Improving Gap delivers good news

A jolly holiday season helped Gap Inc. post fourth-quarter earnings and sales that beat expectations, leading to speculation that the chain’s turnaround may be starting to take hold.



The nation’s largest apparel retailer reported net income of $220.0 million, or 55 cents per share, up from $214.0 million, or 53 cents per share, last year.



Sales totaled $4.43 billion, up from $4.39 billion and ahead of the $4.41 billion analysts had expected.



Total same-store sales rose 2%, compared to a 7% drop in the year-ago period.



“We’re pleased to finish the year strong, with positive comp and sales growth during the critical holiday quarter,” said Art Peck, CEO, Gap. “Going forward, we will maintain our focus on improving the quality and relevance of our products, increasing our responsiveness to trends and demand, and creating more synergy across channels to deliver the experiences our customers want and expect, however they choose to shop.”



For fiscal year 2016, the company’s same-store sales were down 2% compared with a decline of 4 percent last year. By global brand, same-store sales rose 1% at Old Navy, were down 3% at Gap, and down 7% at Banana Republic.



For 2017, Gap expects that sales at existing stores will be "flat to up slightly," which would reverse several years of declines. Earnings are projected to rise to $1.95 or $2.05 per share, up from $1.69 per share in the previous year but still below the $2.07 that analysts were hoping for.