Gap Stock Rises on Solid Q4 Earnings, Comparable Sales Up 3% Y/Y

Core Insights - The Gap, Inc. reported strong fourth-quarter fiscal 2024 results, with earnings of 54 cents per share, exceeding the Zacks Consensus Estimate of 36 cents and reflecting a 10% year-over-year increase [1] Financial Performance - Net sales decreased by 3% year over year to $4.149 billion, surpassing the consensus estimate of$4.067 billion, impacted by calendar shifts [3] - Comparable sales rose by 3% year over year, while online sales dipped by 2%, accounting for 41% of total sales [4] - The gross margin remained flat at 38.9%, with an adjusted gross margin estimated at 37.6% [9] - Operating expenses were reduced by 6.7% year over year to $1.4 billion [10] Brand Performance - Old Navy's net sales edged down 4.3$2.2 billion, but comparable sales rose by 3% [6] - Gap Global's net sales fell by 2.7% year over year to $980 million, with comparable sales increasing by 7$545 million, while comparable sales rose by 4% [8] - Athleta's net sales decreased by 5.5% year over year to $396 million, with comparable sales dipping by 2$2.3 billion, a 21.1% increase from the previous year [11] - Free cash flow for the period was $1 billion, with cash dividends paid amounting to$225 million [12] - Total stockholders' equity stood at $3.3 billion, with long-term debt of$1.5 billion [11] Future Outlook - For fiscal 2025, the company projects sales growth of 1-2% from $15.1 billion in fiscal 2024, factoring in foreign currency impacts [15] - Management anticipates a slight increase in gross margin and operating income growth of 8-10$1.11 billion [17] - Capital expenditure is expected to rise to $600 million in fiscal 2025 [13]