) stock rose 13.09% (As on March 7, 11:23:02 AM UTC-4, Source: Google Finance) after the company reported better-than-expected fourth quarter earnings and revenue. Store sales were flat year-over-year. The company ended the year with 3,569 store locations in about 40 countries, of which 2,506 were company operated. Online sales increased 4% compared to last year and represented 38% of total net sales. Comparable sales were up 3%. Gross margin of 41.3%, expanded 250 basis points versus last year. Merchandise margin increased 210 basis points primarily driven by lower commodity costs. Rent, occupancy, and depreciation (ROD) as a percent of sales leveraged 40 basis points primarily due to higher net sales in the year. Operating expense was $5.1 billion; down 2% compared to last year’s reported operating expense and down 1% compared to last year’s adjusted operating expense, which excluded $89 million in restructuring costs and a $47 million gain on sale of a building. Operating income was $1.1 billion; operating margin of 7.4%. The company ended the year with cash, cash equivalents and short term investments of $2.6 billion, an increase of 38% from the prior year. Fiscal 2024 net cash from operating activities was $1.5 billion. Free cash flow was $1.0 billion. Ending inventory of $2.1 billion was up 3.6% compared to last year. Fiscal year 2024 capital expenditures were $447 million.
Moreover, Old Navy fourth quarter net sales of $2.2 billion were down 3% compared to last year. Gap fourth quarter net sales of $980 million were down 3% compared to last year. Banana Republic fourth quarter net sales of $545 million were down 4% compared to last year. Athleta fourth quarter net sales of $396 million were down 5% compared to last year
GAP in the fourth quarter of FY24 has reported the adjusted earnings per share of 54 cents, beating the analysts’ estimates for the adjusted earnings per share of 36 cents. The company had reported the adjusted revenue decline of 3 percent to $4.1 billion in the fourth quarter of FY24, beating the analysts’ estimates for revenue of $4.07 billion.
Additionally, the retailer’s board also approved a Q1 fiscal 2025 dividend of $0.165 per share, representing a 10% increase from the previous quarter’s dividend.
Gap provided guidance for fiscal 2025 (FY25), projecting net sales growth of 1% to 2% and operating income growth of 8% to 10%. For Q1 2025, the company expects net sales to be flat to up slightly compared to Q1 2024.