Yahoo Finance Gap's Holiday Sales Ride on Old Navy, December Comps Up 1% - Analyst Blog
The Gap Inc. (GPS) came up with impressive comparable-store sales (comps) and sales numbers for the holiday sales season, comprising the months of November and December (nine-weeks ended Jan 3, 2015). Comps increased 3% for the holiday season this year compared with last year. Moreover, net sales for the combined months increased 4%.
The improvement in comps for the holiday sales period was mainly attributed to solid 12% comps growth at the Old Navy brand, including an 18% rise in November and 8% increase in December.
We believe that the company’s holiday season sales mainly benefited from robust sales in November, characterized by strong promotions and trendy merchandise that boosted sales over the Thanksgiving and Black Friday weekend. In Nov 2014, Gap posted an increase of 6% in both comps and net sales on the back of solid growth registered across Old Navy and Banana Republic Global brands.
However, the company’s standalone results for December were a little laid back when compared with November, as it posted a 1% increase in comps, compared with flat comps last year. Net sales for the 5-weeks ended Jan 3, 2015 came in at $2.10 billion, up 2% from $2.05 billion during the 5-weeks ended Jan 4, 2013.
Brand-wise, the company’s comps performance for December improved only at Old Navy, while its core Gap brand posted a decline and Banana Republic remained flat.
Comps at Old Navy Global rose 8% compared with a 2% decline in the prior-year period. Banana Republic Global’s comps remained flat, similar to last year. However, comps at Gap Global were down 5% against a 1% increase recorded last year.
Despite positive sales results for the holiday season, shares of this leading apparel retailer for men, women, children and babies fell about 0.9% in the afterhours trading session yesterday to $42.73, after tripping 1.15% to $43.10 during the regular trading hours.
The holiday shopping season this year has been an uplifting one for most retailers with many of them reporting solid sales data for the months of November and December. Further, these retailers, including Macy's Inc. (M) and American Eagle Outfitters Inc. (AEO), raised their forecasts for the fiscal year, indicating more optimism for the fourth quarter.
Another retailer that posted impressive results this holiday season was Aeropostale Inc. (ARO), which narrowed its loss estimate for the fourth quarter. This was prompted by a 9% decline in comps for November and December, compared with a 15% decline reported in the year-ago period.
Coming back to Gap, the company revealed that it is altering its monthly reporting cycle. Starting from the January sales release, the company will report monthly sales results for the third month of each fiscal quarter, two business days ahead of the usual, on Monday of the 2nd fiscal week at 1:00 p.m. Pacific Time. However, for the first and second months of the fiscal quarter, it will continue to report sales results on Thursday of the 1st fiscal week at 1:00 p.m. Pacific Time. The company’s sales release for the third month of the fiscal quarter generally includes its preliminary earnings per share guidance.
Gap, which is scheduled to release its January sales results on Feb 9, 2014, currently carries a Zacks Rank #3 (Hold).
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