GPS Gap Inc

   By Maria Armental 
 

Gap Inc.'s (GPS) comparable sales, a key metric for retailers, returned to growth in 2017 after two consecutive years of declines. The retailer reported financial results on Thursday. Here's what you need to know:

EARNINGS: Profit for the 14 weeks ended Feb. 3 fell 7% to $205 million, or 52 cents a share. Excluding the impact from the U.S. tax overhaul and other items, profit was 61 cents a share. Analysts surveyed by Thomson Reuters expected 58 cents a share.

REVENUE: Net sales rose 8% to $4.78 billion, beating analysts' projected $4.67 billion.

COMPARABLE SALES: Sales at stores open for at least a year and associated online sales rose 5%, compared with a 2% increase in the year-ago period and beating analysts' projected 1.7% increase. The Old Navy brand had the best performance, with a 9% comparable sales increase. comparable sales in its namesake brand were flat from the year-ago period while Banana Republic saw a 1% increase, compared with analysts' projected declines of 0.2% and 1.6%, repectively. On an annual basis, comparable sales rose 3%, beating analysts' 1.8% projection.

PROFIT MARGIN: Gross profit margin improved to 36.8% from 33.9% a year earlier.

OUTLOOK: In fiscal 2018, the company expects to earn $2.55 to $2.70 on a per-share basis and for comparable sales to remain flat or increase slightly. Analysts expect a profit of $2.31 a share, or $2.34 as adjusted, with comparable sales increasing 1.3%.

The company set capital spending at about $800 million and said it expects to add 25 company-run stores, less closings and repositions, with most of the new locations being Athleta and Old Navy stores. Gap ended the year with 3,165 company-run stores at the end of the year, down from 3,200 stores in the year-ago period.

DIVIDEND: The board approved increasing the annual dividend to 97 cents a share, from 92 cents a share. The first quarterly payout under the raised dividend of 24.25 cents a share will be in May to shareholders of record at the close of business on April 11.

STOCK: Shares, down 7% this year but up 30% over the past 12 months, rose 9% to $34.51 in after-hours trading.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

March 01, 2018 16:58 ET (21:58 GMT)

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