Gap Profit Falls 12.5%; Outlook Weak

(RTTNews) - Fashion retailer Gap Inc. (GPS) said Thursday after the markets closed that its fourth quarter profit fell 12.5% from last year, as sales declined 3.2%.

However, the company's quarterly earnings per share came in above analysts' expectations, but its quarterly sales fell shy of analysts' forecast. At the same time, the company forecast fiscal year 2014 earnings below analysts' current consensus estimate.

"We are pleased to deliver another year of profitable growth for our shareholders," said Glenn Murphy, chairman and chief executive officer of Gap Inc. "Engaging customers across our multi-channel portfolio of brands positions us well on our path to winning in the global marketplace."

The company also said that its Board of Directors has approved a plan to increase the company's annual dividend per share by 10% to $0.88 per share for fiscal year 2014. This represents more than a 75% increase in the company's annual dividend per share in the last two years.

The company's board has authorized the first quarter fiscal year 2014 dividend of $0.22 per share, payable on or after April 30 to shareholders of record on April 9.

Gap shares are currently losing 1.01% in after hours trading after closing the day's regular trading session at $43.68, down 23 cents. The shares trade in a 52-week range of $31.19 to $46.56.

Gap offers apparel, accessories, and personal care products for men, women, children, and babies under its namesake, Old Navy, Banana Republic, Piperlime, and Athleta brand names. Its products include assortments, such as denim, khakis, outerwear, tees, and accessories; maternity apparel; women?s loungewear, sleepwear, intimates, and sports and active apparel; and handbags, shoes, jewelry, personal care products, and eyewear. Though the U.S. continues to be its largest market, the company is trying to expand its presence in Japan and China.

For the fourth quarter ended February 1, 2014, the San Francisco-based company reported net income of $307 million or $0.68 per share, compared to $351 million or $0.73 per share for the year-ago quarter.

On average, 32 analysts polled by Thomson Reuters expected the company to earn $0.66 per share for the fourth quarter.

The company had said earlier this month that it expected fourth quarter earnings in the range of $0.65 to $0.66 per share.

As previously announced, net sales for the fourth quarter fell 3.2% to $4.58 billion from $4.73 billion in the same quarter last year. The company's fourth quarter same-store sales were up 1%. Thirty analysts had a consensus revenue estimate of $4.60 billion for the fourth quarter.

Looking forward, the company forecasts fiscal year 2014 earnings per share to be in the range of $2.90 to $2.95. Analysts currently expect the company to earn $3.02 per share for the fiscal year 2014.

Another clothing retailer Abercrombie & Fitch Co. (ANF) on Wednesday reported a 58% drop in fourth quarter profit, reflecting lower sales and margins as well as the impact of restructuring charges.