The Gap Inc. (GPS) Stock Up on Positive Earnings, Lower Forecast
Shares of The Gap Inc. (GPS) were trading up +1.23 or +3.05 percent to $41.60 per share in this morning's premarket. Shares gained this morning and in yesterday's afterhours trading after the company announced its earnings for its 2014 fourth quarter, which beat analyst estimates. Nevertheless, the company's full year 2015 guidance was below analyst expectations. The Gap Inc. stock closed at $40.37, up +0.08 or +0.20 percent in Thursday's regular trading session.
For the company's fourth quarter ended on January 31st, 2015, the Gap's reported net earnings of $319 million or $0.75 per share, an increase of +4 percent over the same period last year. Revenue increased by +3 percent to $4.71 billion with same store sales increasing +2 percent versus an increase of +1 percent in the same period one year ago. The analyst consensus for earnings was +$0.74 on revenue of $4.7 billion.
The company's guidance for its fiscal 2015 year was for earnings per share of $2.75 to $2.80 and an increase in capital spending to $800 million compared to $714 million in 2014. Analysts were expecting the company's guidance to be $3.01 for the full year. The Gap cited unfavorable currency translation due to the strong dollar, and the labor dispute on U.S. west coast ports as the primary reason for the lower than expected full year guidance.
Sabrina Simmons, the company's Chief Financial Officer and Executive Vice President said in the company's conference call after the earnings release that, "Regarding earnings per share, on a reported basis, we expect earnings per share to be in the range of $2.75 to $2.80. Included in this guidance is an estimated unfavorable impact from foreign exchange at current spot rates of about $0.16, an unfavorable impact of about 13 pennies, due to the West Coast port situation, and an expectation for a slower turnaround at Gap Brands."
In addition to the earnings release, The Gap also announced it would increase its yearly dividend to $0.92 per share this year, up from the current $0.88, with its first dividend of the year of $0.23 per share payable to all shareholders of record on April 8th and payable on or after April 29th. The company also announced it will set aside an additional $1 billion to buy back its own shares after approving $500 million to purchase shares last October.
In related news, the company announced Thursday it was rehiring Wendi Goldman as Executive Vice President for Gap product design. Ms. Goldman was formerly co- president of Limited Brands and at one time worked for Banana Republic. The Gap Inc. stock is down a fraction for the year but appears to be on an upswing after yesterday's earnings release. After last week's settlement of the West Coast labor dispute, the company could see a better than expected first quarter.
Other News About GPS
Gap Rehires Veteran to Revive Namesake Stores
The Gap rehires Wendi Goldman for its product design department.
Gap & L Brands: Beware the Guides of March
One analyst is pessimistic on retailers February sales.
Other Stocks in the News
Verizon uses typewriter font to lambast net-neutrality rules
Verizon complains bitterly at new net neutrality rules.
Apple faces second suit from victorious patent firm
Smartflash LLC files its second lawsuit for devices not included in its first litigation.