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Gap (GPS) 4Q16 Results: Solid Earnings and a Revenue Beat; Comps Expected to Be Flat to Up Slightly for FY17

Executive Summary

  • Gap reported 4Q16 adjusted EPS of $0.51, down from $0.57 in the year-ago quarter but above the consensus estimate of $0.50. The company reported revenue of $4.43 billion, up 1% from the year-ago quarter and above the $4.41 billion consensus estimate.
  • Same-store sales increased by 2% during the quarter, compared with a decline of 7% in the prior-year period. For FY16, total comps declined by 2%. A comp increase of 1% for the Old Navy brand was offset by a 3% decrease for the Gap brand and a 7% decrease for the Banana Republic brand.
  • For FY17, Gap expects EPS of $1.95–$2.05, including a $0.09 negative impact from foreign currency and exchange rates, versus consensus of $2.06. Same-store sales for the full year are expected to be flat to up slightly, versus the consensus estimate of a 0.5% increase.

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