Gap's 4Q results to show continued turnaround

Gap's 4Q results to show continued turnaround on changes in management and stores

Associated Press

NEW YORK (AP) -- Gap Inc. is expected to report strong fourth-quarter results after the markets close on Thursday as the clothing chain's turnaround continues.

WHAT TO WATCH FOR: Analysts will want more details about the holiday season and will also be looking for comments on how shoppers are adjusting to new financial pressures like rising gas prices and the payroll tax hike.

The report comes as the San Francisco-based clothing retailer, which operates its namesake stores, Banana Republic and Old Navy has seen its push into brightly colored clothing, new designer collaborations and livelier stores help invigorate sales over the past year.

Last October Gap announced a management overhaul to help it respond more quickly to changing tastes around the world. The change, which went into effect this month, will put the North American, international, online, outlet and franchise divisions under a single global executive for each of the company's brands. The company is also forming a new innovation and digital strategy team to further advance those efforts.

Gap announced earlier this month that its January revenue at stores open at least a year rose 8 percent on strength in its North American stores. Analysts polled by Thomson Reuters expected an increase of 4 percent. The metric is a key measure of a retailer's health, because it excludes revenue at stores that recently opened or closed.

Gap said that it expects to post a fourth-quarter profit of 70 cents or 71 cents per share, up from 44 cents per share the year before. Before that outlook, analysts polled by FactSet had expected earnings of 69 cents per share for the period, which ended Feb. 2 and includes the important holiday-shopping season.

In January, revenue at stores open at least a year rose 12 percent at Old Navy North America and 8 percent at both the Gap and Banana Republic North America brands. The company's international stores posted a 1 percent increase. .

WHY IT MATTERS: Gap is the nation's largest mall-based clothing chain, so its results provide insight into consumer spending.

WHAT'S EXPECTED: The most recent forecast from analysts polled by FactSet sees earnings of 71 cents per share on revenue of $4.69 billion, according to FactSet.

LAST YEAR'S QUARTER: The company earned 44 cents per share on revenue of $4.28 billion.

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