Gap raises profit outlook

gapGap Inc has raised its profit guidance for its recently concluded fiscal year based on its fourth quarter sales and reduced taxes, despite a soft month of January.

The retailer said it expects to report net income of $US2.86 to $US2.87 per share for the year ended January 31, up from its previous estimate of $US2.73 to $US2.78 per share. Analysts expected a profit of $US2.74 per share on average, according to FactSet.

The San Francisco company said its total fourth quarter sales grew three per cent to $US4.71 billion. Sales at locations open at least a year rose two per cent in the quarter. Those sales are considered an important measurement of retailer performance because they exclude results from stores that opened or closed within the last year.

But the company said its net sales slipped one per cent to $US888 million in January, while sales at stores open at least a year fell three per cent for the month.

Analysts expected a one per cent January decrease in sales at stores open at least a year, according to Thomson Reuters.

Gap said its revenue fell in January as sales for its namesake brand slumped, but its Banana Republic and Old Navy brands reported improved results. An extension of tax benefits also underpinned its results.

The company said it expects to report a profit of US73 to US74 cents per share in the fourth quarter, while analysts had expected US68 cents per share on average.

Shares of Gap fell US30 cents to $US40.80 in aftermarket trading. The stock has slipped 2.4 per cent in 2015.

AP

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