(Reuters) -Gap beat fourth-quarter sales and profit estimates on Thursday, helped by improving demand for its apparel brands including Old Navy and Banana Republic during the holiday quarter, sending its shares up 16% in extended trading.
Gap’s efforts to reinvigorate its brands and return to its “pop culture brand” roots under CEO Richard Dickson’s turnaround strategy have been helping the company bring back lost customers even in a challenging environment.
Shoppers, who were saving up over the year to splurge during the festive season, flocked to grab fresh and trendy styles, driving sales for companies such as Gap and Under Armour as they stock up their shelves with in-demand items.
The company’s fourth-quarter net sales of $4.15 billion, beat analysts’ estimate of $4.07 billion, as per data compiled by LSEG.
It earned quarterly profit of 54 cents per share, beating the average estimate of 37 cents per share.
Gap beefed up its promotional and marketing efforts by introducing campaigns and collaborations such as “Get Loose,” featuring Troye Sivan, to engage with younger generations.
However, Gap expects net sales growth for fiscal 2025 to be between 1% and 2%. The midpoint of this range is slightly below the 1.7% rise analysts estimated.
The company’s forecast is based on the assessment of the current macroeconomic environment and related headwinds to consumer spending, including inflationary pressures, tariffs, supply chain disruptions and foreign currency volatility, the company said.
Its first-quarter net sales are expected to be flat to slightly up, compared with analysts’ expectations of a 1.6% rise.
Earlier this week, peer Abercrombie & Fitch also provided a bleak forecast due to softer demand and higher input costs.
Apparel makers, much like retail giants Walmart and Target, expect that rising inflationary concerns flared by President Donald Trump’s import tariffs will strain consumer budgets.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Alan Barona)
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