Revenue Gap (GPS) Q1 2024

gap posted positive comparable sales across all four brands on Thursday, prompting the apparel giant to raise its full-year guidance as CEO Richard Dickson’s turnaround strategy takes effect.

Retailers behind Gap, Banana Republic, Athleta and Old Navy also beat earnings and revenue estimates.

Here’s how Gap compares to what Wall Street expected, based on a survey of analysts by LSEG:

• Earnings per share: 41 cents vs. 14 cents expected
• result: $3.39 billion vs $3.29 billion expected

Gap shares rose more than 20% in extended trading Thursday.

The company reported fiscal first-quarter net income of $158 million, or 41 cents per share, compared with a loss of $18 million, or 5 cents per share, in the year-earlier period.

Sales in the period ended May 4 rose about 3% to $3.39 billion from $3.28 billion a year earlier.

It’s “the first time that all four brands have reflected positive comps in many years. In fact, we were sort of looking for when they have and it’s difficult to find,” CEO Richard Dickson told CNBC in an interview.

“We are very confident about our quarter and have given us the confidence to raise our guidance for the full year 2024, our earnings outlook and our operating margin. … our priorities have really been formed,” he said. “The culture is energized and we deliver what we said we want to deliver to our shareholders.”

Gap now expects net sales to rise “slightly,” compared to a previous forecast of flat. The company expects gross profit to grow by at least 1.5 percentage points, compared to previous guidance of at least half a percent.

The biggest change in Gap’s forecast is in its operating revenue outlook. It now expects operating income to be in the mid-40% growth range, compared to previous guidance of low to mid-teens growth.

Dickson, who took the helm at Gap in late August, is a marketing guru who has worked to revitalize the company’s portfolio of brands. His work has focused on brand stories and positioning names like Gap and Old Navy back to the center of culture.

Some of which have already begun to appear.

Earlier this month, actress Da’Vine Joy Randolph wore a denim ball gown designed by Gap’s new creative director, Zac Posen, to the Met Gala in Manhattan. A few weeks later, actor Anne Hathaway wore a white Gap dress to a Bulgari party also designed by Posen.

“We’re very excited to see (Hathaway dresses) on the market and also down to consumers so they have the opportunity to buy,” Dickson said. “We continue to believe again, that better storytelling through marketing and innovative media is resonating.”

He told CNBC that the quarter’s success was driven “by consistency and financial and operational rigor,” adding that the company’s average selling price returned to pre-pandemic levels as leaner inventory levels led to better sales. But with better design and marketing, consumers are also buying more.

Here’s a closer look at how each brand performed:

• Old Navy: Net sales of $1.9 billion were up 5% compared to last year, while comparable sales were up 3%, worse than analysts’ uptick of 4.9%. When asked about the worse-than-expected results, Dickson said the brand saw its “highest quarterly component in three years,” which he considered a win. He noted there is strength in women’s business and “positive results in active” – ​​a “key category” for the company.

• Banana Republic: Sales of $440 million increased 2% compared to last year. Comparable sales rose 1%, ahead of estimates for a 1.9% decline. The growth was also on top of the 8% decline in the year-ago period.

• Atleta: Sales of $329 million increased 2% compared to last year. Comparable sales rose 5% after falling 13% last year. Analysts do not have expectations for the same sales as Athleta.

• Gap: Sales of $689 million were flat compared to last year. Comparable sales rose 3%, in line with estimates. “Gap’s performance was primarily driven by strong marketing and product execution around the Linen Moves campaign,” the company said.