The Gap Inc. (GPS) Posts Strong Results, Raises Guidance

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The Gap Inc. (GPS) Posts Strong Results, Raises Guidance

The Gap Inc. (NYSE:GPS) released its latest quarterly results after closing bell on Thursday, reporting earnings per share that were a penny ahead of consensus. The company reported earnings per share of 64 cents. That’s a 31 percent increase over the same quarter last year. The retailer reported 49 cents per share for the same quarter a year ago.

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Analysts were expecting the company to report earnings of 63 cents per share on revenue of $3.8 billion for the quarter.

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The Gap’s earnings broken down

Net sales rose 8 percent during the second quarter and 10 percent on a constant currency basis. Comparable sales rose 5 percent for the quarter. The Gap Inc. (NYSE:GPS) reported second quarter gross margins of 40.5 percent—an increase of 60 basis points. The retailer’s operating margin rose 160 basis points to 13.5 percent.

Net earnings rose $60 million or 25 percent compared to the same quarter a year ago.

The Gap raises guidance, increases dividend

The Gap Inc. (NYSE:GPS) also raised its earnings per share guidance to between $2.57 and $2.65 per share. Full-year earnings per share guidance was previously between $2.52 and $2.60 per share.

The retailer also announced that it was raising its annual dividend per share from 60 cents to 80 cents per share, starting in the third quarter of this year. This is a 60 percent increase over last year’s per share dividend.

The Gap expands

The company also announced that it will open the first Old Navy store in Shanghai and also launch an ecommerce site for its Old Navy brand in China in the first half of next year. The chain ended its most recent quarter with 10 Old Navy stores in Japan and pacing to open 15 to 20 new stores for the year.

The Gap Inc. (NYSE:GPS) also continued expanding in China with the addition of six new stores, making up a total of 55 stores in China. The company also announced plans to take the Gap brand to Taiwan for the first time in the first half of next year.

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