Gap Continues To Grow Sales, Take Market Share, Analysts Say

Core Viewpoint - Gap Inc reported strong fourth-quarter results, exceeding analyst expectations, which led to a rally in its stock price [1][2]. Financial Performance - Gap's fourth-quarter earnings were 54 cents per share, surpassing the expected 37 cents per share, driven by strong performance across various metrics [2]. - The company's quarterly sales reached approximately $4.149 billion, exceeding expectations of about$4.070 billion [4]. - Same-store sales growth was 3%, significantly higher than the consensus estimate of 1.1% [2][4]. - Gross margins remained flat at 38.9% [2]. Management Guidance - Management guided for fiscal 2025 net sales growth of 1%-2%, aligning with the Street's expectation of 1.6% [3]. - Expected EBIT margins are projected at 7.9%, with earnings anticipated to be around $2.40 per share, which is 10$2.17 per share [3]. - Operating income growth is expected to be between 8%-10%, higher than the consensus estimate of 7% [6]. Market Position and Strategy - The company is at an inflection point, aiming for low-to-mid single-digit sales growth and annual operating margin expansion targeting historical profitability levels of 8-10% [3]. - Gap is gaining market share in a challenging industry, with notable brand transformations in Gap and Old Navy contributing to increased cultural relevance and revenue growth [7]. - The company ended the quarter with approximately $2.6 billion in cash, with no current plans for deployment identified [5]. Analyst Ratings - JPMorgan maintained an Overweight rating and raised the price target from$29 to $30 [2]. - BMO Capital Markets reiterated a Market Perform rating with a price target of$25 [4]. - Telsey Advisory Group reaffirmed a Market Perform rating and set a price target of $26 [6]. Stock Performance - Following the earnings report, Gap's shares rose by 13.3$22.07 [7].