Gap's Q4 sales lead to better profit outlook

Gap Inc. is raising its profit guidance based on its fourth-quarter sales and reduced taxes.

The retailer says it expects to report a profit of $2.86 to $2.87 per share for the year, up from its previous estimate of $2.73 to $2.78 per share. Analysts expected $2.74 per share on average.

The San Francisco company says its total fourth-quarter sales grew 3% to $4.71 billion compared with $4.58 billion for the fourth quarter last year.

Gap Inc. says its revenue fell in January as sales for its namesake brand slumped, but its Banana Republic and Old Navy brands reported improved results. Net sales for the four-week period ended Jan. 31 were $888 million compared with net sales of $899 million for the four-week period ended Feb. 1, 2014.

Gap Inc.’s same store sales for the fourth quarter were up 2% versus positive 1% last year.

“We’re pleased to have grown comparable sales 2 percent for the fourth quarter, driven by a strong, double-digit comp at Old Navy,” said Sabrina Simmons, chief financial officer at Gap Inc. Gap Inc.’s same store sales for January were down 3% versus 1% last year.

Gap says an extension of tax benefits also helped its results.

Gap Inc. products are available for purchase in more than 90 countries worldwide through about 3,200 company-operated stores, over 400 franchise stores, and e-commerce sites.