Gap predicts return to sales growth due to Athleta Boost, Reuters vaccine launch
© Reuters. A Gap Inc. retail store is shown in La Jolla
(Reuters) – Apparel retailer Gap Inc (NYSE 🙂 on Thursday predicted a return to sales growth this year as it expects sales of its Athleta brand to double over the next two years and drive the adoption of COVID-19 vaccines gets traffic in its shops.
The San Francisco-based company’s shares rose 4.4% to $ 25.42 in expanded trading after fourth-quarter earnings beat expectations.
As consumers work and take classes online during the pandemic, affordable Old Navy clothing and Athleta joggers, tees, and shirts that stay at home have become favorites.
Athleta revenue rose 29% to more than $ 1 billion in the fourth quarter. It is projected to be $ 2 billion by 2023, Chief Executive Officer Sonia Syngal told analysts in a conference call after the profit.
“We have never been so confident about Athleta’s way forward,” added Syngal.
Gap now plans to open 30 to 40 Old Navy stores and 20 to 30 Athleta stores and close around 100 Gap and Banana Republic stores in fiscal 2021.
The company had already started shutting down stores of its eponymous brand and the Banana Republic before the pandemic as their stores struggled due to stiff competition.
Last month, Gap placed a $ 140 million bet to improve its network of distribution centers while customers switch to online shopping.
Online sales increased 49% for the quarter.
Fiscal 2021 net sales are expected to reflect growth in middle to high teens, and Gap is forecasting earnings in the range of $ 1.20 per share to $ 1.35 per share.
On a stock basis, Gap earned 28 cents per share in the fourth quarter, 10 cents more than expected, according to IBES data from Refinitiv.
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